CALIFORNIA - Los Angeles, California, real estate is currently experiencing an upswing, but some analysts predict a decline in home prices in 2023. This is partly due to historically low-interest rates, which have helped boost buyers' purchasing power. This will result in a price dip and a sales volume drop. However, the future of Los Angeles, California, real estate is also uncertain. Zillow's 2023 forecast predicts prices will remain flat or decline in specific regional communities.
In Los Angeles, home prices rose in the Millennium Boom, only to plummet during the financial crisis. Since then, prices have been regaining their footing. A small bump occurred in 2009 due to stimulus programs, but that was not sustainable. The market experienced another drop in 2011, primarily due to a lack of fundamental support.
Home prices in southern California are likely to stay flat or rise. A decline of 5% or 10% is possible if there is a recession, but the more likely scenario is a flat market. Zillow's home price index measures home prices across the state and reflects changes in the composition of home sales. Orange County is currently nearing its peak price, while San Bernardino County and San Diego County have both seen a decline in home prices.
Rising interest rates have made many homebuyers pull back from the market. This pandemic has also hurt lower-income Californians, who have been unable to participate in the recovery. The housing market is likely to slow in 2022, and lower-income households are expected to remain underrepresented in the market.
Millennials will continue to drive the housing market for years to come. These individuals are the most educated generation in history and outnumber baby boomers. Most millennials are in their early 30s and looking to purchase their first home. The number of millennials is expected to remain strong, particularly in areas surrounding major cities. Despite this, housing inventory is at an unhealthy low. This will make meeting demand a challenge.
In the short term, single-family home sales have dropped from last year and are down 7.8% from last month. The median price in southern California is 795,000, which is 4% higher than last August when it was $760,000. Meanwhile, sales of condos and townhomes have fallen. According to the California Association of Realtors, home prices are expected to decline by seven percent by 2023. In addition to this, rising inflation will likely push home prices down.
A strong job market supports the housing market in California. Many factors, including great year-round weather, exceptional parks, and a high education rate, contribute to this. These factors make the state a desirable location for both young and old.
