Supply Coming Back With a Vengeance in Playa Vista. Inventory Mix in LA Fails to Satisfy Buyers
As of this writing, inventory is up significantly in Playa Vista with 31 single family homes and condos on the market. Granted it is late summer when supply tends to peak, but this is a dramatic increase in active listings from the teens, which had been consistent through much of the first half of the year. Several buildings such as Camden (3), Chatelaine (3), The Metro (3), Serenade (2), and Villa Savona (2) have multiple listings for sale at once for the first time in years. Serenade has been one of the most active with seven listings active or sold since July 1st and another one rumored to be coming on the market soon.
What is the reason for this recent rush to sell? For one, values have far surpassed their previous peak and the median price for condos in the three months ending today is above $1,040,000. Many people are sensing values have reached a peak or prefer to sell on what’s left of the up-side as opposed to at the beginning of the down-side. Another reason could be the Google office’s upcoming completion at the former Spruce Goose hangar scheduled for this fall. While this should bring additional demand, many investors have targeted this timing as an exit and are hoping to beat others to the punch. Further, demand is down or at least taking summer vacation. In the past 30 days, only seven condos in Playa Vista have gone under contract. This compared to 17 new condo listings in the same time is enough to give a good boost to inventory. Time will tell whether this is a short term glut of supply or if it will continue and inevitably lead to a correction in Playa Vista housing prices.
Outside of Playa Vista, other areas of LA have also a seen an increase in supply in recent months, however inventory mix is not providing any relief for most buyers. One big reason is that developers, who have been quick to snag most of the older homes in poor condition in the more desirable areas over the past several years, have replaced many of these potential starter homes or fixer-uppers that could have been affordable to many buyers, with uninspiring cookie-cutter boxes, homes unaffordable to many of these buyers, and often both. For example, a single builder has over 20 active listings throughout the Westside with just a handful of different floor plans and nearly the same style for each. While priced at the entry level for new construction, these homes are still above most buyers’ budgets and have become so ubiquitous that many buyers are worried over-saturation or backlash to the monotony of style will lead to reduced the property values. Others are are simply disinterested. Overpriced listings also abound for those sellers who don’t price end-user repairs to their functionally obsolete or poor condition properties into their asking prices. The prevalence of these give a misleading impression of supply while there are really still very few attractive options for many buyers outside of Playa Vista. Until these sellers become motivated and realistic, it is probably still looking like it will be a tight market for starter homes and more modest move-up homes on the Westside and other desirable markets for some time to come.