Los Angeles home prices dropped second-most in nation in 2022; inventory remains high

If you’ve dipped your toe into the housing market recently, it would be completely understandable to have been scared away from the prospect of purchasing a home in California.

High cost of homes, rising mortgage rates and recession fears have made the last couple months a precarious time to dive into the real estate pool.

But a new study published by real estate company RE/MAX has found that home prices in Los Angeles are actually on the decline year-over-year.

In December 2022, the median price of a home in Los Angeles was $810,000; down $40,000 or 4.7{7e5ff73c23cd1cd7ac587f9048f78b3ced175b09520fe5fee10055eb3132dce7} from December 2021.

That was the second largest decline in the study, behind only San Francisco which saw a 5.1{7e5ff73c23cd1cd7ac587f9048f78b3ced175b09520fe5fee10055eb3132dce7} decrease.

Below are the five metropolitan areas to see the biggest year-over-year dips, according to RE/MAX.

But don’t go to the bank to withdraw your life savings for a down payment, just yet. The study also found that the total number of new houses to come onto the market is down a stark 38.6{7e5ff73c23cd1cd7ac587f9048f78b3ced175b09520fe5fee10055eb3132dce7} this year versus last.

In Dec. 2021, there were 7,343 new real estate listings in Los Angeles. This past December, there were only 3,540.

Los Angeles had the third largest percent decrease in new listings year-over-year, trailing only Phoenix, Arizona and Des Moines, Iowa.

So prices appear to be steadily going down, but new listings are at least slowing down a bit. It’s important to note that December is typically not a big month for real estate listings, in part because of major holidays and inclement weather that makes moving a bit more of a hassle than in other months.

And despite a big dip in new listings in December in L.A. and across the country, RE/MAX says the total number of houses on the market as a whole remains strong.

Housing inventory in Los Angeles is still much higher than the previous year. Data provided to KTLA shows that the housing inventory in December 2022 was nearly twice as high as December 2021.

Those houses that do go to market are also staying on the market longer. In December 2021, the average house lasted on the market only 27 days. In December 2022, homes lasted for more than 41 days.

Prices are dipping, inventory is up and homes aren’t selling as fast — this is all good news for buyers. But RE/MAX says it’s good for everyone.

Nick Bailey, president and CEO of RE/MAX, described the latest movement in the housing market as a “rebalancing.”

“Looking forward into 2023, the higher-interest rate environment clearly poses some challenges, but as buyers, sellers and agents recalibrate their expectations, sales will continue to occur. Demand hasn’t gone away,” said Bailey.

Those mortgage rates Bailey mentioned are also expected to come down over the course of the year. Rates just dropped for the third consecutive week, reaching the lowest figure since last September. But still, a far cry from the pre-pandemic rates before the housing market turned into the wild west.

It’s also important to note that, while the median price of a house sold is down, the same data indicates that homeowners are also listing their homes at a higher price to begin with.

You win some, you lose some.