years.
Home prices reported for Los Angeles for the third quarter of 2014 rose approximately 8 percent year-over-year as compared to a more than 18 percent year-over-year increase reported for the third quarter of 2013. This data supports analysts’ predictions of further declines in the rate of residential price increases.
Inventory has increased and homes are sitting on the market for much longer periods then they did a year ago, but buyers don’t have the same sense of urgency as they felt last year. With the run up in prices over the last few years, many potential buyers have been priced out of the market.
Buyers can still recall the rollercoaster from 2003 to 2007 when the real estate bubble burst due to easy credit lending policies. Prices plummeted. Then prices soared once again between 2011 and 2013. This time the leap was boosted by the Federal Reserve’s policies. It purchased billions of dollars worth of mortgage backed bonds and sent fixed 30-year mortgage loan rates to historic lows.
As the result of Fed policy, large numbers of investors flooded the market with cheap money to purchase foreclosures. Some analysts expect now that foreclosures have dropped off dramatically, such investor demand will continue to decline.
With foreclosures drying up, home prices are expected to grow driven by “traditional market fundamentals” of household formation and job growth, but at a much slower rate of appreciation. Zillow predicts home price increases of just 3.1 percent on the national level for September 2014 through August 2015, down from 6.6 percent over the past year.
The decision by the developer of Century City’s 10000 Santa Monica Blvd residential high-rise building to offer its units for rent rather than for sale as originally planned may be a sign of a further slowdown in price appreciation. The 40-story building that recently broke ground will offer 283 units for lease.
The units will include one, two, and three bedroom units with floor to ceiling windows. They will range from 1,500 to 3,000 square feet. The project will have over an acre of landscaped gardens with a tennis court and indoor and outdoor pools.
While prices have jumped for single-family homes since the bubble burst in 2007, the condominium market has lagged behind. Century City and Wilshire corridor condominiums took a beating in the downturn and have not seen the bounce that single-family Westside homes have shown.
While condos can be purchased on the Westside for about $525 to $650 a square foot, prices can vary significantly depending on the luxury level of the building. Pricing depends on the amenities and services provided as well as on the amount of monthly homeowners dues and special assessments, if any.
The ultra-luxury estate market with prices in the stratosphere is still hot. A newly built $85 million Beverly Hills estate with jetliner views is said to have the attention of Beyonce and Jay Z. The mega-high end market is expected to continue to see significant gains as foreign buyer and celebrity interest remains high.
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”
