The housing market is on fire!

Housing Prices in Los Angeles

The housing market is burning a trail through its way back to 2007 prices. Is it a bubble?

This is a question no one can answer with certainty. What’s certain is that there are the few elements driving the increases, including:

• Interest rates
• Inventory
• Competition

Low interest rates have been in place for some time now, and they have brought some balance to an unstable market. When these rates are coupled with constrained inventory, home prices are increasing by leaps and bounds. Inventory levels are a gauge for future values of properties, and the levels have been low since the middle of last year and continuing to shrink.

For those who thought they would never hear it again… what a great time to be a seller.

The market has been brutal to buyers. Most properties are receiving multiple offers and under value properties are receiving 30 to 40 offers. Only time will tell where the dust will settle.

Housing inventory in Los Angeles at decade lows

California and especially Southern California real estate numbers have been largely affected by low inventory, with Los Angeles seeing a whopping 60% fall from 2010 inventory numbers. The high demand (we are seeing multiple bids on properties in areas like Echo Park) and lower inventory is bringing up home prices – good for homeowners needing to sell, not as good for those looking for the lower-priced deals. Strangely enough, the modest increase in sales we have seen does not appear to match up with the significant drop in inventory (meaning a home sold means a home no longer for sale), however investor money and low down-payment buyers are the ones buying, according to DoctorHousingBubble.com.

los-angeles-inventory

Foreclosures account for less than half of shadow inventory

From October 2011 to October 2012, the national shadow inventory decreased to 2.3 million units – that’s down 12.3%. Current inventory is looking like a seven month supply and in terms of dollars we are looking at $376 billion. Seriously delinquent properties represent 1.04 million of those units, while 903,000 are in foreclosure, and 354,000 are REOs according to CoreLogic. That means that over half of the shadow inventory are delinquent, but not yet in foreclosure.

By the end of October 2012, California ranked second in serious delinquencies and saw a 9.7% decline. At the same time in the state, home sales have jumped 15% and prices 19% year over year.