The COVID-19 pandemic had a negative impact on Los Angeles real estate market. However, as of today, people are buying houses for cash LA faster and for more than the asking price. The housing market is now thriving across the country, and the competition is fierce among the buyers.
If you are looking for a good property in Los Angeles, you need to improve your game. Since the demand is so high, you may not likely see the kind of property that may be appealing to you. Many home sellers now want to sell to professional cash home buyers, like Inhouse Offer for a huge amount of money. Yet, the market is still hot.
Why Is The LA Housing Market So Hot?
- Difficulty in buying a home
Research has shown that 90% of Californians that want to buy a house are experiencing difficulty in getting their picture-perfect home. It is challenging to purchase and own a house in LA. The cost of owning a house has increased tremendously in California. This has caused the home price in the state to be 2.5 times that in other states.
We know that the pandemic hasn’t made this more accessible too. And the demand for homes is now even higher. In fact, many professional cash home buyers are now taking advantage of the low interest rates, which further increases the prices. It makes owning a home difficult.
- Homeownership has dropped
Homeownership has dropped significantly due to the increased house prices, even with the low mortgage rates. Only about half of the households in the entire state own their homes. Others are living in rental properties.
- Rent prices are increasing
California is one of the most expensive cities for tenants. It is worse now as homeownership continues to drop due to the high cost of owning a home. Many people have seen rental properties as an alternative. This has made rent prices keep increasing. Yet, people still want it.
- Wages vs. Rental cost
Unfortunately, the wages of most households can’t keep up with the cost of rents even when the average earning in California is higher than the rest of the country. That means that the income hasn’t kept them up with the rising rents.
Before the COVID-19 pandemic, more than half of the renters in Los Angeles had 30% of their income going towards rent, and one-third of them had more than 50% of their income going to rent. For families of color, it isn’t better, as studies conducted show that chances for black families to be severely rent-burdened are 2x higher. The pandemic worsened the matter as it increased unemployment and made a lot of families to be jobless.
- Homelessness is increasing
Although the number is always dynamic. For instance, a person that has a house at the start of the year may turn out to be homeless at the end of the year. Hence, tracking homeless individuals around is tasking, but the recent estimate is pretty accurate. It shows that the problem is getting bigger. In LA, nearly 250,000 people access homeless services. A lot of them were single adults together with massive numbers of families with kids. In LA County, about 90,000 people accessed their services in 2020, which is the highest.
Factors That Drive the Housing Market
- Interest rates
Interest rates have heavy impact on real estate markets. Changes in interest rates influence companies whenever they decide to buy houses for cash in Los Angeles. Thus, if you are considering purchasing a home, research the interest rates. It is vital because the lower the interest rate, the lower the mortgage and the lower the home’s cost. It will also create a higher demand for real estate and will push the prices up again.
Demography gives statistics of data based on several factors such as age, race, gender, income, migration patterns, and population growth. It is essential to look at these statistics to get a notable factor that affects the pricing of the houses. It lets you know what kind of properties are in demand and who wants them. Demographic change on national levels has enormous implications on the housing markets for years to come.
This is probably the most potent factor. The real estate market depends on the overall economy. The measurement of the country’s GDP, employment data, or manufacturing activity is one way to determine the outcome of the real estate markets. That is, if the economy dips, the housing market dips. You should pay close attention to the LA economy trend to make huge profits.