The New Year in Real Estate


It’s been another exciting year in the Los Angeles real estate market! I wanted to give you a quick recap of the market results and projections for next year. 2016 looks to have the most uncertainty since the middle of the housing recession in 2009.
We had a very long winter to start the year, with sales activity starting later in the season than normal, picking up in late March. After the unusually slow start, we had a scorching hot summer market, with low inventory, multiple offers, and scores of disappointed buyers who could not find a property to buy. This situation worsened at the end of summer and the beginning of fall as rates dropped to near all-time lows.
Interestingly, many market segments moved differently this year. Income properties, probably the hottest segment in 2014, were slow, as high prices pushed down yields and drove investors out of the marketplace. Additionally, improving owner occupied buyer confidence encouraged non-investor buyers to out-compete investors. More than ever this year, competition at the “low-end” of any particular market was fierce, as buyers fought to get the “worst house” in the best neighborhood. As a result of that, sales for middle- and higher-priced homes in many markets struggled relative to the rest of the market last year.
The Federal Reserve recently raised interest rates a quarter of a point. By itself, this is not enough to impact the financial decision to buy homes over a large population. It is possible, however, that this move could dampen consumer sentiment. If that happens, it will have a negative effect on pricing. I expect that with slightly higher rates and rents at all-time highs already, investors will stay out of the market, which will allow many entry-level and first time buyers into the market. The biggest challenge to that group is the remaining lack of more aggressive financing. There are many loan products now, but still not a lot that are able to actually help stated-income and marginal credit borrowers.
Ultimately, I believe the Federal Reserve will restrain interest rate rises to protect the housing market. Overall I expect to see a fairly flat housing market for the next 6-9 months. I think it will be tremendously easier for buyers to get “in the door” with a more stable market, which is good news. Investors, again, will be shut out, and will move their money to other assets. They may even sell some properties they purchased recently to reinvest outside of real estate, which is great as it will provide much needed inventory.
Thank you to all of our friends, family, and clients. With a few new team members, wefinished the year with new highs with 165 sales for $100,000,000 in volume. I’m looking forward to an even bigger 2016.

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