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Los Angeles Sees Biggest Drop in Home Sales Since 2008

The U.S. election and rate rises led to a slowdown in demand last year

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Homes along the Venice canals in Los Angeles.

Ricardo DeAratanha / Getty Images
Homes along the Venice canals in Los Angeles.
Ricardo DeAratanha / Getty Images

The Los Angeles housing market saw the biggest drop in sales last year since the 2008 financial crisis.

The number of homes changing hands declined 12.1% year-over-year in the final three months of 2016 to 2,803, according to a report by Douglas Elliman Real Estate and appraisal firm Miller Samuel released Thursday. At the same time, the number of homes for sale increased 4.4% to 2,234.

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However, despite the decline in home sales and the rise in listing inventory, the strength of L.A.’s housing market was still robust compared to the likes of Manhattan and the Hamptons, two areas about which Elliman also released market reports.

The average number of days an L.A. property spent on the market, for example, was broadly flat at 61, compared with 145 in the Hamptons and 94 in Manhattan, according to Douglas Elliman.

At the same time, the listing discount (the change from final listing price to contract price) was 3.7%, much lower than the Hamptons, which had a 12% listing discount in the fourth quarter.


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Prices were also still climbing higher, with the median sales price in the fourth quarter up 7.3% year-over-year to $1.03 million. It was a similar story in the luxury sector, with prices ending the year  12.1% up at $6.21 million.

"It’s been a little bit better, but overall we’re still in a cycle of low inventory as there’s a not a lot of room to build in Los Angeles. This is pushing prices even higher even though the number of sales declined," Colin Keenan, senior vice president and managing broker for Douglas Elliman’s Beverly Hills office, told Mansion Global.

As for slowing demand, he attributed that to jitters over the U.S. election, while increasing interest rates hindered some buyers at the bottom end of the market.

More:Gore Vidal’s Los Angeles Home Sells for $3.75 Million

"A lot of buyers take loans to maximize their buying potential," Mr. Keenan said. "When rates go up, it influences that, and it has started to affect the condo market and non-luxury single family market."