As successful landlords and property investors, such as Steven Taylor Taylor Equities, know very well, changes in residential real estate are not as dramatic as those of runway fashions. Nevertheless, when such changes do occur, they can make the market unstable.
However, when you look at the big picture, there are cycles and patterns that can indicate what may happen to the market in the future. Nevertheless, it takes experience in the real estate business to properly read and interpret the signs.
Southern California Trends
Overall, California residential sales and home prices have been trending down over the past five years or so. Two years ago, Los Angeles Basin home prices increased by 9%, but last year the increase was only 3%. In other words, the growth seems to be slowing from year to year.
With that being said, however, the Los Angeles Times reported a large increase in home sales and a modest price increase in September 2019. This warming of the market is attributed to low inventory levels in which demand outstrips supply, as well as low interest rates.
So what does the overall downward trend combined with the late-season surge suggest for the Southern California real estate market in the near future? It is difficult to say, as it still remains to be seen whether the recent increase in demand will continue or whether the brief boom will still go bust. Nevertheless, the California Association of Realtors predicts a slight increase in median home prices of 2.5%. This mild growth, less than the 4.5% increase seen in 2019, is expected to mirror a predicted increase in the unemployment rate and slowing of economic growth.
Nevertheless, if the interest rates remain low, that could drive up home sales in defiance of the recent year-to-year trends. Regardless of what the future of residential real estate holds for Southern California, buyers are likely to remain rooted in reality when making offers.
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