Spring has become one of the slowest selling seasons on record for Southern California homes. Los Angeles home prices have followed a national downward trend over the past year, but have shown resilience and a gradual rebound in recent months.experts tell TRD The Los Angeles market has avoided sharp price drops due to lack of inventory, although last year’s “ideal pricing” has been squeezed out of deals by rising interest rates and other economic headwinds.
Odeta Kushi, an economist at First American, said home prices will rise month-on-month through 2023.
“The Los Angeles real estate market continues to face chronic supply shortages, and with a limited supply of homes for sale, any seasonal uptick in demand is an Econ 101 for home prices,” Kushi said.
First American found prices were down compared to last year’s booming market. In March 2023, the median home price in Los Angeles was $870,000, down nearly 5% from $912,000 a year earlier. However, the median price has climbed since the beginning of the year. That’s up nearly 3 percent between February and March, when the median was $845,000.
Price drops are already common in the luxury and ultra-luxury sectors. Some prime homes in Los Angeles have experienced significant price corrections. Celebrities Ben Affleck and Jennifer Lopez made headlines earlier this month when they purchased 2571 Wallingford Drive in Beverly Crest for just under $61 million . The home had an asking price of $75 million in March.
Other price cuts include 55 Beverly Park Way, owned by California Pizza Kitchen co-founder Larry Flax. In February, it listed for $48 million; in May, it relisted for $42 million.
There was also a price correction in the single-digit luxury market. A newly constructed home at 133 West 31st Street in Hermosa Beach dropped from an asking price of nearly $6 million in February to a listing price of $5.5 million in May.
The Culver City home at 3256 S. Sherbourne Drive has dropped $150,000 since March, when the asking price was $1.6 million. It’s currently listed at $1.45 million, said Evan Haug, founder of Always Buyers, a platform for discounted properties.
“Aspirational pricing is correcting. You need to manage expectations now,” Haug said.
“Listings under $2 million are more sensitive to the macroeconomic pressures of supply and demand. There’s not a lot of supply there; inventory isn’t keeping up with demand,” he explained. “There’s also pressure on the demand side. Affordability is falling as interest rates are rising and market confidence is falling. We’re not seeing the price growth that we’ve seen in the past. We’re seeing bidding wars, but not the frenzy of 2022.” war.”
The price reduction also reflects the flexibility of sellers. Many sellers have rejected proposals to lower home prices during the first rate hike in 2022. Discussions with sellers about adjusting prices have been easier this year, said Derek Reilly, a Westside Expert agent with Lyon Stahl Investment Real Estate in West Los Angeles.
“In any market, it’s all about the motivations of the sellers. If they’re just testing the market, they won’t be open to lowering prices,” Reilly said. “There are only three reasons a property won’t sell: price, price and price.”
