Los Angeles, one of the most famous cities in the world, is home to the Hollywood Walk of Fame, Universal Studios, the La Brea Tar Pits, Griffith Park, and of course, ocean views from the Santa Monica pier.

Many trends originate in Los Angeles, which sets styles and attitudes for much of the rest of the country. The city is also a melting pot of diverse cultures, with a wide range of go-west-young-man opportunities in the entertainment, medical, technological, and aerospace fields, among many others.

With a growing population already at 9.1 million, home prices are appreciating accordingly, say local Realtors. That's angelic for sellers, but for buyers, low inventory and affordability are only getting worse.

"Los Angeles has seen an average price appreciation of 10-12% for the past 4 years," says Realtor Anthony Marguleas. "Homes range from $100,000 up to $20 million dollars.

Strong demand has returned the city to a sellers' market with multiple offers on desirable listings. "We are still seeing multiple offers and sometimes even over the asking price," says Marguleas. "Entry-level homes are still selling very quickly due to the large number of buyers who want to live in Los Angeles. The higher end price range of $1 million and up has been hit harder. This is especially true in the upper end of $5 to $20 million."

"The Los Angeles area has remained very strong with home appreciating at a steady and gradual increase," confirms Realtor Charmaine Trifon. "Combined with this price appreciation, the number of days a home is on the market has decreased so more homes are selling in a shorter time period and for more money. This illustrates why buyers need an exclusive buyer's agent, who can look after their best interests and make sure they do not overpay for the home."

And the sellers' market shows no sign of abating and prices continue to rise.

"This past month we saw 850 homes sell with an average price of $542,000," says Realtor Dan Urbach. "A year ago we saw 717 homes sell with an average price of $440,000, so there is almost a 25 percent appreciation."

What about the condominium market, which is more ideal in metros with limited land expansion like Los Angeles. "With condos we saw 434 condos sell for an average sales price of $310,000 as compared to a year ago when the average price was $255,000," says Urbach. "While the number of homes and condos for sale has decreased by 16%, the number of leases has increased by an almost identical amount. Many sellers who do not have to sell and want to hold on to their equity are choosing to lease rather than sell their home."

Says Realtor Ian P. Medina, "In Los Angeles County, 8,087 new and existing condos and houses were sold in last month, up more than 22% from a year earlier and the biggest volume for a January since the frenzied market of 1989. "The median price of homes sold advanced 17.5% to a record $235,000.00."

The luxury market is also impacted by demand, but high prices keep homes from turning over as rapidly.

"Higher priced homes ($3-$6 million) are selling," says Realtor K.C. Soll. "Inventory is scarce for homes on large lots or in the highly desirable neighborhoods such as Brentwood Park and the Palisades Riviera. In the price range of $2-$3 million, the inventory is moving more slowly."

Remarks Soll, "Homes under $700,000 are hard to find, unless bought for land value. The hottest areas are Santa Monica, Brentwood, Pacific Palisades and Malibu."

What should motivated buyers and sellers do? "Many buyers are landing at LAX and buying properties within a week," says Soll. "In this market, when properties come on the multiple listing system, they either sell with multiple offers or languish for weeks. It is a good idea to check out the number of days on the market to locate what could be good buys.

"A seller testing the market should adjust the price by 5% per month until there are written offers. Motivated sellers (who have some idea where they are going) should pay close attention to the recent sales in the neighborhood."

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Published: May 2, 2002

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