By Jeffery Marino
Theoretically, the current upturn in prices and interest rates should slow down the market for residential real estate because higher prices and rising rates reduce buyers’ purchasing power.
But as of May, the latest month with full housing data, there was no sign of a slowdown in Northeast Los Angeles. The data show that the median sale price for a home in NELA hit $1.25 million in May, up 26% from May of 2021.
Continued high prices reflect a dwindling supply of homes, which leads to fierce competition for the relatively few houses that are for sale.
In May, the number of homes for sale in NELA was down 35% compared to a year ago, leaving a scant 151 homes for sale in the region at month’s end. To put that number in perspective, there were 350 homes for sale at the end of May 2019, back when the median sale price was still well under $1 million (at $861,000).
Moreover, houses for sale in NELA went fast in May and for well above their asking prices. The median days-on-market in May was 26 – nine days faster than May 2021 and the fastest month for home sales in NELA since September 2018. The sale-to-list ratio, which compares asking prices to final sale prices, set another record in May, hitting 116%, fully 7% higher than it was in May of last year.
What this shows is that low inventory of homes for sale in NELA has been the driving force in the market, not inflation and rising interest rates. That’s good news for sellers who continue to command top dollar. It’s bad news for buyers, many of whom will be outbid on houses they try to buy or worse, priced out of the market entirely.