Housing prices have continued to increase in Los Angeles County, despite a drop in home sales activity. New research from Yardi’s Property Shark shows that home sales in the market decreased 21% in the first half of the year, but home prices during the same quarter increased 4%.
“There are numerous factors that are driving up home prices,” Andrea Popescu of Property Shark tells GlobeSt.com. “One of them is related to interest rates on home loans that have fallen significantly, while some other aspect would refer to the increasing desire for more home space. In this regard, we noticed a slight uptick at 1% in the median square footage of homes sold in the first half of 2020, compared to the same period of 2019. The median square footage of homes sold in H1 2020 was 1,462 square feet, while in H1 2019 it was 1,452 square feet.”
The decline in home sales was expected due to market uncertainty and rising unemployment. “The uncertainty of the pandemic had a direct impact on sales activity. In the first three months of 2020 the number of transactions recorded a 2% increase Y-o-Y. After the first lockdown, sales recorded a significant drop – sales from April to June dropped 38% compared to last year,” says Popescu.
Pico Rivera was the only market in Los Angeles County to see an increase in home sale activity, while Agoura Hills and Calabasas both had the largest decline in sales activity, down more than 40% in both markets. “Agoura Hills and Calabasas are among the 20 most expensive cities in L.A. County, while Pico Rivera home prices are at the lower end of the spectrum – with the latter being the 9th most affordable city in L.A. County,” says Popescu. “Additionally, 93% of home sales in Pico Rivera were single-family homes, while in Calabasas and Agoura Hills condos make for a significant part of sales activity in H1 2020, representing 26% and 30%, respectively, of all home sales.” Popescu can’t predict exactly where home prices are heading, but she says they don’t show signs of decline. “While it’s particularly hard to predict where home prices will stand by the end of this tumultuous year, what can be said is that in the first half of the year, L.A. County median sale price went up 4% and, by the look of it, home prices don’t seem to be showing signs of decreasing,” she says.
While predicting the future is difficult, looking to the past for guidance is easier. Today, home prices and sales activity is much different than in the last recession. “Home prices in L.A. County are yet to reflect the economic downturn caused by the ongoing pandemic, so it would be hard to make such a comparison at this time,” says Popescu. “The only thing we can say with certainty by now, backed up by official data, is that in the first half of the year, sales activity fell a notable 21%, compared to last year.”