By Jeffery Marino
What’s a first-time homebuyer to do?
As home prices rise, so do down payments. The median sale price for a home in Northeast Los Angeles was $1.075 million in October. At that price, a buyer would need $215,000 to make a 20% down payment.
To make matters more difficult, buyers who need time to save up for a house are likely to find that home prices rise faster than their savings accounts. In October – the latest month with comprehensive data — median home prices in NELA were up 16% compared to a year ago. It was the ninth straight month of double-digit annual price growth. In dollar terms, the median price of a home in NELA in October rose by $150,000 compared to a year ago, and the down payment, assuming 20% down, rose by $30,000.
Of course, not all financing arrangements require 20% down, but with prices rising so far so fast, even a smaller down payment will be a big chunk of change.
Rising home prices and, by extension, rising down payments, mean that more potential buyers, especially first-timers, rely on gifts and loans from family and friends.
Getting a toehold in NELA’s housing market is not going to get any easier anytime soon.
In October, a scant 209 homes were for sale in NELA (including condos and townhomes). That represents a 34% decline in inventory from a year earlier – the largest annual decline since May 2019.
Inventory is low because buyers are snapping up homes as fast as they can. The median days on market in NELA in October was 34, which is six days faster than in October 2020. Fully 25% of homes listed for sale in NELA in October were under contract within two weeks.
Low inventory and high demand translate into high prices. The average sale-to-list ratio in October was 109%, which means buyers paid 9% more than asking on average. The sale-to-list- ratio has hovered around 109% since May 2021, when the median sale price for a house in NELA first hit the million-dollar mark.
A house is a nice asset, if you can get it or, as the case may be, if your parents can get it for you.
Jeffery is a seasoned data journalist and has covered the California real estate market for over a decade.
