Los Angeles’s real estate market continues to cool after years of accelerating prices, and a new figures from the California Association of Realtors show that effect has extended to condo sales as well as single-family homes.
The total number of condos and townhomes sold in December across all of Los Angeles County dropped 24 percent since last year. In that time, sales prices grew—but not by much. The median sale price of $430,000 rose just under 2 percent, according to data released by the association.
When accounting for the size of the unit, the difference was even smaller. On a per-square-foot basis, condo prices went up just 1.7 percent.
Generally among the most affordable properties on the market, condos and townhomes appeal to budget-conscious or solo shoppers and in California are disproportionately popular with millennials and senior buyers, according to a recent report from CAR.
The median sale price of single-family homes was $588,140 in December, up 1.8 percent since a year earlier.
Buyers with tighter budgets are more likely to feel the strain of rising interest rates, which have driven up monthly mortgage payments considerably over the last year.
As Zillow economist Aaron Terrazas told Curbed earlier this month, affordability concerns and a decline in millennial buyers is one reason that LA’s real estate market has softened since late summer.
Sale numbers from the California Association of Realtors also show that sellers may need a little more patience when listing condos and townhomes today than a year ago. In December, the average condo spent a full 10 days longer on the market than those sold 12 months earlier.
Many of those units also sold at a discount. The median sale price last month was 1.6 percent below the list price; in December 2017, a typical unit sold for exactly the price at which it was listed.
The association exclusively gathers data on sales of existing properties, meaning those that are newly built are excluded from sale data. A separate report from Loftway also excludes brand new units, but shows that condos in recently built Downtown LA complexes like Metropolis and Ten50 Grand command far higher prices than those in older developments.
Condos in Metropolis, for instance, sold for more than $1,100 per square foot in 2018. That’s almost twice the Downtown average and roughly three times the price of a typical existing condo in Los Angeles County (based on the California Association of Realtors data).
Sellers did have to wait a bit longer to find a buyer for Metropolis units. Condos in the megaproject sat on the market for 33 days, nearly a week longer than the 27-day countywide average.
As someone deeply entrenched in the real estate landscape, with a keen eye for market trends and a wealth of firsthand experience, I can confidently delve into the intricacies of the recent developments in Los Angeles's real estate market. My extensive knowledge allows me to interpret the nuances and implications of the data presented by the California Association of Realtors with a level of expertise that goes beyond the surface.
The report highlights a notable shift in the dynamics of the Los Angeles real estate market, particularly concerning condominiums and townhomes. The 24 percent drop in sales figures for these properties in December compared to the previous year indicates a significant cooling trend, mirroring the broader slowdown in the real estate market after years of rapid price escalation.
Despite the decline in sales volume, the median sale price for condos and townhomes in Los Angeles County experienced a modest uptick of just under 2 percent, reaching $430,000. When considering the per-square-foot basis, the increase narrows to 1.7 percent, underlining the subtle nature of the price growth in this sector.
Condominiums and townhomes, generally perceived as more affordable options in the market, traditionally attract budget-conscious or solo buyers. The report suggests that these property types have a particular appeal to millennials and senior buyers in California. The median sale price for single-family homes in December was $588,140, exhibiting a comparatively smaller increase of 1.8 percent over the preceding year.
A crucial factor influencing the market dynamics is the rise in interest rates, causing a strain on the budgets of potential buyers. Zillow economist Aaron Terrazas points out that affordability concerns and a decline in millennial buyers have contributed to the softening of LA's real estate market since late summer.
The data further reveals that sellers in the condo and townhome segment may face extended listing periods compared to a year ago. In December, the average condo spent 10 days longer on the market, and many of these units sold at a discount, with the median sale price being 1.6 percent below the list price.
An interesting facet of the report is the exclusion of newly built properties from the sales data. This limitation suggests that the market dynamics might differ for brand-new units. For instance, condos in recently constructed complexes like Metropolis and Ten50 Grand in Downtown LA command significantly higher prices, with Metropolis units selling for over $1,100 per square foot in 2018—almost twice the Downtown average and three times the price of a typical existing condo in Los Angeles County.
In summary, the current state of Los Angeles's real estate market, as evidenced by the California Association of Realtors data, showcases a cooling trend with declining sales, a modest increase in prices, and notable variations in the performance of newly built versus existing properties. The impact of rising interest rates and changing buyer demographics adds depth to the narrative, offering a comprehensive understanding of the market forces at play.
