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Los Angeles Housing Market Seems to be Slowing

Harrison Stowe
2 min read
Los Angeles Housing Market Seems to be Slowing

Of all the regional markets in the United States, none have seen the flurry of activity that California has since 2013 began. While still carrying the troublesome status as the ground zero of the pre-recession housing crash, both Silicon Valley and greater Los Angeles have seen rapid home sales and price escalation throughout the past few months. As I noted in a prior post, the San Francisco housing market is still pacing a straight upward trajectory. However, the housing market down south might soon witness different patterns.

A Notably Slower Growth

According to a new report form the Los Angeles Times, population growth throughout Southern California slowed notably last year. As the article details, there’s much less motion to form new households and less influx of new residents overall. This has led to a slight decrease in demand for new homes, which for a span of months had been gaining value due to elevated demand. It’s a sign, overall, that the decrease in demand could lead to a slight evening in what have for a long while been escalating home values.

The combination of limited relocation to Los Angeles and its adjacent counties and a general migration away from the area has already started to impact the housing market outlook.  As the Los Angeles Times report notes, more than 11,000 residents moved out of San Bernardino County than moved in by the close of 2013. It seems that the migration away from these high-population, high-demand areas is tied directly to the exorbitant price of real estate. As has been observed throughout the northern part of the state, housing prices have become so high that some buyers have avoided the area altogether.

So What’s the Impact?

This might have the unintentional impact of leveling housing prices, or at least slowing the rise in values. One of the small ironies of LA buyers getting priced out is that it helps maintain prices for a larger range of potential homeowners. It seems as if Los Angeles, as is the case with the rest of the country, has reached a point where home prices are seesawing gently between affordability and minor climbs in price. It’s a somewhat complex position for the market, but it’s also a buffer against a sharp bubbling in real estate values. At this point in time, it’s far preferable to the boom-crash many observers were concerned about once the housing market began turning the corner.

Ultimately, this might forecast a greater interest in more “peripheral” property – homes and condos located away from high-demand neighborhoods and the coastline. More conservative buyers might look for out-of-the-way homes in lower-priced neighborhoods, which leave opportunities for developers to reap the rewards of investing in lower-demand areas.

What are your thoughts on the Southern California market?

Photo Credit: Ron Reiring

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.