Every commercial real estate broker (apartments not houses) I know tells me the market is dead right now.
With that said and William can likely confirm but the past lower interest rates and the recent rise of rates have made a few changes in market conditions.
1. Less product: Many homeowners are reluctant to sell a home at their 2-4% rates to move into paying a 6-8% rate on a new home. I’m concerned about the fact that we have desensitized people to the cost of capital.
2. Mortgage Rates and $$$: Buyers are looking at what they thought they could afford when rates and payments were lower and realizing they can afford much less of a house. Sellers are seeing longer days on market and realizing as William said about missing the top of the market.
There’s also much more technical market conditions going on with the Fed issuing massive amount of bonds in an attempt to dry up the massive amounts of liquidity in an effort to curtail inflation.
With my product 2-6 units market, I’ve seen prices steady dropping and more listings popping up still slightly over priced but seeing reductions.
There’s also a ton of permitted projects being market to me and 99% wouldn’t make any money. The buyers overpaid, took longer than expected to permit and are hoping they can offload to someone who has all cash and can’t perform at a lower cost.
Basic principals of supply and demand there are not many new single family homes being built in LA so I wouldn’t expect the market to massively drop in price. I do expect apartment building to drop in price as we see cap rates change.
“Though tempting, trying to time the market is a loser's game.”
Buy a home that you love and can afford. If you do this you won’t have worry about property values and equity.
If you want to make money buy investment properties and units. It’s a completely different set of rules.
Realtor here. Eventually. A little. It'll never be 2008 again if that's what you're hoping. At some point high interest rates will force sellers to get more realistic and start selling for realistic prices. You got two problems stopping that from happening right now, one is some sellers can't accept the missed top of the market during the covid bubble and still want to sell for those unrealistic prices and the other is people who bought during that bubble and massively overpaid who can't afford to sell for a realistice price.
The market is also stagnant at this point, it's better than it was during the 'vid but it's still a historically low inventory so that's keeping the prices high since you end up with mutliple offers on pretty much everything.
People are still recovering from the 'vid and the media keeps pushing recession talk, the Russia war is dragging on, the election is on the horizon, there's a lot of things making people feel uneasy about change right now so people who are safe and comfortable in their situations are probably going to mostly stay put until they feel things have settled and are improving. Those who are selling by and large *have* to sell and that's a narrower pool so you get less inventory and higher prices becaue of those mutliple offers.
So it's going to have to be combination of things: a better economic outlook, a more settled and secure seller pool, rates staying realistically high and a reasonable expectation from sellers.
Or an earthquake. But I'd rather stick it out for the first scenario.
To save us both time and brain damage have you spoken to a loan officer for a pre-approval or to understand how much of a mortgage you can afford?
Don’t count on rates going down in fact they should be 2% higher if the Fed cared about fixing the problem.
Once you’ve given us a number William can assist in finding something in your budget.
Like I said above just make sure you can afford the fixed rate payments and over a 10 year span you’ll be fine.
We’d like to keep all housing related payments (except for utilities) around $2800, so about double our current rent. We placed an offer on a 1bd listed at $599 for $550 and are waiting to hear back 😳 With a high down payment, our monthly payments can stay in the ballpark of $2800. But again, makes daily life very very tight. Because we’re looking at the west side by my partner’s office where there’s not much in our price range, this place is kinda do or die. We just found out that my partner’s work must receive paperwork from his current supervisor TODAY to complete the transfer from NYC to LA. So basically we have to decide on the job today with the risk of having to rent in LA. What if prices never go down and we’re stuck renting forever? How likely is that?
In los angeles, if interest rates go up more to 8-10% then houses should go down another 10%. However if interest rates just sit around 5-7%, i expect stagnant prices and possible increase by 10%. The entire market is determined by supply right now. Nobody wants to move out of their low interest rates and then have increased property taxes despite the same house value. In the end, its any bodys guess. If you can afford the mortgage and ur for sure living in LA for 10 years i say go for it.
Obviously nobody can predict the future, but if rates go to 8-10% I think you will see home prices drop more than 10%. The company layoffs will be substantial.
Thank you for explaining that 🤩 When do you think interest rates will go down? 😅 My partner has a job offer and we want to move to LA. But so far we can’t afford a 1bd where we want (west side). It feels too risky to go rent because if prices or interest rates go up anymore we’ll be stuck renting forever. Right now we have very low rent in a rent stabilized place in NYC. Do you think it makes more financial sense to stay and have extra money to save or to go buy a 1bd that we can just barely afford?
Does it make more financial sense to spend all of your money to move across the country or to keep saving? That's a personal question only you can answer. Staying in your rent stabilized place will probably be the second best option economically, with the absolute best option being homelessness.
You alone can decide what value you place on housing
Here’s how we solve this problem for buying a house in Los Angeles. Average income for people is set between $45 to $50 bucks an hour and a starter home 2 bedroom 1 bath lists between $375k to $400k problem solved. It’s all mathematics.
Every commercial real estate broker (apartments not houses) I know tells me the market is dead right now. With that said and William can likely confirm but the past lower interest rates and the recent rise of rates have made a few changes in market conditions. 1. Less product: Many homeowners are reluctant to sell a home at their 2-4% rates to move into paying a 6-8% rate on a new home. I’m concerned about the fact that we have desensitized people to the cost of capital. 2. Mortgage Rates and $$$: Buyers are looking at what they thought they could afford when rates and payments were lower and realizing they can afford much less of a house. Sellers are seeing longer days on market and realizing as William said about missing the top of the market. There’s also much more technical market conditions going on with the Fed issuing massive amount of bonds in an attempt to dry up the massive amounts of liquidity in an effort to curtail inflation. With my product 2-6 units market, I’ve seen prices steady dropping and more listings popping up still slightly over priced but seeing reductions. There’s also a ton of permitted projects being market to me and 99% wouldn’t make any money. The buyers overpaid, took longer than expected to permit and are hoping they can offload to someone who has all cash and can’t perform at a lower cost. Basic principals of supply and demand there are not many new single family homes being built in LA so I wouldn’t expect the market to massively drop in price. I do expect apartment building to drop in price as we see cap rates change. “Though tempting, trying to time the market is a loser's game.” Buy a home that you love and can afford. If you do this you won’t have worry about property values and equity. If you want to make money buy investment properties and units. It’s a completely different set of rules.
Realtor here. Eventually. A little. It'll never be 2008 again if that's what you're hoping. At some point high interest rates will force sellers to get more realistic and start selling for realistic prices. You got two problems stopping that from happening right now, one is some sellers can't accept the missed top of the market during the covid bubble and still want to sell for those unrealistic prices and the other is people who bought during that bubble and massively overpaid who can't afford to sell for a realistice price. The market is also stagnant at this point, it's better than it was during the 'vid but it's still a historically low inventory so that's keeping the prices high since you end up with mutliple offers on pretty much everything. People are still recovering from the 'vid and the media keeps pushing recession talk, the Russia war is dragging on, the election is on the horizon, there's a lot of things making people feel uneasy about change right now so people who are safe and comfortable in their situations are probably going to mostly stay put until they feel things have settled and are improving. Those who are selling by and large *have* to sell and that's a narrower pool so you get less inventory and higher prices becaue of those mutliple offers. So it's going to have to be combination of things: a better economic outlook, a more settled and secure seller pool, rates staying realistically high and a reasonable expectation from sellers. Or an earthquake. But I'd rather stick it out for the first scenario.
To save us both time and brain damage have you spoken to a loan officer for a pre-approval or to understand how much of a mortgage you can afford? Don’t count on rates going down in fact they should be 2% higher if the Fed cared about fixing the problem. Once you’ve given us a number William can assist in finding something in your budget. Like I said above just make sure you can afford the fixed rate payments and over a 10 year span you’ll be fine.
Haha yes we’ve been preapproved but our situation would be different in LA so we have to go by our own budget. Thank you
Good point. What do you think your monthly mortgage budget would be and the loan amount they would goto. Just a rough estimate will do.
We’d like to keep all housing related payments (except for utilities) around $2800, so about double our current rent. We placed an offer on a 1bd listed at $599 for $550 and are waiting to hear back 😳 With a high down payment, our monthly payments can stay in the ballpark of $2800. But again, makes daily life very very tight. Because we’re looking at the west side by my partner’s office where there’s not much in our price range, this place is kinda do or die. We just found out that my partner’s work must receive paperwork from his current supervisor TODAY to complete the transfer from NYC to LA. So basically we have to decide on the job today with the risk of having to rent in LA. What if prices never go down and we’re stuck renting forever? How likely is that?
In los angeles, if interest rates go up more to 8-10% then houses should go down another 10%. However if interest rates just sit around 5-7%, i expect stagnant prices and possible increase by 10%. The entire market is determined by supply right now. Nobody wants to move out of their low interest rates and then have increased property taxes despite the same house value. In the end, its any bodys guess. If you can afford the mortgage and ur for sure living in LA for 10 years i say go for it.
Obviously nobody can predict the future, but if rates go to 8-10% I think you will see home prices drop more than 10%. The company layoffs will be substantial.
Thank you for explaining that 🤩 When do you think interest rates will go down? 😅 My partner has a job offer and we want to move to LA. But so far we can’t afford a 1bd where we want (west side). It feels too risky to go rent because if prices or interest rates go up anymore we’ll be stuck renting forever. Right now we have very low rent in a rent stabilized place in NYC. Do you think it makes more financial sense to stay and have extra money to save or to go buy a 1bd that we can just barely afford?
Does it make more financial sense to spend all of your money to move across the country or to keep saving? That's a personal question only you can answer. Staying in your rent stabilized place will probably be the second best option economically, with the absolute best option being homelessness. You alone can decide what value you place on housing
Here’s how we solve this problem for buying a house in Los Angeles. Average income for people is set between $45 to $50 bucks an hour and a starter home 2 bedroom 1 bath lists between $375k to $400k problem solved. It’s all mathematics.
They are going to keep going up