Single-family listings in Los Angeles County didn’t look all that bad in June compared to May, but when narrowed down to year-over-year performance, the decline was shocking.
Year-over-year declines of approximately 41% (2,096 vs. 3,531 units) suggest that this year’s inventory crunch is much worse than last year’s, according to a recent Douglas Elliman report, although demand from buyers remains insane .
Contracts signed in June also saw a double-digit decline of 12% (2,392 vs. 2,744) as the number of products decreased.
Jonathan Miller, author of the Elliman report, said such a sharp year-over-year decline should normalize after August. Although the report does not track prices, the drop in new listings is expected to keep prices relatively stable in Los Angeles County, Miller said.
The stable quarter-over-quarter data could indicate that the residential real estate boom that began during the pandemic is fading. There are also forces at play that are slowing the economy.
For example, high interest rates have a direct impact on buyers and can make potential sellers anxious as they may need to take advantage of their next move to get a higher price.
“It’s hard to downgrade right now,” said Tim Gavin, a Beverly Hills real estate broker and co-founder of The Healey Gavin Group, a unit of Coldwell Banker Realty. “If you lose your job, you can’t downgrade from a $2 million house with a 3% to 3.5% mortgage to a $1 million house with a 7% mortgage. It depresses inventory.”
Gavin noted, however, that the home is for sale. “There are still people who need to buy a house. They are biting the bullet today and hoping to refinance later.”
