Los Angeles Real Estate Market Shows Signs Of Returning To “Normal”
Seven months into the coronavirus pandemic, the Los Angeles real estate market has shown its resilience as sales activity returns to “normal” and housing prices continue to surge. As buyers and sellers become more accustomed to operating in a post-pandemic world, closed sales, new listings, pending sales, and overall inventory has returned to the same level as in prior years, and median sale price has jumped to the highest level it has been in recent history. Time will tell if this surge continues, but the data appears to show that the market has returned to levels considered normal in recent history.
Closed Transactions Evidence A Strong Los Angeles Real Estate Market
Due to escrow periods typically lasting approximately 30 days, looking to closed sales and the median price of those sales tells us how buyers and sellers were behaving about 30 days ago. This data shows us that closed sales are back up to the same level as in prior years. Due to the seasonal nature of the real estate market, we can expect closed sales for October to begin to decline, and for that trend to continue through the winter.
More interestingly, the median sale price of the closed transactions has surged significantly above prior years. This is likely attributable to pent up demand and low inventory, forcing buyers to pay more for properties. As shown below, the median sale price in September of this year is almost $100,000 higher than the same time last year.
What The Data Tells Us About The Future Of The Market
Data reflecting new listings and pending sales gives us a more current picture of how buyers and sellers are behaving. As with closed sales, new listing activity appears to have returned to stable levels similar to prior years. This shows that sellers have become more comfortable with listing properties for sale.
Pending sales data is a reflection of buyer demand and willingness to purchase properties. Interestingly, pending sales per month dropped markedly from August to September, with pending sales in September being the lowest it has been in the past four years. This will likely be reflected in a sharp decline in closed sales in October. The decline, however, is relatively typical for this time of the year, as reflected by the data for prior years.
Finally, the Months Supply Of Inventory metric indicates how many months it would take for the current supply to be consumed by buyers based on current market conditions, thereby providing us with a sense of the supply on the market. As shown below, this metric is also similar to prior years, once again evidencing a return to normalcy in the Los Angeles Real Estate Market.
While the coronavirus pandemic initially had a significant impact on the Los Angeles real estate market, it appears that the impact has faded and both buyers and sellers have become accustomed to operating in a post-pandemic market. There will likely be a decline in activity in the coming months, which is typical due to the seasonal nature of the real estate market. However, overall, it appears the market has returned to pre-pandemic levels, and one can expect that trend to continue barring a spike in coronavirus cases.
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