The Housing Chronicles Blog: L.A. County Economic Conference - Residential Real Estate

Thursday, June 30, 2011

L.A. County Economic Conference - Residential Real Estate

As part of its ongoing association with Beacon Economics, MetroIntelligence authored the residential real estate section for the Los Angeles Economic Forecast Conference, which took place on June 21st in downtown Los Angeles.

If you'd like to read the section in its entirety, we've made it available for free on our Web site.
Please also register on our Web site to keep updated on future reports and presentations.

Click here to download the report.

Click here if you'd like to register for updates.

Here were some of the major findings from our report:

  • Lower home prices continue to make them exponentially more affordable than they were in the past, with 43% of households able to buy the median-priced home at current interest rates. This compares with the low single digits between the second quarter of 2004 and the third quarter of 2007.
  • Although tax credits did help housing prices rebound temporarily, since their expiration the S&P/Case-Shiller Index in the county has again began to decline, falling by nearly 3.5% since the middle of 2010.
  • New home sales remain in hibernation, down by over two-thirds from their 2006 peak; although new home prices have rebounded slightly from their most recent trough in mid-2009, they’re still off by 20% from their peak in 2007.
  • Since rebounding from their trough at the end of 2007, sales of existing single-family homes rose by over 30% by the first quarter of 2011, but remain low due continued competition from foreclosures; after falling by nearly 50% between mid-2007 and mid-2009, prices did recover by about 12% by the first quarter of 2011 but remain under considerable pressure.
  • Although condo prices did stage a temporary rally in late 2009 and 2010, by the first quarter of 2011 they remained just below their low point of mid-2009; however, the consequence of lower prices has helped boost condo sales by nearly 30% between the first quarters of 2009 and 2011.
  • After witnessing elevated vacancy rates and pressure on asking rents due to a combination of the recession and foreclosed homes being sold to investors, the apartment market is now the strongest sector; vacancies are expected to end 2011 below 6.5%, while rent growth slowly rebounds to 1% per quarter or more.
  • Although the rate of quarterly foreclosures did decline sharply from the peak in the third quarter of 2008 through the end of 2010, they’ve rebounded by about 25% as stronger banks begin to release more REO homes onto the marketplace; fewer defaults, however, could indicate that this rising tide of foreclosures may soon peak.
  • Permits for both single-family and multi-family units in 2010 rose over levels noted for 2009, but remain well below 2008 totals; looking ahead, increases for multi-family units should out-pace those of single-family homes due to the relative strength of the apartment market.

No comments: