The Housing Chronicles Blog: Los Angeles Economic Forecast Conference - Residential Real Estate

Friday, June 22, 2012

Los Angeles Economic Forecast Conference - Residential Real Estate

Even if you missed the recent Los Angeles Economic Forecast Conference produced by Beacon Economics, you can still get a copy of the conference book for free.  As part of its ongoing association with these economists, MetroIntelligence authored the residential real estate section for the conference book given out to attendees at this event, which took place on June 21st at the Los Angeles Airport Marriott.

Following are some of the key findings:

  • Lower home prices continue to make them exponentially more affordable than they were in the past, with 48% 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 2005 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 been declining, falling in February 2012 to a level last noted in April of 2009 even as monthly declines have been flattening out.
  • New home sales remain in hibernation, down by 75% from their 2006 peak;  although new home prices have rebounded slightly from their most recent trough in mid-2009, they’re still off by 31% from their peak in 2007.
  • Since rebounding from their trough at the end of 2007, more recently sales of existing single-family homes have ranged mostly from 13,000 to 14,000 units, but remain under pressure due to continued competition from foreclosures; after falling by nearly 50% between mid-2007 and mid-2009, median prices have recovered by about 5% to just over $312,000.
  • Although condo prices did stage a temporary rally in late 2009 to nearly $315,000, since then the median price has gradually eroded to just under $268,500; however, one key benefit of these lower prices has been a boost in condo sales, which have risen by 89% since the last trough in the first quarter of 2008.
  • 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 by far the strongest real estate sector; vacancies are expected to end 2012 below 5.5%, while rents should continue rising by 1.0% to 1.4% per quarter through mid-decade.
  • After falling sharply from the peak in the third quarter of 2008 through the end of 2010, foreclosures are again declining following a moderate rise in early 2011; fewer defaults also indicates that the last peak of the foreclosure wave is now well behind us.
  • While permits for single-family units have steadily hovered close to 600 units per quarter since the last half of 2009, permits for multi-family buildings have been rising steadily since the first half of 2010; looking ahead, permit increases for multi-family units should far out-pace those of single-family homes due to the strength of the apartment market.

Click here to download this residential real estate section.

Click here to download the entire conference book.

And, finally, click here to find out more about the consulting services offered by MetroIntelligence Real Estate & Economics Advisors.  Or just give us a call at 818.584.1848.

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