Real Estate Market Observations by Endre Barath, Jr. Beverly Hills Realtor
Periodically I like to share with my readers, my observations about the Los Angeles Real Estate Market. Most recently I have been asked by a Real Estate Investors as to what I see as the market movers and what I consider the hurdles are in the greater Los Angeles area.
So, when I gave my answer, I thought other Los Angeles Real Estate Investors might benefit from my observations.
Some of the market movers are the fact that we are still in a low-interest-rate environment, hence this allows novice investors to continue to enter the buyer’s pool when it comes to purchasing Multi-Family Units in the greater Los Angeles.
Seasoned Investors continue to see a trend of rent increases as well as Single Family Home price increases. Hence they conclude that over time they will continue to reap a larger cash flow return from their tenants.
Large developers recognize the influx of Millennials to Los Angeles, particularly to Downtown Los Angeles. Hence, they have been building and updating many of the tired buildings as well as converting them to Luxury Rental Units and to Luxury Condominium complexes.
Generally speaking, significant trends often happen gradually, seldom do they just happen overnight. The challenge is recognizing the gradual changes as the appear in front of our own eyes and preparing and making the adjustments. I have heard comparisons of Real Estate Shifts to ‘tides’, they are barely noticeable first, but over time you notice that a massive change has taken place.
Since November 2016 there has been a tremendous increase in consumer confidence. This in turn has continued to fuel the local economy and the purchasing of everything from cars to homes on a much larger scale than most of us anticipated.
Consequently, this activity in turn maintained the already limited or should I say, the shortage of inventory in all price points, which we have been experiencing for the past two and a half years. This high demand and lack of inventory has assured that the price points remained much higher than we anticipated.
If the above factors remain, I anticipate a positive real estate environment for Real Estate Investors in the greater Los Angeles area.
Now let us look at the hurdles and their negative impact on the Los Angeles Real Estate landscape. The most important challenge we face is: Affordability or should I say the lack of Affordability of homes in Los Angeles.
The second hurdle and third hurdles are interconnected. If the interest rates climb to a significantly higher point and prevent extremely well qualified buyers from getting into their first homes. That phenomenon in turn will push the lease entry points to an even less affordable price point and over building takes place. The idea of course is to the compensate the shortage, but if it ends up over compensating then in turn will create a glut of rental properties, which in turn will put pressure on the Real Estate Investors.
All in all, since there is such a shortage of inventory for lease as well as for sale I do not see any major hurdles for the small Real Estate Investors in the long term, outside of the inability to step into the Los Angeles Real Estate Market.
Now if you are considering Investing in Real Estate in the greater Los Angeles area, please reach out to me directly!
If you are considering buying or selling a home, a luxury home, luxury investment real estate, luxury vacation homes, or luxury beach properties in Southern California, Los Angeles, Century City, Westwood, West Hollywood, Beverly Hills, Marina Del Rey, Venice or Malibu, feel free to contact me at 310.486.1002 (m) or email@example.com or visit one of my websites at http://www.endrebarath.com. I am a Pet Friendly Realtor and I contribute a portion of my commission to local animal rescue organizations.