Improved conditions lead to increased activity in the Los Angeles real estate market
A wave of activity has swept across the real estate market in southern California, which has added value to real estate in Los Angeles. The momentum has propelled the prices of for-sale and rental properties upwards in spite of the struggling nationwide economy. According to DataQuick, recent gains in the median sale price of homes are attributed to greater demand caused by low mortgage rates and a smaller inventory.
DataQuick reported that home sales in southern California increased above the year-ago level in July, in keeping with the trend of increased property values that has continued for the past seven months. Sale prices of homes in the region have increased by 8.1 percent over the past year, from $283,000 in July 2011 to $306,000 last month, DataQuick revealed. The source also reported that short sales have increased by 17.4 percent from a year ago, and 18.7 percent of Southland resales last month consisted of short sale transactions.
A recent article from Los Angeles Downtown News stated that developers are eager to capitalize on the improved market conditions. The news source reported that a housing boom in the downtown district is gaining traction. In the next 16 months, at least 10 buildings with almost 2,400 apartments are under construction or expected to begin construction. In an interview with the source, developer Tom Gilmore said that he had recently seen occupancy rates jump to 98 percent.
"We are effectively full," Gilmore explained to the news source. "The only reason I'm not at 100 percent is because I can't turn the apartments over fast enough."
Los Angeles Downtown News reported that according to the Downtown Center Business Improvement District's 2011 Downtown Demographics Survey, the new developments in the works could increase the supply of Los Angeles real estate by 8 percent in one to three years. Rental rates are expected to increase in the meantime. Apartments in the Historic Core section of downtown rent for approximately $2.03 per square foot per month, but newly opened buildings are charging higher rates, according to the source. Los Angeles landlords have recently purchased and resumed construction on developments put on hold during the recession; however, the supply pressure is expected to cause an increase in rent in spite of the influx of new housing on the local market.