By Jeffery Marino
The housing market in Northeast Los Angeles began to slow in June, the latest month with comprehensive data, as higher interest rates took a bite out of what homebuyers were able and willing to pay.
The median price for a house in NELA in June was $1.218 million, $28,000 lower than in May (a 2% drop). It was the first decline in the monthly median since November 2020.
Year-over-year, the growth in home prices decelerated from a sizzling annual rate of about 25% from February through May to a merely torrid 19% in June.
The slowdown in price growth in NELA is consistent with conditions throughout L.A. County and nationwide.
Will price growth continue to slow?
It mainly depends on how high rates go. It took a while for rate increases that began in March to affect the NELA housing market, but with the recent rate on the 30-year fixed rate mortgage at 5.8% — nearly twice as high as a year ago – there’s no escaping the impact. On a $1.2 million home with 20% down, the monthly payment as of late June worked out to $6,500 versus $4,900 a year ago. For buyers who are maxing out their budgets to buy a home, which most buyers do, this makes a significant difference in what is affordable.
As price growth slowed in June, most other data points in the local market remained relatively unchanged.
In June, the inventory of homes for sale in NELA was down 29% year-over-year, which is a similar supply picture as in months prior. The sale-to-list ratio was also unchanged, at 115%, meaning the average buyer paid 15% over the asking price.
Those metrics indicate that it’s still very much a seller’s market in NELA. But among other market measures, we’ll be keeping an eye on that sale-to-list ratio. Here’s why: A falling sale-to-list ratio is an early indication that buyers are gaining negotiating power to drive prices even lower.