Ten offers - all over asking price. Down-payments ranging from 20-50% or more. Buyers removing their appraisal contingencies, confident that their offers of 5-10% over asking price will nevertheless will be approved by independent appraisers. And if not, they're able, willing and eager to pay the difference in cash.
In what highly-desired section of Los Angeles is this happening? Studio City and especially Sherman Oaks, due to its proximity to the 101-405 freeway interchange.
What's happening in the Valley is two-fold and it's definitely not a "bubble." First, since film-making has come back to L.A. due to financial incentives initiated by Mayor Garcetti, there has been an influx of film people with the money to purchase homes. Second, because the Westside is very expensive and has experienced a similar migration of tech professions to corporate media giants in Playa Vista ("Silicon Beach"), many people who live and work in the Westside have made the decision to buy in the South Valley, especially Sherman Oaks, and have grudgingly accepted they will suffer the commute on the 405 freeway through the Sepulveda Pass.
Migrations of both classes of well-paid workers have created an over-supply of well-qualified buyers for the amount of housing available. This is what's driving South Valley prices in particular up.
I disagree that these conditions are caused by homeowners who don't want to sell. In fact, I know of homeowners who've decided only because of the strong demand that's tempted them into considering that now is the time to sell and cash-out.
In other words, the current real estate market is driven by an over-demand of buyers for the available supply of housing. It's basic Econ 101.
Great for home sellers, not so good for the buyers.
My essay was inspired by an article in CurbedLA.
Comments(1)