The first-quarter Metrostudy data for the Los Angeles-Long Beach-Santa Ana, CA shows the housing market held strong in new-home sales for the quarter, despite an overall drop in closings for existing and new homes combined. New-home closings for the quarter totaled 1,401, up from 1,178 in 1Q13, an 18.9% increase in closings. Although overall closings were down about 5,000 to 25,505 in the first-quarter compared to last year, the median price continues to rise like many of the biggest markets are enduring nationwide.
The median new-home closing price for the Los Angeles market soared to $709,000 in the first-quarter, a 23.7% increase over the first-quarter of last year. Existing home prices are also on the rise to $453,700 from $385,600, a 17.7% increase over a year ago. The median price per square foot, however, is higher in the existing market than new, offering homebuyers more space for the cost of a new-home. For the first-quarter, median price per square foot is $322 for existing homes and only $308 for new. The surge in median cost per square foot overall is $55. This raises the continuing affordability concerns for the entry-level buyer and the millennials, who are renting in cities and raising the population, but encounter sticker shock with each look at home prices.
The dramatic price appreciation is the Los Angeles market is met by a dip in the months supply of Vacant Developed Lots. VDL supply for the MSA dropped from 14.9 in 1Q13 to 11.2 in 1Q14. Finished housing supply, however, is up to 11.8 and 10.5. VDL, under construction, and finished months supply all remained stagnant between the 4Q13 and 1Q14. Los Angeles has also been enduring unemployment rates far higher than the national average at a preliminary 7.0% in April versus the national average of 5.9% (not seasonally adjusted) for the same month. Job security concerns might additionally impact newly formed households, possibly delaying their decision to buy a home.
Learn more about markets featured in this article: Los Angeles, CA.