Los Angeles Real Estate Supply and Demand
The demand for Los Angeles luxury homes is increasing because of the domestic and international buyer combination. Building permits are also increasing, and are at their highest levels since 2008. As more building permits are issued, more new houses and apartments become available for sale.
With a recovering housing market, low interest rates and the international buyers’ preference for new construction, it makes sense to build new homes in Los Angeles.
However, there is some concern that the supply of new housing, especially in the urban areas, will outpace demand in areas with multiple projects such as the Hollywood & Vine district and Downtown Los Angeles where 1,000 of units are being built.
In the luxury housing areas of Trousdale Estates in Beverly Hills I am currently aware of at least 20 new construction projects currently in the works all which will be multi-million estates asking top dollar for these lavish properties. The famous “Bird Streets” in the Hollywood Hills is also having a new construction boom with at least 8 new projects that have broken ground with price tags as high as $35 million.
A recent survey by the Conference Board polled consumers that are planning to buy a home in the next few months. Most of the potential buyers say they intend to buy a home that’s been previously lived in. This may be because they think they’ll get a better deal on an existing home than on new construction.
However, the survey doesn’t take into account that the low inventory of houses for sale in Los Angeles and other major markets that are low as well. With few existing homes available for sale, new homes will be in demand.
Los Angeles real estate construction has increased in 2013, but inventory of houses for sale in LA remains tight. In the last three years, the number of homes for sale decreased by 34%, while the number of homes that actually sold is up by 4%. If this trend continues, it could drive up property prices and keep many from buying homes.
New construction of luxury homes and gated communities in Los Angeles will help ease the inventory squeeze and give buyers more options as long as builders offer these properties for affordable prices and interest rate do not dramatically rise. More than likely Los Angeles luxury buyers will keep on the fast pace course in 2014.
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Susan Andrews | Estates Director
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Susan Andrews is your ultimate real estate source for Los Angeles, California and surrounding communities.
Photo courtesy of the The Wall Street Journal website.