Borrowing costs

Home Prices in NELA Fall as Borrowing Costs Rise –

This Highland Park bungalow sold for $1.206 million in June, 10% above asking price. It was taken off the market in 30 days.

By Jeffrey Marino

The housing market in northeast Los Angeles began to slow in June, the last month with complete data, as rising interest rates reduced what homebuyers were able and willing to pay.

The median price of a home in NELA in June was $1.218 million, down $28,000 from May (a 2% drop). This is the first drop in the monthly median since November 2020.

Year-over-year, home price growth has slowed from a blistering annual rate of around 25% from February to May to a blistering mere 19% in June.

Slowing price growth in NELA is consistent with conditions throughout LA County and across the country.

Will price growth continue to slow?

It mainly depends on the height of the rates. It took a while for the rate hikes that started in March to affect the NELA housing market, but with the recent rate on the 30-year fixed rate mortgage at 5.8% – almost twice as high as a year ago – there is no escape on impact. On a $1.2 million home with a 20% down payment, the monthly payment at the end of June was $6,500 compared to $4,900 a year ago. For buyers who max out their budget to buy a home, which most buyers do, it makes a significant difference in what is affordable.

While price growth slowed in June, most other local market data points remained relatively unchanged.

In June, the inventory of homes for sale at NELA was down 29% year-over-year, consistent with a similar supply situation to previous months. The sale-to-list ratio also remained unchanged at 115%, meaning the average buyer paid 15% more than the asking price.

These metrics indicate that it is still a seller’s market in NELA. But among other market metrics, we’ll keep an eye on this sell-to-list ratio. Here’s why: a declining sell-to-list ratio is an early indication that buyers are gaining bargaining power to drive prices down further.