LA Market Due for a Turn?

[Kathlyn Lewis]

I've asked several people this question privately and gotten several different answers (no surprise), so I thought I'd pose this question more publicly here:

The sellers market seems perched to turn with housing supply about meeting or maybe even surpassing demand.  Do you think this is happening in Los Angeles?  If it is happening - the magic question - when do you think the price fall will happen?

Can't wait to see everyone's response - thanks in advance for your input!

[Joshua McGinnis]

This just isn't true based on the numbers.

Homeless Numbers are Indication of an Issue
We have 40,000 homeless people living on the streets in LA, for a variety of reasons, not the least of which is housing affordability. Last month, the city declared a "State of Emergency" where it plans to allocate part of a $100M fund towards housing and housing-related subsidies.

Overcrowding
Los Angeles County has seven of the ten zip codes with the worst housing overcrowding in the nation and 64 zip codes that are in the worst half percent for housing overcrowding.
Source: http://graphics.latimes.com/crowding-map/

Rent Control
We have an exorbitant amount of rent-controlled housing. L.A.’s rent control laws, passed in 1978, also limit supply by reducing turnover, thus taking a large portion of units off the market. For example, 80% of the city’s 880,581 multifamily units are rent-controlled. This forces newcomers to compete for the far smaller stock of available market-rate units.
Source: http://www.forbes.com/sites/scottbeyer/2015/04/10/...

We Have the Least Affordable Housing According to 2015 UCLA Report
Source: http://www.scpr.org/news/2015/08/06/53625/LA-least...

The Mayor's Primary Initative
Mayor Garcetti has made it a goal to build 100K new units of housing by 2021, a number many experts say is what we should be building per year.
Source: http://www.scpr.org/news/2015/08/28/54043/la-mayor...

AirBNB is growing in LA, taking valuable rental units off the market
Source: http://www.laane.org/wp-content/uploads/2015/03/Ai...

California's Home Prices have Consistently Risen / Outpaced US Home Prices
Source: http://cdn.cstatic.net/images/gridfs/55099ab2f92ea...

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The biggest issue is that we just aren't building fast enough.

LA's Population is growing by 8-11% each year and we are only adding about 3% of growth to inventory.

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Will we face a macroeconomic shift which might change pace for a period of time? Absolutely. But over the long haul, until we ramp up production, we're going to be dealing with short supply and the high prices that follow.