For years, there have not been enough homes on the market for sale. With the calendar flipped to the second week of January in this new year 2020, the lack of inventory has been even more pronounced. The active inventory is extremely low to start the year, down 29% compared to the start of 2019.
Buyers have been frustrated in the past few years and are just as frustrated in this new decade. The Los Angeles and Orange County housing inventory is half empty. It is again, tough for buyers to find homes that they like in today's market. We started the year with 8,025 homes for sale in Los Angeles County m the lowest start since 2013 and 2018. There were 11,350 homes to start 2019 - 41% more than January 1, 2020. Buyers had a lot more choices a year ago!
This trend of supply shortage started with the 2008 recession. Ever since less and less homeowners have placed for sale signs in their front yard. Builders are releasing homes slower. Its been the trend for 12 consecutive years. With interest rate at 5% late 2018 causing demand on the market to diminish, it looked like the inventory problem was easing off. However, this reverted quickly in March when the interest rate dropped back down to 3.625%. Homes are more affordable, demand picked up, and inventory started to drop again.
Here are some advise for buyers and sellers on the market:
For Buyers: Be Realistic from the start. Do not hesitate to write an offer to purchase a home that you are interested. There are not a lot of homes that will be on the market most of the year if the interest rate remains. Buyers won't have to overpay for a home but may have to pay slightly above the most recent comparable.
For Sellers: Be Realistic in pricing. Yes, the sellers are getting more advantages because of a shortage of inventory. However, the demand had also dropped with the supply, just not at as fast a pace. Price does not appreciate rapidly. Los Angeles County homes are projected to increase by 5% over the next 12 months. So the price accordingly. Price it at fair market value. The better the price, the more activities it will generate, and the more offers you will receive - giving you more leverage.