Q. What makes the Westside real estate market so resilient to economic factors that have been affecting the rest of the counties real estate markets?
The quick and simple answer boils down to the most basic law of economics: Supply and Demand. With the very limited and fully sated supply of housing on the Westside, and the seemingly endless demand to live inLos Angeles’ sea side locations, our real estate market holds firm when the rest of the country falters. In addition, the buyers in this high price range are resilient to increasing interest rates. Also, the “waiting list” of buyers that jump in the market at the slightest hint of a bargain is large enough to prompt multiple offers at any given time.
As the population in Los Angeles increases each year, the Westside still stands out as a highly desirable area to live. However, there is no room to build new unless you tear down an existing house. For housing prices to come down there needs to be a substantial increase in listing inventory, giving the buyers some real options, and causing price competition among the sellers. We have not seen this market of increased supply because we have such a large pool of buyers. In fact, the high-end new construction homes in Santa Monicahave been selling for top dollar in record time with no regard for the economy or mortgage industry fiasco.
The large pool of buyers on the Westside includes a group of people waiting on the sideline for prices to drop. I call this group our safety net. As soon as there is any threat that prices may come down we begin to see this group trolling the open houses. They are “all cash buyers” willing to buy anything that will sell below market value. They serve to stabilize the market in the event of any down turn.
People like to call it a bubble…I prefer force field; the Westside market is shielded from the rest of the economy. With our huge demand, high prices and limited supply, there is no foreseeable reason to predict any sort of major downward shift in our home prices.