Los Angeles home buyers will have fewer houses to choose from and less attractive prices during the busy spring buying season if trends seen in March continue.
Housing inventory—the number of homes on the market—across every Los Angeles neighborhood was down at the end of March from a year ago, according to a report from brokerage Pacific Union International on Monday.
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Inventory dropped 25% in the central and southern parts of the city and fell 19% in Downtown. Western Los Angeles neighborhoods—including areas like upmarket Bel Air, Pacific Palisades and Santa Monica—logged a 13% drop in inventory in the first quarter compared to last year.
"Even in those neighborhoods that wouldn’t be considered hotspots, inventory is down," said Selma Hepp, chief economist at Pacific Union.
The robust spring sales season kicks off in March, making the month a weathervane for trends and activity in the coming months. But the slump in inventory that started in the latter half of 2017 showed little sign of improvement, Ms. Hepp said.
The lack of inventory has created more bidding wars and pushed sales prices up. In March, around half of all homes sold above their original asking price, a jump from only 38% the year prior.
The average home sold in a month.
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As a result of rising prices, homes over $1 million made up 42% of sales in March—up from 37% a year ago.
Across the city, prices jumped 14% in March compared to the same time last year. A few of the biggest jumps were in the luxury Malibu community, up 59% to $2.1 million in March; Sunset East saw prices jump 33% to 1.15 million; and West Los Angeles, where prices increased 21% to $1.2 million.
"Declining inventories are becoming the Achilles' heel of the Los Angeles housing market, and while demand remains strong, there will probably be fewer total sales this spring than there were at the same time last year," Ms. Hepp said.