Real estate sales fell 21 percent last year
By Dolores Quintana
The Los Angeles real estate market is showing signs of being impacted by rising inflation and mortgage rates as the year progresses.
New data from Core Logic shows real estate sales in May 2022 may be the worst in 34 years, a 16 percent drop from May 2021 highs, CBS reported. Sellers have also begun to lower listing prices as buyers struggle with rising mortgage rates and rising inflation in the country. This has made potential buyers much more cautious about jumping into a sale.
These price cuts, which are happening not just in Los Angeles but across the United States, are a warning sign that real estate’s golden age may be coming to an end. Still, this does not necessarily mean that home prices are falling and even with current market conditions, most home sales are still being bought for more than the listing price.
Core Logic also reported that median monthly payments in Los Angeles increased 40 percent from 2021 to 2022. Real estate experts blame the high house prices and mortgage interest rates for the incident, according to CBS News.com.
Yolanda Cortez, an LA agent at Century 21 Realty Masters, told the Los Angeles Times“I have buyers who are a bit quiet right now.” Cortez added that because of rising interest rates, buyers who had other plans are being forced to consider areas such as the Antelope or Victor Valleys in the high desert, which are 60 miles from downtown Los Angeles.
All of this is creating a knock-on effect of fewer homes going into escrow and a rising inventory of homes for sale, forcing sellers to make changes. The number of homes for sale whose selling price has been reduced has doubled in the past year. In fact, the price of 16.2 percent of homes in Los Angeles County has fallen in the past four weeks. This is an increase of 7.5 in the same period last year.
Altos Research founder Michael Simonsen believes that while there are buyers who are priced right now, he thinks other buyers have pressed the pause button for other reasons. With the stock rising, those who can buy have decided not to, making a slowdown real.
Simonsen said, as quoted by the Los Angeles Times“Buyers know they may be able to wait until summer and have more choice.”