Real estate agents in the Valley region report continued low inventory and high prices for residential properties, following national trends seen since last summer, despite coronavirus concerns. Though demand for housing remains high across the board, with record-low inventory, the number of sales in the area has dipped due to a lack of homes available.
“When COVID hit, I personally thought, ‘Oh, this is the way companies go down and they file bankruptcy.’ I just never thought I will experience that,” Harma Hartouni, owner of Keller Williams Encino-Sherman Oaks, No. 8 on the Business Journal’s list of Residential Brokerage Firms, said.
In the first two months of the pandemic, he said, escrows were falling through and very few sales were made. But by the summer months, low interest rates brought buyers back in droves. Hartouni’s team expanded as a result.
“I decided with my leadership team to double down and get focused on recruiting and productivity, which we did and we went from 350 agents to over 420 within seven, eight months,” he said.Hartouni and others in the Valley region saw a surge in first-time home buyers and upgrade purchases around June 2020. Financial relief packages for the coronavirus pushed interest rates down and provided stimulus checks to most households, which some buyers used toward down payments. As lockdown measures had forced people into their homes, consumer behavior also shifted as many sought to move from condominium and apartment living to single-family homes. Since then, inventory has dwindled and prices have increased, causing further activity in the market.
“If you think about an average listing, before the pandemic, we’d average between three to four offers. Now we’re averaging 21.2 offers per listing,” Harout Keuroghilan, chief executive of JohnHart Real Estate in Glendale, No. 6 on the list, said.
His staff has also grown since the pandemic started, in order to process the increased number of offers.
Broad appealThe spike in demand has applied to all kinds of homes, with single-family dwellings seeing particularly significant increases. Even properties in poor condition or in previously less popular neighborhoods are moving quickly, with prices surging. In Los Angeles County, the median home price rose 25 percent to a record $775,000 in May; in Ventura County, the median home price rose 20.9 percent to a record $701,500, according to data from DQNews.“With inventory being really, really tight, it’s not at all it’s cracked up to be. Don’t get me wrong – I’m not complaining, we’re doing very, very well,” Keuroghilan said. “But as you can see from the numbers, production and sales are at all-time lows.”Hartouni echoed Keuroghilan’s concerns about limited inventory, despite the benefits of higher list prices in the short term, and stressed that in a healthy market, some properties go unsold – which isn’t the case in the region currently.
“Our numbers have increased, yes, although if you look at our numbers since 1999 to now, our inventory in the San Fernando Valley is still the lowest it has ever been, just the sheer number of properties on the market,” Hartouni said.
While the demand for housing in the region remains high, both Hartouni and Keuroghilan indicated they have seen large numbers of people choosing to leave the Los Angeles area due to the high cost of living. Especially given the rise in remote work, many families have chosen to relocate from the county or out of state entirely.“The fact of the matter is, this is an expensive state to live in,” Diane Sydell, president of the Southland Regional Association of Realtors, said. “Depending on where you’re located, a lot of people have moved again out into the suburbs, so that they can find housing that is more realistic to their price ranges. But many, many of my clients have moved out of state to Nevada, Arizona, Utah. They’re finding it more affordable.”Looking forward, each of the agents indicated how uncertain the future is, with varying degrees of optimism.
“If you look at notice of defaults, which is when you know people are not paying their payments, banks file notice of default, they have increased 2 to 3 percent in the ZIP codes in the San Fernando Valley. That’s a big change. Studio City is the hottest market in the San Fernando Valley and has a 4.5 percent foreclosure rate right now. We didn’t have that two years ago,” Hartouni said. “So, I do think we’re due for a correction. We were due a long time ago; COVID actually deferred it. And I will say that, not now, not this year, but maybe by the end of next year, we will start seeing the change. Although it won’t be as bad as 2006, it will definitely be a change.”
Low Inventory Curtails Housing Brokers’ Boom
