By Michael Edlen | Special to the Palisadian-Post
As everyone on the planet knows, we are in the midst of a pandemic unlike anything experienced in more than 100 years. While we finally have a vaccine on the near horizon to deal with the risk exposure, it will clearly be at least several more months before people might feel more comfortable going about their daily lives.
So how is it possible that the housing market has now reached a new high level of valuation in the Palisades and other Westside areas? The figures for 2020 so far, as compared with the first 11 months of 2019, show a nearly 20% higher number of sales and at a 7% higher median price level, with enough energy in the process that it has taken 21% less time on average for homes to sell this year.
Small businesses have closed, many restaurants are barely hanging on, too many people have been laid off and yet the stock market hovers around a new high level as does the housing market. The answers seem to be fairly clear, although not so obvious.
In an odd way, the strength of our housing market is also a reflection of the pressures created by the COVID environment. People are tending to want to move out of the city into suburbs, from smaller homes into larger ones, and from condos into houses. Wherever possible, families are seeking larger yards for kids to play more freely in and where private pools can be enjoyed.
There is also a steadily growing demographic pressure on the housing market as the millennial generation includes larger numbers over age 30 every month. Many of this generation have been living at home with parents, have moved back to that home after being laid off from work or have to work from home due to the restrictions still in place at their offices. The pressure of this housing situation is also increased as more of them are in relationships that are challenged by the lack of privacy and space.
We also have interest rates that are the lowest they have been in more than 50 years. This has made it possible for increasing numbers of first-time buyers to qualify for financing to purchase, even though the prices of homes are higher than a year ago. For most of 2020, the inventory of homes available for purchase has not quite been sufficient to meet the growing demand in many areas, and thus the upward pressure on prices has continued even during the COVID period.
Thus it becomes understandable how it is possible for us to be experiencing a strong housing market even in the face of such extreme economic hardships. How long will this continue? Most likely until there is enough underlying strength in the economy that interest rates begin to increase, which might occur before the middle of 2021. Until then, this is likely to remain a remarkable opportunity for buyers and for sellers.
Michael Edlen has been a trusted real estate advisor to many people for 30 years. He can be reached for no-cost or obligation consultation at 310-600-7422 or firstname.lastname@example.org.
This page is available to subscribers. Click here to sign in or get access.