Despite the pandemic in 2020, Los Angeles outperformed expectations throughout the latter half of the year. Entering the year's final quarter, the market was outperforming seasonal trends, with buyers active to close out the year.
The market success wasn't isolated to one or two areas of Los Angeles County either. Across the region—including Westside and its adjacent coastal communities and L.A.'s South Bay— home sales were strong, and prices were surging. And even with a few urban areas lagging, albeit only slightly, overall, the Los Angeles housing market has never been stronger.
Let's review several aspects defining the market upswing, including Westside and South Bay real estate insights for 2021.
Sales Up, Prices Up, Inventory Down
Coming out of the pandemic's first wave of cases in May 2020, pent up demand drove the home buying market in L.A. County. That demand continued through the end of the year.
Even with another stay at home order for the region (a common hurdle to homebuying throughout the year), home sales in the 4th quarter were up across L.A. versus the same period in 2019: 33% along the coast, 23.5% throughout the Westside, and 21% in South Bay.
The activity put a considerable burden on inventory, and in turn, drove prices up as well. To consider the bulk of L.A.'s Westside and South Bay neighborhoods seller's markets would be an understatement.
Single-family home prices in Marina del Rey, for example, increased nearly 20% year over year. Days on the market dropped 23%. Further inland, Culver City failed to match the sales increase —only 2.4% year over year—but what homes were available were quickly snatched up, with days on the market decreasing by almost 28%.
South Bay followed similar 4th quarter performance patterns. El Segundo and Hawthorne had modest price gains year over year—6.12% and 3.58%, respectively. El Segundo homes lingered on the market 15% longer than the prior-year period (although condos plummeted by 20%). However, days on the market in Hawthough were cut in half, down to three and half weeks from 2019.
With the pace set by homebuyers in 2020, it will be some time before the supply catches up with demand. Throughout the year, sellers were skittish, and new development was slowed via a combination of the pandemic and rising land and material costs. With vaccines helping return us to a sense of normalcy in 2021, expect listings and new builds to slowly recover as the year progresses.
Continued Low Interest Rates
One of the critical driving forces bringing buyers to the market throughout 2020 was historically low interest rates. Entering the new year, rates had reached their lowest thresholds on record— a 30-year fixed-rate loan was available for 2.5%.
Looking ahead, rates for the early portion of the year should remain very attractive for buyers. Currently, a 30-year fixed rate is 2.80%. A 15-year fixed rate is available for 2.28%.
Rates, however, are expected to increase as the year progresses. It will not be the four to five percent of years past, but you can expect the number to rise above 3.25% for the first time since April 2020. While this won't necessarily slow motivated buyers, it should help return the market to more seasonal predictability.
Millennials on the Move
Another continuing trend is people on the move. What began as a response to the pandemic and the need for more space transitioned into more wide-scale lifestyle changes. Businesses offering employees the ability to work from was part of the first buying wave.
The second, and perhaps longer-lasting push, will come from Millennials. The county's largest generation—at 72 million strong—is entering prime homebuying age. Not only will they prove to be a significant player in 2021, but they will set the market conditions for the next decade. Generation Z will follow closely behind.
As well, with vaccines reaching wide distribution, the economy should regain strength and bring more confident homebuyers. Expect markets across L.A. County to reap the benefits, including those in Westside, South Bay, and along the coast.
Are you interested in buying or selling a home in West Side Los Angeles? Perhaps you're seeking more information on El Segundo homes for sale or Marina del Rey real estate? Contact Bill Ruane today and allow his years of experience and expertise to help you navigate the process.