Is this the right time to sell property in Los Angeles USA? 2015 has been a terrific year for the housing market in Los Angeles. There are many who insist that the incredible rise in property prices in America’s second largest city is a sure sign that we are in at the start of a property bubble. Indeed, home prices have risen to the same level as they were just before the housing market crash in 2008.
There are others who say that the trend in Los Angeles, as well as in the rest of California is largely positive, and that we are in the middle of a steady and mostly stable economic recovery in the state.
According to a report from the CALIFORNIA ASSOCIATION OF REALTORS®' (C.A.R.), titled "2016 California Housing Market Forecast," the housing market in Los Angeles will improve in 2016, following a general trend that holds true across California. C.A.R. estimates home sales in California to be 6.3 percent higher in 2015 than in 2014, with over 433,000 units sold.
Leslie Appleton-Young, Vice President and Chief Economist at C.A.R. says, "The foundation for Los Angeles housing market remains strong, with moderating home prices, signs of credit easing, and the state continuing to lead the nation in economic and job growth. However, the global economic slowdown, financial market volatility, and the anticipation of higher interest rates are some of the challenges that may have an adverse impact on the market's momentum next year. Additionally, as we see more sales shift to inland regions of the state, the change in mix of sales will keep increases in the state-wide median price tempered."
A recent UCLA Anderson Forecast said that Los Angeles is only three years into the economic recovery that began in 2012, despite the fact that home prices have risen by 27% since then. The UCLA analysts insist that home prices will rise further, by at least another 8 to 10% before stabilizing, and maybe declining slightly.
The analysts have been enthused by the tremendous job growth in Los Angeles, and also by the fact that there is a decline in housing supply because of extremely strict building and environmental regulations.
Jerry Nickelsburg, who is a top economist at UCLA's Anderson Forecast says, “That means you will not expect to see housing more affordable during the next few years. In fact, just the opposite.”
Another UCLA economist William Yu adds, "L.A.’s housing market, despite becoming more expensive and unaffordable, is not in a bubble. The current rise in home prices seems to be driven by rising effective demand and limited supply, not by speculation. Therefore, the housing bubble burst we experienced several years ago is unlikely to haunt us this year or next, and the smart money will continue to invest here."
And where will the smart money come from? From China, of course. There is an increase in the number of rich Chinese investors buying property in Los Angeles. This has been boosted by the decline in the Chinese economy, as investors look to find more productive avenues for their enormous wealth, and where better to invest than in Los Angeles, USA?
Mr. Wu writes, "With the dismal outlook and uncertainties in China, contrasted with the promising and stable outlook in the US, it is wise to reallocate money from China to the US Even with the negative wealth effect generated from China’s deflating real estate, tumbling stock markets, and 3 percent currency devaluation, wealthy Chinese individuals still have sufficient equity to make a move."
So, clearly, it is a great time to be selling in Los Angeles and the action is only likely to get more interesting in the near future.