Packed open houses. Bidding wars. Rising prices.
That’s the landscape for much of the Southern California housing market as the spring selling season gets underway. Competition is as fierce, or even greater, than last year in many corners of the Southland, and would-be buyers can expect a pitched battle if they want to close a deal, real estate agents say.
The frenzied start has been driven by a dearth of homes for sale, low mortgage rates and steady job growth. Homes are selling faster than a year earlier, with more of them going for above the list price, data from online brokerage Redfin show.
“Be ready to write the offer on the Realtor’s car,” mortgage broker Jeff Lazerson said.
Another sign of the market’s strength came this month when data provider CoreLogic reported that sales in February jumped 9% from a year earlier. The median price, meanwhile, climbed 3.7% — the 47th straight month it’s risen.
Lazerson said his clients in Los Angeles and Orange counties are putting an average of five offers on a house before they’re successful. And he’s seeing more demand from first-time home buyers, as well as those who want to upgrade to a bigger home.
“The market seems to be healthy again on all levels,” he said.
Real estate agent Heather Presha has seen the craziness firsthand.
With few homes for sale in the Leimert Park neighborhood where she works, buyers are flooding open houses that pop up. Many are coming from the Westside, no longer able to afford a home near the ocean as prices have steadily risen across the region.
The added demand is pushing values higher in the South L.A. neighborhood filled with old Spanish-style homes.
Pat Douglas, another agent in Leimert Park, put it this way: “Anything good that is on the market is going quick with multiple offers.”
In Los Angeles County, there was a 4.9-month supply of homes for sale in February compared with a 5.2-month supply a year earlier — meaning no homes would be on the market after that time period if sales continued at their current pace and no new listings emerged, according to the California Assn. of Realtors. Orange County saw a similar trend.
The Realtors consider a six- to seven-month supply a market that favors neither buyers nor sellers.
“The inventory issue is why price growth is strong,” said Redfin chief economist Nela Richardson.
Recently there’s been a healthy jump in listings, Richardson said, but it’s unclear if the trend will hold.
If it does, house hunters such as Abigail Lee and her husband, Ray, would be overjoyed.
The couple are looking for a home under $2 million, but they’ve found little suitable near a good public school. They’ve put in only two offers in the roughly six months they’ve been looking — and were unsuccessful both times.
This month, Lee, 32, went to a packed open house for a four-bedroom house in north Redondo Beach. It was so busy that the real estate agent ran out of fliers. She put in an offer for more than the $1-million asking price but lost. Instead, the home went into escrow to another buyer, less than a week after it was listed for sale.
In such a hot market, would-be sellers are conflicted about whether to cash in now or wait for prices to rise further. Some have begun to question how long the hot market can last.
“They think we are due for a correction,” said Nikki Hochstein, an agent who specializes in the Westside and is helping the Lees find a home.
Home values are expected to climb this year, given low mortgage rates and job growth. But for many people, wages aren’t rising fast enough, so economists predict prices will increase less than in previous years as families increasingly struggle to afford a home.
February’s data were in line with those expectations, even though signs had emerged in recent months that price gains were once again accelerating. The 3.7% increase was the smallest since last spring.
On a recent Sunday, about 150 people flocked to a three-bedroom condo in West L.A. for an open house, agent Tregg Rustad said.
Among the interested buyers were Sameena Shaikh, a medical researcher, and her husband, Muddassar, who works as a software engineer in Santa Monica.
The couple have been searching for a home for about a year but haven’t pulled the trigger. In that time, they’ve seen prices rise and now fear mortgage rates will jump. As they surveyed the packed open house they vowed to be less picky.
Muddassar explained their new tactic: “Let’s just buy something.”
Not everywhere in Southern California is red hot, however.
Pegi DiRienzo, a Teles Properties agent, said the market has slowed in the corner of Irvine in which she specializes.
There are fewer buyers from China than last year, given troubles in that country’s economy, DiRienzo said. A flood of new homes have also come on the market near the city’s Great Park. And buyers are increasingly flocking to those, rather than older houses in the Turtle Rock neighborhood near UC Irvine.
“It’s going to take a little longer this year to sell properties,” DiRienzo said.
The ultra-luxury market — $10 million and above — has also floundered as international buyers pull back while the economies in their home countries weaken and the U.S. dollar strengthens, said Nick Segal, chief executive of the Partners Trust brokerage in Beverly Hills.
“A fair number of these purchases 12 months ago were aspirational luxury purchases: ‘I now own a home in Los Angeles and it’s my fourth residence,’” he said. “Those buyers have dried up.”
But those are exceptions.
“The demand is good,” said Carey Chenoski, an agent who specializes in the Redlands area. “Things are moving quickly.”