Seriously, doesn't it seem like prices aren't stopping their climb? Because no one is selling. Inventory is super tight and as usual, there are too many buyers.
Here are some reasons why:
1. Believe it or not, some people are still underwater on their mortgages. From the height of 2007, there are a good number of homeowners who borrowed way over their limits and are just barely getting into the black now, but with the costs of selling (transfer taxes, escrow fees, etc), they will still be in the negative. That Echo Park home bought in 2007 for $750k is now worth 815k. After selling fees, you're netting about 0.
2. They can't afford anything else after the sale. Prices are high, and in a high market, unless you really downsize from a single family to a condo, or to Phoeniz AZ, you really aren't making a difference in your expenses. Plus rents are ridiculously high now. It's almost cheaper just to stay put, which is what so many are doing. You can sell your Miracle Mile house you bought in 2007 for 950k for 1.1MM. You've made 150k plus whatever down you put in. That's great, but cut 70k in selling fees. What are you going to upgrade to? Not much. You're going to have to either buy a small 80s style condo in West LA or a studio with a doorman in DTLA for about 600k.
3. Boomers and Empty Nesters, the ones with the homes with lots of equity, who should downsize, are not selling because their children (well into their 30s) are still living with them.
4. Rents are super high. Recession or not, rents have stayed strong in LA. When the housing market collapsed beginning in 2008, the amount of renters increased. To be a renter these days (unless you've lived in that 1940s RSO pad in Santa Monica since 1980 and are now paying $600/mo), is tough. More renters are trying to buy because they are realizing that just adding $200-$300 extra per month could get them a mortgage instead. Hence, more buyers to the market.
