One of the important things to know when buying a house is how much it might cost. This is particularly important for areas like Los Angeles, where Los Angeles luxury real estate can cost hundreds of thousands of dollars. Here’s a look at the expected costs of homes in the San Fernando Valley.
Supply and Demand
Supply and demand fuel the cost of anything, and the principle applies when it comes time to buy a house in Los Angeles. There’s plenty of demand for contemporary homes in Los Angeles and not enough homes to go around.
There aren’t enough new developments in Los Angeles being made to counter the demand. The supply of contemporary homes Los Angeles and Los Angeles luxury real estate has dropped drastically in the past thirty or so years. What was a six-month supply became a four-month supply and then a two-month supply. The number of available properties in the area is only declining with no new builds to make up for it.
The disparity between supply and demand in LA means that homes there cost an average of $671,500. More luxurious property will cost a lot more, while some contemporary homes may cost a bit less. This is the average, after all.
Interest rates are also playing a part in the problem. People are moving to buy a house now while the interest rates are relatively low. What is 3% right now could soon become 5% in a year or so. Interest rates always have an impact on how well property sells. It’s good to get on the market while the rates are low. The problem is that if a lot of people do that there’s no houses to go around.
Mid-Range Property is Moving
While there’s a lot of luxury real estate to go around in Los Angeles, it’s mostly the mid-range market that is on fire right now. There’s a lot of bidding wars happening with people looking to buy a house in Los Angeles. Buyers who have the money for it are coming in and taking as much property as they can while they can. These buyers are very interested in San Fernando Valley.
Living in the Valley comes with a big cost though. People come to the area because of the great economy, access to the coast, and the fine climate. Very few people who move to the area understand that the market conditions – such as limited new constructions – can affect house prices as much as they do. One of the things to know when buying a house is the condition of the wider housing market in the area. For example, communities in the area like staying small so they resist new builds, which further drains the supply of available homes.
Communities in the San Fernando Valley are tight-knit and they like to keep things that way. The result is less homes on the market, which means a higher asking price for the ones that are available. There are also less people in the valley willing to sell their homes given how amazing living there is. Places like San Fernando Valley become sought after because people understand life there is always luxurious.
The Difference a Decade Makes
The prices for property in the valley weren’t always this high. Prices have increased around 13.3% over the past year, and makes for a sharp increase compared to 2016 when prices hovered at around $600,000. Buyers back then weren’t interested in paying so much for a house, even a house in San Fernando Valley, so the number of available buyers – the supply – dropped.
Even those numbers are nothing compared to the situation from March 2011. That was just after the housing bubble burst in the Great Recession. Back then, the median cost of a home in the San Fernando Valley had dropped down to $370,000 – almost half of what it would cost today. Go back even further, to 1998, and the median price of a single-family home in the Valley was down to $180,000. Who knows what the prices will look like in another decade?
Final Thoughts
If you’re thinking about moving to the San Fernando Valley then now would be the time to do it. The average house price is high, but it’s only getting higher as demand continues to outstrip supply. Prices have increased drastically in recent years so it’s best to get your foot on the property ladder while you can. It is vital to have an experienced real estate by your side to get you through the process. Get in touch with expert real estate agent Arman Grigoryan at 818.444.7700 or send an email to arman(at)armangrigoryan(dotted)com.