April 13, 2024 The Best Source of News, Culture, Lifestyle for Culver City, Mar Vista, Del Rey, Palms and West Los Angeles

Millennials get priced out amid high home sales prices in Southern California

Bess Hochman is a top Westside real estate broker of more than 20  years.
Bess Hochman is a top Westside real estate broker of more than 20 years.

Southern California continues to show annual sales price gains. The September median home sales price in the Southland rose about 8 percent year over year.

With the dramatic run up in prices over the last few years and predicted weak economic growth, the outlook for Millennials as homebuyers does not look rosy. An analyst for DQ Services, a respected national data reporting firm, explained “prices are high enough to be a hurdle for a lot of potential buyers, even though mortgage rates have fallen in recent months.”

This Millennial generation, larger than those of the baby boomer generation, are the largest cohort of potential first-time buyers. Generally considered to range in age from their early 20’s to 34, they are typically looking to rent rather than buy.

High unemployment, stagnant wages, large student loan debt, as well as stringent mortgage loan requirements for those who are ready to buy are all reasons why many Millennials are not undertaking home ownership.

If these first-time buyers continue to put off entering the real estate market, then this will affect sellers up the chain. The limited number of move-up buyers will diminish demand, which in turn will drive sales prices down and rents up.

Some analysts worry that without Millennials’ leadership, the decrease in first-time home buyers will cause a long lasting negative ripple throughout the economy.

In addition to stalling the economic recovery, a large population of renters rather than owners will further widen the wealth gap in the United States. The recent USC Casden Multifamily Forecast predicts monthly rents will continue to rise for at least two more years.

Strong investor activity and rising home prices helped fuel the market recovery in 2012. Since then, however, strong investor activity has fallen off as foreclosure properties disappeared and prices jumped.

The most recent report from DQ Services marked the 4th consecutive month with single digit year-over-year gains as opposed to prior double-digit gains for the preceding 22 months. The drop in the rate of appreciation signals buyers have started to put the brakes on prices.

On the luxury L.A. Westside, Millennials are often opting for expensive rentals and dining at trendy gourmet eateries. Some say this is distancing them even further from being able to save enough for a down payment to purchase their first home. Over the last half century, home ownership by this group has decreased from a third to about a quarter.

If price is no object, there is the ultra luxury home priced over $15 million, where prices are skyrocketing and selling time is shorter. Clearly, there are two real estate markets here, the mega-wealthy and the rest of the market.

Predictions are for more modest home value growth on a national basis. The Zillow Home Value Forecast predicts pricing growth of 3.1 percent from September this year through August 2015, down from 6.6 percent over the past year.

For a free consultation, contact Bess Hochman, a top Westside Real Estate Broker for more than 20 years. Bess is also distinguished by holding a law degree. This article expresses the opinion of the author. You are advised to consult attorneys and others experts specializing in the issues referenced in this article. Contact Bess by phone at 310.291.4111 or email: Bess.CenturyCityNews@yahoo.com.

“Bess is a master negotiator!” says Michael Donaldson, attorney and author of “Negotiating For Dummies”

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