Here are my semi-anecdotal and semi-data driven predictions for the Los Angeles real estate market in 2024.
People have been asking me my opinion whenever I mention I’m in real estate, so below are just some of the convos I’ve had recently and wanted to share.
Sellers will come back.
In 2023 with rising rates, sellers took a backseat and chose to wait to list. Unless you were in distress, retiring, or had a death in the family (trust or probate sale) there was really no reason to sell your home and try to enter the market as a buyer.
If you bought your home prior to 2019, chances are you refinanced in 2020-2021 and locked in a really great rate.
Last year I only listed 1 home, which was a family probate sale. Already at the beginning of this year I’ve signed two listings in the first week. Anecdotally, this is telling me that people who are thinking about selling are starting to make moves. We’ll see how this plays out as the year progresses.
Repeat buyers will come back.
Honestly, I think 2023 was an amazing year for first time buyers. Out of all my transactions, 65% were first time buyers.
Of the 5 buyers who were repeat buyers, we managed to help them buy their next property without having to sell the first one.
The market was still competitive, but the opportunities really increased in terms of negotiating discounts, repairs and credits. It never fully felt like a buyer’s market, but it also felt nothing like the hot seller’s market of the pandemic.
It was a time for new buyers to lower expectations, buy a more “sensible” aka price conscious home, and get their foot in the door while others waited it out. My average purchase price went down, but my volume went up.
Now I believe some repeat buyers (people who have bought before and are looking to level up to their next place) will be coming back into the market, increasing competition after taking a backseat last year.
Commercial and multifamily will come back.
Many commercial loans and 5+ unit residential loans have 3-5 year balloons due, or rate adjustment periods. You don’t get a 30 year fixed mortgage in this space. So operators of these types of assets will either need to come up with cash to refinance, or sell.
I expect to see some movement finally in our commercial transactions, including vacant land development and retail.
Operators who were used to sub 4% rates will need to think carefully about their financing and exit strategies, giving rise to more conservative buyers with strong underwriting skills, rather than the “I can promise you double digit returns” investors of the last few years.
We may not have the massive price drops in multifamily that some people are expecting, but I think there will be enough price adjustment that properties will start to move. Especially with distressed sellers looking to experienced buyers ready to pick up their mess.
Rates will continue to drop.
Have you been waiting for rates to drop? Then you’re not paying attention! Rates have already been dropping, and buyers who have been actively in the market are already taking advantage of this.
We had one escrow open longer than usual due to the sellers having to find a new home themselves too, and in just the time we were in escrow our buyer saved quite a bit with rates dropping between December and January.
I’m also seeing refinances kick into gear this month for folks who bought at higher rates and can start to take advantage of the lower rates.
For context, 8 of my last 20 transactions have happened since October 2023, when we started to see pricing improve. These buyers have been taking advantage of less competition when everyone’s still on the sidelines “waiting for rates to drop.”
PS Once you hear rates have dropped in the media, you’ll be the last to hear. The best way to see current rates is to be in weekly communication with a good lender!
Who knows what the rest of the year will bring, but here’s what I’m feeling and predicting from my on-the-ground experience.
Happy to chat anytime!
What are your questions about the state of the market?