By Jeffery Marino
Home prices in Northeast Los Angeles decreased in September as mortgage rates averaged about 6%. Since then, rates have increased to 7%, so when data for October is in, prices are all but certain to be lower still.
In September, the median sale price for a home in NELA was $1.125 million, down 3% from August. Prices have declined month-over-month since June.
Looked at on an annual basis, prices were higher in September than a year ago, but the increase – 6% — is the lowest annual price growth since July 2020.
Econ 101 tells us that prices fall when supply increases. That’s not the case here. Supply remains tight in NELA, with both inventory and new listings slumping by a third in September compared to a year ago.
In NELA, home prices are moderating because higher rates are cutting into buyers’ purchasing power. At the average mortgage rate of 6% in September, the typical monthly payment on a median priced home in NELA was $2,000 higher than it would have been a year ago, or $6,700 a month versus $4,700.
The average home buyer in NELA is still paying above the seller’s asking price, an indication the market remains competitive. Another indication of NELA’s competitive market is that, on average, homes don’t take long to sell.
But those markers are weakening, too.
In September, the sale-to-list ratio in NELA was 106%, which means a buyer typically paid 6% more than a seller’s asking price. That’s the lowest ratio since March 2021 and way down from the peak of 116% in May of this year. Similarly, the median days-on-market for a home in NELA in September was 33 days, which is the slowest the market has been since February 2022.
Both of these figures are getting pulled down by many homes that were listed at top dollar in the summer and sat on the market for months, eventually selling at a discount.