Asking prices and actual transaction prices are on the rise, particularly in favored Korean American neighborhoods.
According to the real estate industry, properties in LA neighborhoods such as Koreatown, La Crescenta, Irvine, and Fullerton are selling in less than 10 days of being on the market. Open houses in these areas are attracting 100 to 200 buyers on weekends, and sellers are receiving 10 or more offers.
For instance, an open house for a home in La Crescenta last weekend drew over 400 visitors in three days, including 200 buyers on the first day. The listing price for the three-bedroom, two-bathroom, 1,500-square-foot single-family home was $1.1 million, but offers went as high as $1.5 million.
In LA, the most common price range for Korean buyers is around $1 million, with North LA neighborhoods like La Crescenta falling in the $1 million to $1.5 million range, and OC neighborhoods like Fullerton, Buena Park, and Irvine in the $700,000 to $1 million range. However, the number of offers significantly decreases when the price of a home goes above $1.5 million.
Realtor insiders have identified a lack of listings as a major factor in transaction prices exceeding the asking price in some areas, including favored Korean American neighborhoods.
“The real estate market is experiencing a peculiar phenomenon of rising prices due to a severe shortage of properties, rather than a boom,” stated one real estate agent.
The Korean American real estate industry has witnessed an increase in demand for homeownership due to high rents. However, homeowners are reluctant to sell their homes and purchase new ones due to high mortgage interest rates.
Many homeowners are not in a rush to sell as they can refinance at lower interest rates of 2-3%. Additionally, the shortage of homes for sale worsens because homeowners cannot afford to sell and find a new place to move to, according to the industry insiders.
With interest rates on 30-year fixed mortgages hovering around 7 percent, there has been a notable increase in cash offers.
“We’ve observed a significant rise in cash offers due to the burden of mortgage interest,” said Kay Park, an agent from Dream Realty.
“Buyers appear to have adjusted to the higher mortgage rates,” commented Jae Chang, president of the Korean Real Estate Brokers Association. “As we enter the second half of the year, we may not see the same level of overheating as we did in early summer, but the shortage of listings means home prices will not plummet anytime soon.”
Meanwhile, according to a Redfin report, as of July 2, around 37% of homes sold nationwide in the past four weeks exceeded the seller’s asking price, marking the highest figure in 10 months and nearly a year.
Redfin analysis attributes the rise in both asking and transaction prices to the significant disparity between the number of homes for sale and buyer demand.
BY EUNYOUNG LEE [lee.eunyoung6@koreadaily.com]
