Our Multiple Listing Service (MLS) has recently published statistics for the 2016 Los Angeles real estate market through November and compared it with the previous year’s figures.
Overall the sales volume in 2016 rose 7% over the same period the previous year and the number of units sold dropped slightly.
So what going to happen in 2017?
Interest rates are predicted to rise from about 4.5 to 5%. Will this affect Los Angeles home buyers? It will certainly give some pause with the high prices, but those who have been in the market for a while will probably not be swayed if it does not go over 5%.
Inventory will be the continuing problem in our market. Sellers are loathe to sell for a couple of reasons: They are paying historically low interest on their mortgage and where are they going to go? We desperately need more inventory in the mid and lower-level market. The high-end market is more stable in terms of inventory, and the interest rate increase will not affect that market as much.
The big question is how much higher can home prices rise in L.A? They have already started to flatten. They are not likely to drop, especially with this low inventory, but hopefully they will stay steady for the long-term.
For sure something has to happen. There will be no real estate market if buyers and not buying and sellers are not selling. Who is going to give first? 2017 will be an interesting year.