L.A. Home Prices Stumble at Midyear

Los Angeles home prices were down 6% in July year-over-year, rounding out three consecutive months of home pricing declines, according to research from Pacific Union International. The downward trend comes after months of strong pricing gains, which haven’t been offset by the anemic midyear numbers. Los Angeles could be rebalancing after rapid pricing growth, following a similar pattern in the Bay Area, which also saw soft pricing trends after months of rapid price gains.

“Pricing trends suggest that following a strong increase in prices at the beginning go 2018, price growth is stabilizing again to a more sustainable level see over the last couple of years,” Selma Hepp, PhD, chief economist and VP of business intelligence at Pacific Union International, tells GlobeSt.com. “Some of the more affordable L.A. communities are seeing more appreciation as buyers are still looking for deals and areas of growth.”

The decline, therefore, isn’t an issue of waning demand, but rather a rebalancing following unusually strong demand due to rising interest rates. “Market has been very competitive over the last year as buyers were trying to rush in before interest rates increased and prices rose further—that led to higher price growth that over the last few years,” says Hepp. “Now, buyers do not feel the same urge, fatigue has set in, and they are taking longer to shop around. Also, for those budget-constrained buyers, combination of price growth and higher rates made it unaffordable to purchase a home.”