Los Angeles Housing Market

Housing Forecast for Los Angeles 2018 to 2020

The real estate/housing market in Los Angeles enjoyed good growth during 2017. And predictions are for higher prices and good conditions for sellers.

However, the stats for January 2018 were a little sobering. According to curbed LA,  only 4,847 homes were sold in LA County. That’s an alarming drop from 6,613 in December and much less at 5,188 sales in January of 2017.

Prices grew $41k this spring of 2018. Predictions are for continuing high prices due to ongoing shortages.

The wild fires had an effect, in LA County and hitting regions such as Sonoma and Napa valley regions hardest. The insurance driven recovery should revive the housing market in LA.

The losses were estimated at nearly $10 billion with a $500 billion hit to the economy. The numbers are similar to the floods experienced in Houston TX or Miami FL .  Some homeowners are discovering they weren’t covered sufficiently with their home insurance.



The California Association of Realtors Outlook

CAR reported that:

  • single-family home sales fell 7.6% in January down to 388,800 and down 2.9% from January 2017.
  • January’s statewide median home price was $527,800, down 4.0% yet still 7.3% higher than January 2017.
  • entry level homes in California rose to $220,000 in California, up more than 10 percent from 2017 when entry-level home averaged $200,000.
  • the DOM for a single-family home remained low at 27 days in January, compared with 36 days in January 2017.

The California Department of Insurance said the fires cost $9.0 billion in insurance claims so far, which was 3 times the $3 billion claimed previously.  For the next few months however, California housing will be in extra short supply.



Fires might actually be an unfortunate distraction from the housing crisis that’s existed for many years now in Los Angeles and across the whole state of California. The state just can’t seem to get a handle on the need for more homes.

The OC Register reports that CEQA lawsuits against developments are a serious issue for housing, especially in the LA area. As Los Angeles residents suffer financially, and while housing crash rumors float around, prices are rising.  You’ll need an income of $120,000 to buy a home in LA in 2018.

Prices of condos in downtown LA are reportedly $90,000 higher than last year.

Insurance Companies Fielding Claims from Homeowners

Is it instinct or just common sense that California will continue as the most desired place to live on the planet? Does the climate in San Diego, Sacramento , Bay Area, and Los Angeles along with the high paying jobs, interesting geography, lifestyle and recreation, California is a magnet for people around the world.




Infographic Courtesy of CAR.org – LA Buyer Profile

In 2017, real estate sales in 2017 in California eased however house prices remain high in Los Angeles, Orange County, San Diego, and San Francisco / Bay Area housing markets which had previously approached prerecession highs. But will they rise further and is this the right time to invest in an income property?

The short answer is Yes. Houses for sale in Los Angeles County and Orange County are in short supply and new residential development is not keeping pace. It would take a market crash to stop the price rise and even then it would only be for a few years. For wealthy investors, a few years is well worth the wait. The question is where to get a realistic price? The hunt continues.



Santa Monica House Prices

Average House for Sale Still Sells

CAR reports the average house price in LA rose about 10% in late summer of 2017. San Bernardino, Riverside, and Orange County had strong price growth of 8% to 10%.   Contrast that with the drop in the Bay Area of more of about 3% or $14k to $33k for detached homes and you realize LA is a more attractive housing market for property investors.

The effect of the fires will be to reduce availability and raise prices. So not much relief in site for the LA market. As in most housing markets across the US, millennials have been shut out of the markets. They’re in their child bearing years and have saved up small fortunes to ready them to finally purchase. They’ll be buying in LA or Orange County somewhere.

Sales volume actually increased 11.5% in the last month, so homeowners appear to be loosening up finally.  Realtors are wondering how they can get people to sell their homes. Inventory is the big story for the fall of 2017.

This graphic from CAR.org’s latest report shows inventory in California is sharply down from last year. Sales above $500k were up up. Active listings in the lower price ranges are down considerably ( -10% to -28%).

Screen capture courtesy of CAR.org

And buyers
real estate investors are hopeful they can find the right property in the right city or zip code. Zillow has forecast house prices in Los Angeles to rise throughout 2018 while CAR shows it moderating. A lot depends on the political climate and interest rates.

Screen Capture courtesy of Trulia

We should keep in mind that only 30% of Californians own a home so the door is wide open for opportunity and new sales, particularly with first time buyers.  The problem is that homeowners don’t want to sell and buyers can’t afford the prices.

Why are Buyers Buying in California?

CAR’s 2016 survey showed only a small portion of buyers buy property as an investment. Only 13% are real estate investors.

California Home Buyer Survey Buyer Survey – Screen Capture courtesy of CAR.org

The US economy will pick up steam and Californians will be buying a home again even if they have 1 hour+ commutes, higher interest rates, and out migration to remote towns.

Check out the top housing factors below affecting housing prices in discover a better homes for sale search process.




The Telling Stats about LA’s Forecast

If buyer’s are hoping for bargains in the next 4 years, they’re unlikely to find them. Despite a dip in September, prices for homes and condos are up $24k to $30k from one year ago. Are the Asian and Persian buyers pulling out of LA?  The Trump instability and trade issue might be a pause before even more money pours into the reviving American economy.  Make American Great Again, also creates excellent investment opportunities in California, paying out in $US.

  • jobs being repatriated back to the US from Mexico and China
  • employment already good and rising
  • the end of Obamacare?
  • the end of Dodd-Frank restrictions on lending
  • general Federal easing of real estate development expected
  • it will take some time for mortgage rates to rise
  • still isn’t enough housing to house LA’s growing population (recession)




It’s the Los Angeles housing forecast that is perhaps one of the most interesting forecasts for the US for the next few years. California’s housing developers are hard pressed to build homes to house the population. We can speculate that homes will rise in price for the next 4 years. It’s not easy to predict though when people are talking real estate bubbles, NAFTA cancellations, Brexit, skyrocketing prices, vacillating oil prices, reduced immigration, and presidential elections.  




malibusmall
Malibu Coastal. Photo courtesy of marisolmalibu.com

Overall, the Los Angeles forecast was very good for sellers with plenty of demand and with the average price of a home hitting $690,000 last summer. Affordability is dropping though and only 30% of LA county residents own a home. 

Given the nasty commutes Los Angeles workers are enduring, this housing crisis should be a top priority for the California state governor.

A few pundits are suggesting homeowners need to build granny flats in everyone’s back yard.  Political battles are forming over the effect of regulations on LA’s and California’s home construction. Who will win? Will they battle Trump head to head to stop new development?

The situation may become worse than what San Francisco, Vancouver, and Toronto have been through, and what Miami, New York, and Boston may be into now.


Save your Money on Auto Insurance Quotes in LA

Are you paying too much for car insurance in Los Angeles? Some zip codes and neighborhoods are subject to higher premiums. Are you okay with that? How about finding lower car insurance rates and making it a habit of shopping for auto insurance every year? 2017 is a good year to save:)

Here’s the Hottest Zip Codes in Los Angeles

LA Curbed’s list of hot zip codes: Los Angeles’s 90012 zip code is shaping up to be the 2nd fastest growing area in the nation at 8.8% growth, 2nd behind only Gilbert AZ. The 90012 zip code includes Chinatown, the Civic Center, Elysian Park, Victor Heights, parts of the Arts District and Bunker Hill, and most of Little Tokyo.

Here’s the LA Times hot zip code list:

Santa Monica 90402 – Average home price: $3,237,500

Hermosa Beach 9025 – Average home price: $1,693,500

Lincoln Heights/Montecito 90031 – Average home price $458,500 +14.6%

City Terrace  90063 – Average home price: $320,000 +18.5%

Marina Del Rey 90292 – Average home price: $2,157,500 +23%

Manhattan Beach 90266 – Average home price: $2,100,000 +10%

Compton – 90220 – Average home price: $285,000 +9.8%

Playa Del Rey 90293 – Average home price: $1,517,500 +26.5%

Toluca Lake Studio City  91602 – Average home price: $1,022,500

Read more on the best zip codes in the US for investors and homebuyers.

LA Home Prices Fully Recovered?

The Los Angeles home price graph below courtesy of Zillow shows how prices have almost returned to pre-recession values and are beginning to level off. To forecast prices and demand for the LA region, we’d have to examine the cause of the moderation and if it’s a fact. Here’s LA’s hottest zip codes.

 

Last year, home prices in LA rose 7.8%. That’s a fairly strong ascent to just snap out of, so we’re left wondering what really is the outlook is for the 2017 to 2020 period? With prices high and rising, it makes sense that the number of buyers will dwindle (preferring to rent) and a leveling off would occur. It seems however, this is more of a guess by forecasters not really backed up by a solid consideration of all the factors that will be in play during the next 4 years – defeated regulations, growing economy, and reduced immigration.

Homes for Sale in Los Angeles: Prices, Trends from Zillow

Try the Zillow Home Search Widget to learn more about LA Homes for Sale. Realtors, click here to hear more about the Zillow leads program:

 

Home Sales Volume Chart: Los Angeles

la-home-sales-firsttues

Is there a Housing Bubble Market?

harvardHere’s the thing. According to a Harvard real estate guru, bubbles don’t burst until demand dries up — an increase in unsold inventory.

Do you honestly think there will be no demand for coastal California property, especially Los Angeles county or Orange county?  As you’ll see from the data in this post below, there is huge demand for property. Supply is the problem.

Factors Affecting House prices and Availability in LA

  1. Housing Demand – High overall demand – “all cash bidding wars” in some cases
  2. Housing Supply – Throttled, supply is far from what’s needed
  3. Mortgage Rates – Continuing Low, especially in light of global economic slackening
  4. Down Payment and mortgage rules – Banks are withdrawing FHA loans however some are offering downpayments as low as 3%
  5. Regional Employment – Very low and remaining low
  6. Buyer Income – low and not rising much
  7. Home Prices – High and rising – out of reach for many buyers – many consider LA homes grossly over-priced
  8. Demographics – Millennials coming into family and home buying years and LA millennials have had the lowest rate of home buying (pent up demand)
  9. Number of Renters – increasing fast
  10. New Home Construction: slow (100k to 140k per year)
  11. Economic-Foreign Trade – Trump expected to reduce US deficit
  12. Election Year – Voters uncertain of what Trump will create
  13. Taxes on Sale of Home – Tax situation is great for sellers




Historical Data

This intriguing graphic courtesy of https://journal.firsttuesday.us/ reveals that home sales in Los Angeles is actually well down from historical levels. The likely reason for that is lower income buyers simply have even less income to buy and of course the high prices. Home ownership is lowest in California.

la-case-schiller-index

A complete recovery of around 110,000 annual home sales will likely occur in 2019-2020, as end user demand in Los Angeles County is buttressed by a Great Confluence of Baby Boomers (Boomers) and first-time buyers who are lured by further employment (needed to accommodate population growth of roughly 1% annually since the beginning of the Great Recession).

That’s a forecast growth of about 20,000 homes per year over current current 2016 levels.

Another interesting stat provided by firsttuesday is the very low rate of home ownership and how much it’s plummeted. It’s on the uprise now, and you’re left wondering whether Trump’s renewed emphasis of America First will encourage the growth of home ownership?

la-homeownership

LA Economic Forecast – Very Rosy

la-economic-forecastThe forecast for economic growth for the Los Angeles is optimistic at this point. Visit https://laedc.org/2015/09/30/new-2016-2020-economic-forecast-published-93015/ for the most recent info and their forecast up to 2020.

 

This Stat from CAR shows homes have been on a rollercoaster ride of sorts yet, 2016’s expected resale volume is still well down from 2011 and 2012’s highs. If incomes should rise in the LA area, it could have the effect of stimulating new housing construction and increase sales of homes. With the number renters skyrocketing, there’s a huge pool of potential buyers.

Home reSales Forecasts 2016f

la-housing-stats

This graphic reveals the exceptionally high cost of renting in Los Angeles compared with other major centers. The housing availability problem isn’t isolated to California or LA, it’s a US wide issue. The high housing costs in the coastal California areas however may prevent many skilled workers from migrating to LA to work. Startups for instance may be forced to leave San Francisco, Bay Area and LA because of the cost. San Diego County may be a better option for the short term.

la-rentals

This is a short term forecast from LA realtor James Campbell, who believes prices will drop?!

What can we conclude from the above data? That LA’s market for realtors is very promising, yet just as it is in San Francisco, Toronto and Vancouver, finding sellers and convincing them to sell will be a key challenge.  Digital marketing efforts could be vital to any realtor hoping to maximize demand and achieve highest price for their clients. Is this the right year to buy rental income property?  Find out which are the best investments in 2017 including investing in real estate.

Check out other posts providing realtor tips, prospecting strategies, social media strategy, and tactics used by top flight luxury realtors and even lead generation companies.




Related posts: Housing Market 2018 | Florida Real EstateBlockchain Real EstateSan Francisco Housing ForecastLos Angeles Housing Market | Sacramento Housing Market | San Diego Housing Market | Real Estate Agents | Blockchain Real Estate | Toronto Real Estate SEO | Vancouver Condos | Toronto Condos | Vancouver Housing Forecast | Affordable LeadsRealtor Branding | Realtor Branding |  Realtor Growth Hacks | Realtor Skills | Realtors Benefits | Home SearchHousing Crash  | Stock Forecast | Foreign Exchange Rate Forecast | USD CAD Exchange Rate Predictions |  Oil Prices | Mortgage Refinance Rates 

Gord Collins —  I generate leads for realtors in Los Angeles, Phoenix, Denver, Seattle, Chicago, Boston, New York, Dallas, Houston, San Antonio, Austin, St Louis, Minneapolis, Green Bay, Charlotte, Tampa, Miami, Orlando, Toronto, Sausalito, Santa Clara, Mountainview, Fresno, NAPA, Tiburon, Oakland, Palo Alto, Anaheim, Beverly Hills,, San Diego, San Francisco, San Jose, Sacramento, Encinitas, Orange County, LA County, Riverside, Malibu, Santa Barbara, San Bernardino, Portland, Washington, Atlanta, Irvine, Nashville, Sunnyvale, Salt Lake City, Riverside, Rancho Cucamonga, Costa Mesa, Thousand Oaks, Simi Valley, Glendale, Oceanside, Long Beach, Huntington Beach, Carlsbad, Santa Clarita,  Henderson, Mesa, Temecula, Kirkland, Redmond, Kansas City, St Louis, Stockton, Scottsdale, Palm Springs, Chula Vista, Escondido, and Santa Monica, Venice Beach, and La Jolla. See additional housing market reports on New York NYC, San Diego CA, and San Francisco CA.

How to Capture Your Market with Strategy

Basics of Strategy: Learning to Win Faster, Easier

We never question why the Amazons, Facebooks, and Googles of the digital world soar like they do. We might assume it’s money, and there’s no doubt that funding carries big advantages. However importants funds are, it is strategy that creates the win, not battle tactics, systems, or armies of staff.

These iconic brands have wasted money and learned from it. And they’ve also learned not to compete. Their strategy was to target a promising market, usually on the cusp of some technology trend, then dominate it with minimal worry about competitors. See this interesting post on CNBC about Google  and the type of culture they have (including the freedom to fail fast).




This post will be of interest to any marketing person or business owner who want to simplify strategy and use it to win a new job, win their market, or improve their own profitability. Mastery of overall digital strategy is a difficult matter – from plan to strategy design to execution and adopting systems to help you, there’s a lot to know. I’ve discovered that learning and staying on top of it requires a lot of energy and stamina.

“Everybody wants to talk about strategy and competitive advantage, but nobody wants to admit they don’t know what it is,” — Tim Lewko, Vancouver Strategy Consultant.

So why study strategy now?  That’s easy — there’s new software called Artificial Intelligence Marketing Software – a brilliant solution that goes way beyond marketing automation to give creative marketers tremendous power to be strategic. And to stay employed, we’ll need to be savvy with the new AI software and its power.

The onus to retrain, reposition, and upskill to stay current with AI will be ours. Businesses and government may not want responsibility for helping us discover how we’ll fit into the workforce in this new era of AI assisted business. This is the big struggle for us all.

This isn’t an article on AI adoption, yet it is difficult to talk about digital marketing or strategy now without AI coming into the conversation. When you have a moment, read this Marketingweek post on the implications of AI for marketing professionals.

Amazon Prime Air drones – more of a symbol than a serious solution. They may never be allowed to fly all over the place! Pic Courtesy of Amazon.com

With artificial intelligence software making headway in marketing departments, it’s the higher level skills of strategy and planning that will be in demand. Ancient Chinese War Lord Sun Tzu would agree entirely, that higher level strategy formulation is more important than battle tactics – that “tactics are the noise before defeat.”

You’ll find a 8 point plan of basic strategy below.




Western Business Philosophy: Attack Your Competitors Mercilessly

Western thought on business strategy is that you should attack your competitor’s strengths head on and crush them. Sun Tzu advised us to focus on and exploit their weaknesses. A new school of strategic thought is that you should avoid battle entirely – that competition for losers. This means all of your time and resources might go into understanding, engaging and winning the market.

In marketing, you have the ability to create a unique brand that battles for positioning in the customer’s mind. The only actual competition you might face is in buying Adwords and Facebook ads in competition with other businesses. That can be destructive to your budget.

Every once in a while, we may have to listen to some of Sun Tzu’s battle tips, yet avoiding direct warfare is better. And you do that through smart positioning (as Jack Trout wisely advises). As part of your digital marketing strategy, you can position your brand to ruin the value proposition of a noisy, troublesome competitor. In this way, you take control of the market without direct battle, just like Sun Tzu actually did advise.

From Rank Amateur to Beating a Pro

You can master strategy. Years ago, I enjoyed the challenge of chess which you may know is a game of thoughtful strategy. My friend Albert O was a chess champion from the Philippines. That was interesting that I became friends with an expert level chess player. He beat me quickly everytime without much effort (the first time in 3 moves). Embarrassed, I sought and found good chess strategy book from the library and I delved into the different master techniques.

Long story, short, months later, after 30 to 40 games I finally beat him.  Time spent on learning strategy is well spent and Albert was pleased that he had to try now to beat me!  I don’t believe I ever met someone with a better attitude.

Test to Discover Which Strategy Will Work for You

Interestingly, I found some particular strategies that worked best for me, after trying and testing a variety. I was looking for something basic where I could at least delay Albert from beating me. The Queen’s Gambit or the King’s Gambit seemed to work best against him and others. I don’t know why it worked for me. It could be that players don’t understand how to defend against particular strategies, not what I did.

Your strategy might be one unique to your skills, resources and capabilities, and not a particular thematic approach.  For instance, your AI marketing or marketing automation software may encourage you to do things a certain way, when it doesn’t work for your company in your market.

And the matter of resources vs skills is important too. Your strategy might change depending on how much money you have to hire a coach, your coworker’s skills, software and service subscriptions, advertising channels, whether you can improve your product, and with respect to the opportunity in your specific market.

Learn more about using AI marketing solutions in real estate.  The real estate market and Realtor professional is being tranformed by AI.

Today, because of how Google and Facebook have monopolized online marketing, business owners just pay to play, and they do it without much strategy. If you search on Linkedin or Indeed.com, you’ll discover little demand for the title: marketing strategist. Because the boss assumes he or she knows enough and can steer the ship. But we know a lot of CMOs are quitting their jobs because being the chief strategist is a tough job and they’re failing.




If you manage a business, you’ll have to learn strategy yourself, and improve, or hire a strategist to help you. If you’re a control freak, that’s fine. Hire them as an assistant. You’ll likely get more business and profit value out of this person rather than hiring another button pusher in your marketing department. With artificial intelligence software making headway in marketing departments, it’s the higher level skills of strategy and planning that will be in demand.

What’s nice about practicing strategy without big money, is how you’ll need to think and work harder. And you’ll certainly have less waste as you learn the ropes.




As handy as AI marketing software is, it won’t be able to plan your digital marketing strategy, social media strategy, SEO strategy, outreach strategy, or dream client acquisition strategy. This is your domain.

The 8 Basics of A Strategic Plan

  1. study market demand and the gaps in service
  2. build expertise in the market gaps you can win
  3. study your competitor’s strengths and learn how to avoid them or defeat them
  4. discover how to acquire and retain maximum value from customers/clients
  5. create a business model of success to give you market dominance
  6. shape your value proposition in a way that casts light on your opponent’s weakness
  7. identify the tools and resources you’ll use to build your UVP and unbeatable positioning
  8. carry out your plan with an integrated approach which also allows you to leverage your key strengths

Although you’re trying to avoid direct battle with the competition, your prospects are aware of them.  We all like to have options. For that reason, you would be wise to use the above 8 building blocks to get your audience focused on your strengths only – to build an undying preference for you.

You destroy your competition by how you present your strengths in relation to customer’s needs and your competitor’s weaknesses.

For instance, Google never bad talks the competition. Google is positioned as an internet service company that gives people what they want. Its competitors didn’t and still don’t. The competition’s weakness is that they needed revenue, but Google didn’t initially need immediate return. Google positioned itself on the word free, fast, and on fulfilling the web searcher’s quest without asking anything in return. It created sustained brand value.

Similarly, Amazon positioned itself as the fastest, most complete online shopping portal. Lots of products and fast cheap shipping has allowed Amazon to take marketshare from brick and mortar stores across the world. The talk of driverless cars and drone delivery bots just drives home the point that competitors can’t do what they can.
What can you do that your competitors can’t?

With artificial intelligence driven marketing software rising, companies are looking to jettison agencies and bring AI marketing in-house. A CEO looking at value and power might not believe an agency can build the necessary top-level skill and expertise in their industry. Nor can they bring the whole agency in-house.




Instead, the smart CEO will look to hire one or two skilled strategists with industry expertise to manage marketing campaigns with the new AI software. It’s both efficient and very powerful. Now more of the marketing budget and time can go directly into their campaign. We could be talking about anywhere from $50,000 to $300,000 more dollars to put directly into marketing campaigns and use AI marketing robots.

That points to a demand for the new type of marketing professional. When the AI tsunami hits, there will be a frenzy to achieve the above situation. Any company that has an extra $300k to put into their marketing will grow marketshare fast. Too much of the budget is going to wages.

Creativity and Innovation Will Make the Difference

Everyone will have marketing automation in place soon. What they don’t have is enough talented, creative senior people who do their work strategically. Let’s face it, if you have a staff of 5 marketers who are talented, your AI marketing solution can really power them up.

AI marketing solutions do the dirty work of testing, timing, and reporting. Your strategists guided by you, can find out if something like the Queen’s gambit or King’s gambit is the best strategy. Or perhaps, they’ll discover they have the power now to use an even higher level strategy, going up against IBM’s Watson system.

On that note, who will win the Marketing AI war? IBM’s Watson or a smaller solution such as Boomtrain or Albert? Whoever is the best strategist.

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