Here are some points to consider.
- The housing market in Los Angeles has not fully recovered from the 2008 crises.
- Home values generally rise approximately 15-25% from peak to peak
- Higher interest rates historically go hand in hand with higher home prices
- Supply and demand is the key to soaring home prices
When I speak to my clients, it is shocking to me that so many people think we are at the top of the housing market again and that home prices will correct downward. In my opinion, this is simply not true!
Our housing prices are approximately the same as they were back in 2005-2006. That was considered by most to be the last peak in home prices. The thing to remember is that there is usually a 15%- 25% increase in property values peak to peak.
Interest rates have been rising since mid-March and as the rates go up, the cost to purchase becomes more expensive. This should drive buyers into the housing market in droves.
The housing inventory in Los Angeles is already stale. Most of the home buyers I am speaking to are commenting how few good homes there are to purchase. This has made the home buying process frustrating at best.
As interest rates continue to rise, and more and more home buyers feel pressured to get into the market, the already small and stale inventory will continue to shrink. As the inventory continues to shrink the house values will start to rise. It’s the basic law of supply and demand.
There are many more reasons why the housing market is primed to go up, but in my humble opinion, we are about to see a spike in home prices. Remember that in the scheme of things, a higher interest rate will cost you much more money over time than higher home prices.
The one point I would like to remind the reader is, that if you are planning to sell in order to buy you would be wise to consider that if the price of your home goes up so too will the price of the home you want to buy. The worst thing that could happen to a potential buyer who decides to wait is the double-edged sword of higher prices and higher interest rates.
The general rule to remember is don’t try to time the Real Estate market. It is almost impossible to do, and inevitably you end up on the losing side of the equation. Remember to be in the know and make good choices!
If you are interested in a free, no obligation buyers consultation or listing presentation please contact The Barasch Group