The short lived multiple offer bonanza is over for residential real estate in Southern California. Inventory at pre-recession lows this Spring is increasing as prices begin to level off. Ridiculously high prices scared away foreign cash investors as they couldn’t make money on their buy and rent business models. A jump in interest rates didn’t help either.
High prices cool demand. Sellers need convincing to lower the prices and buyers will re-enter the market. This Spring sellers priced their homes on those flyers they found on their porch which show how much their neighbor believed their neighbor’s house was worth.
Rents are as high as they can go. In Southern California 22% of households are paying more than 50% of pre-tax income for housing, while median home values and rents are among the highest in the country. According to the Center for Housing Policy and National Housing Conference, 39% of working households in the Los Angeles metropolitan area spend more than half their income on housing.