LA's Real Estate Slowdown: Less Sizzle, More Fizzle

"LA's Real Estate Slowdown: Less Sizzle, More Fizzle"

Alright, let's dive into the sizzling cauldron that is the Los Angeles real estate market, and by sizzling, I mean simmering—more like lukewarm.

Things have cooled down from the hot days of just a few months ago, where houses were flying off the shelves faster than toilet paper at the start of a pandemic.

So, here we are in 2024, gazing at a landscape littered with "For Sale" signs like some sort of suburban yard sale. But guess what? The houses aren't moving quite as quickly...

That’s right, the Expected Market Time (a fancy way of saying how long it takes to sell a house) has ballooned from a speedy 60 days in March to a leisurely 80 days now. It’s the highest it’s been at this time of year since the nostalgic days of 2014!

So what’s fueling this market molasses? It IS NOT a drop in demand.. in fact, far from it! Demand’s pretty much the same as last year, just hanging out at low levels thanks to those delightful mortgage rates stubbornly sticking above 7%. Remember when 4% was a thing?!? Ah, good times...

So let's go ahead and break down what is actually happening in the glamorous world of LA housing:

The Big Slowdown:

• Scene Setting: Imagine a world where "For Sale" signs are as common as Starbucks, and houses sit longer than that leftover pizza in your fridge.
• Dramatic Twist: Homes used to sell faster than a TikTok dance goes viral, but now? We’re clocking in at a leisurely 80 days on the market. That's slower than a Los Angeles freeway at rush hour.

Price Slashes and Cash Dashes:

• Reality Check: Sellers have dreams of big bucks, but buyers? They're squeezing their wallets tighter than a pair of skinny jeans.
• Market Mismatch: Despite identical demand levels from last year, we’ve got more homes than a Monopoly board. 29% of all listings have cut prices to lure in buyers.

Mortgage Rate Mayhem:

• Interest Piqued:Remember when mortgage rates were cute and low? Now, they’re hovering stubbornly above 7%. It’s like that ex that just won’t go away.
• Economic Backdrop:The Federal Reserve is playing hard to get with rate reductions, waiting for the economy to cool off like a hot slice of pie.

Seller Strategies:

• Overpricing Epidemic: It's a jungle out there, and OVERPRICED homes are the new endangered species.
• Open House Overload: More open houses than Netflix has series, and still, the crowds are thin.

Buyer's Beacon:

• Not a Buyer's Market... Yet, Prices aren’t falling; they’re just not skyrocketing. If a home is priced right and packs a free toaster, it's gone faster than you can say "sold!"
• The Hunt for Red October: Well, more like the hunt for any decently priced home that doesn't require a map and a compass.

Luxury Laments:

• High-End Hangups: The luxury market is more frozen than your computer screen on a Monday morning. Houses priced over $2 million need patience, and maybe a little magic…

NOW, let’s dissect the rollercoaster ride that is the LA real estate market in our favorite digestible format:

• The Growing Horde:
• Inventory Spree: Over the past few weeks, the active listing inventory swelled by 461 homes—a solid 5% jump. We're now looking at 10,547 homes chilling on the market.
• Historical Peek: Compared to the pre-COVID golden years (2017-2019), we're seeing 23% fewer homes making their debut. That's 2,117 homes deciding to play hard to get.
• Seller Stampede:
• This Year vs. Last Year: 1,226 more sellers decided May 2024 was their time to shine compared to May 2023. Last year, the market was cozier, housing 7,514 homes, which is 29% fewer than this year. Nostalgia, right?
• Buyer Activity:
• The Dance of Demand: The number of pending sales has tiptoed up by 99 in the past two weeks—a modest 2% increase, bringing the total to 3,932. That's still a shadow of the pre-COVID days when 5,789 homes were flying into escrow.
• Market Time Mania:
• General Slowing: The Expected Market Time (basically, how long it takes to sell everything if no new listings pop up) has crept up from 79 to 80 days. Last year? A brisk 59 days.
• Price Brackets Play: From under $750K homes to those lavish $8 million+ estates, every price range is feeling the time tick differently. Notably:
• Under $750K: Up from 56 to 57 days.
• $750K to $1M: Up from 53 to 58 days.
• $1M to $1.5M: Up from 73 to 75 days.
• $1.5M to $2M: Up from 90 to 92 days.
• $2M to $3M: Actually down from 148 to 137 days. A rare speed-up in this slow-mo market.
• $3M to $4M: Took a leap from 165 to 199 days. Time to brew some extra coffee.
• Above $8M: Skyrocketed from 593 to a whopping 907 days. Might as well start planning for the 2026 holidays.
• Luxury Lags and Distressed Digs:
• High-End Hangout: The ultra-luxe homes (above $2 million) make up 28% of the inventory but just 10% of demand. Translation? They're not exactly flying off the shelves.
• Distressed Market: Only 58 homes are distressed (think foreclosures and short sales), which is a minuscule slice of the market pie.
• Sales Snapshot:
• May's Market Moves: There were 4,394 homes that found new owners in May 2024, which is just a tad (1%) more than last May. The sales-to-list price ratio? A perfect 100.0%. That's right, homes are selling for what they're listed at, meaning buyers aren't messing around when they find what they like.

In summary, if you’re buying, selling, or just compulsively reading real estate reports (hey, we all have our hobbies), remember: the LA housing market right now is all about patience, realistic expectations, and a good sense of humor. Because, let’s face it, you’re going to need it...