Welcome to the Los Angeles section of MetroDepth. As our name suggests, we provide in-depth coverage of real estate conditions in all of California’s major cities and metro areas. On this page, you’ll find information pertaining to the Los Angeles real estate market in 2013, along with some housing predictions for the L.A. metro area in 2014.
Introduction: Los Angeles Housing Market Then and Now
Like much of California, the Los Angeles real estate market has undergone a major transformation in the last few years. It began as a boom in the early 2000s. It turned into a bust in 2007. And now, toward the end of 2013, the L.A. housing market can best be described as “slow but steady.” Home prices in the Los Angeles metro area have regained a lot of lost ground. But they are still well below 2006 peak levels.
The good news is that the Los Angeles real estate market is once more on solid footing. Inventory surpluses have shrunk to healthier levels. Demand has increases. Prices have risen. We expect to see a continuation of these trends through the end of 2013 and into 2014.
L.A. Home Prices in 2013: Latest Trends and Development
According to the latest Case-Shiller Home Price Index, house prices in the Los Angeles metro area rose 20.8% from July 2012 to July 2013. Those were the most recent numbers available as of October 1, 2013, due to a two-month reporting lag. That puts the L.A. real estate market among the top-10 metropolitan areas in the country, in terms of annual home-price gains.
Other measurements show strong appreciation as well, although to varying degrees. Zillow’s Home Value Index for Los Angeles (a proprietary “blend” based on recent sales and other market data) is 26% higher today than it was a year ago. The company reports an annual increase of 20.6% in the median sale price for this metro area.
Any way you slice it, the overall housing trend is the same. The Los Angeles real estate market is clearly in a recovery mode, at least where home prices are concerned.
Realtor.com reports a 26.5% increase in the median list price for the L.A. area, year over year. This is the midpoint for asking prices set by home sellers across the metro area. In August 2013, the median was $442,700, more than 26% higher than the same month last year.
Real Estate Predictions for 2014
So what’s ahead for the Los Angeles real estate market? Here is the MetroDepth housing prediction and forecast for the L.A. metro area.
Given the current level of demand in this market, combined with the sharp reduction in inventory of the last couple of years, we expect home prices to continue rising well into 2014. Annual (or year-over-year) gains will likely continue for the foreseeable future.
We also expect to see a decline in the number of distressed sales, as a percentage of overall sales. This will give further support to property values across the Los Angeles housing market.
The Federal Reserve recently announced they will prolong their “quantitative easing” stimulus program for at least a couple more months. Some analysts have predicted the Fed will maintain the stimulus program at its current level into the first part of 2014. This will have a suppressive effect on long-term mortgage rates, keeping rates near their current low levels for a while longer. Favorable interest rates will bolster demand for housing in the Los Angeles market, and elsewhere across the country.
Unemployment remains stubbornly high in the L.A. metro area, well above the national average. In August 2013, the jobless rate in Los Angeles was 10.2%, compared to the 7.3% nationally. This is according to data published by the Bureau of Labor Statistics. High unemployment will continue to be a drag on the local housing market into the first part of 2014. But we do expect to see that rate fall gradually over the coming months.
All in all, the current housing recovery in L.A. will likely continue for the foreseeable future. It would take a serious economic shock to reverse the current trend in this metro area. Let’s hope it never comes.
Disclaimer: This article contains real estate predictions and forecasts for the Los Angeles housing market in 2014. Such statements are matters of opinion and should not be viewed as facts or assertions. We make no guarantees about the future of home prices, mortgage rates, or other economic trends.