Due to high interest rates, the number of people looking to buy homes in Southern California, including Los Angeles, has decreased, significantly shifting the housing market momentum toward buyers.
According to a September housing market report released by real estate brokerage Redfin, the number of home buyers in the LA area was estimated at 13,282, while sellers reached 22,967. This means sellers outnumbered buyers by 9,685, or a 72.9% higher proportion.
This level exceeds the national average of 62.6% by 10.3 percentage points.
However, there were significant differences among Southern California regions depending on local supply and demand gaps.
In the Riverside area, sellers outnumbered buyers by 81.1%, showing a higher seller ratio than LA, while Anaheim and San Diego recorded 31.6% and 36.3% more sellers, respectively.
Nationwide, the supply and demand imbalance in the housing market reached its most severe level since relevant statistics began in 2013.
In September, nationwide home buyers stood at 928,892, down 2.4% from the previous month and falling for the fifth consecutive month. This marks the lowest level since 2013. On the other hand, sellers increased by 1.2% from the previous month to 1,510,788, the highest since March 2020.
Consequently, sellers outnumbered buyers by 581,892, or 62.6%, recording the largest gap since data collection began.
Notably, 41 out of 50 major metropolitan areas analyzed by Redfin were classified as buyer-dominated markets. This accounts for 82% of the total, the highest proportion on record.
Redfin classifies a market as a buyer-friendly market if sellers outnumber buyers by more than 10%, and conversely as a seller-friendly market if they are more than 10% fewer.
The increase in home sellers is analyzed to be due to continuous new listings piling up in the market as existing properties fail to sell on time. Homeowners who have long waited for mortgage rate cuts or demand recovery are reportedly no longer delaying sales, and cases of putting properties on the market out of concern for potential future home price drops are also increasing.
However, the expansion of the buyer’s market does not mean that overall home-buying conditions have improved.
Asad Khan, a senior economist at Redfin, explained, ‘The current buyer’s market stems from cautious consumer sentiment rather than strengthened purchasing power. Many potential buyers are priced out due to high home prices or hesitant due to economic uncertainty, increasing the bargaining power of buyers with actual purchasing capability.’
He added, ‘Buyers with sufficient funds and stable jobs can carefully select the homes they want and negotiate prices, and can even abandon transactions if the conditions do not match. While the housing supply side has created the most favorable environment in years, the number of people who can utilize it due to high purchase costs has actually decreased.’
