Here at CaliforniaListings.com, we stay away from the “doom and gloom” editorializing you’re likely to find at other outlets and instead opt for the hard facts and data. That, of course, leaves some room for interpretation.
Lucky for you, and us, we’ve got backup in the form of dozens of SoCal’s top market experts to help suss out what’s fact and what’s fiction. Kevin Shelburn, owner of Shelburn Realty Group and a member of the Bayside team, has been feeling our frustration as well, which is why he put pen to paper and is explaining why the proverbial sky isn’t falling despite all the talk of recession and inflation.
Shelburn writes, in part:
We’re missing an accurate long-term outlook of the Los Angeles housing market based on historical analysis, basic economics and reliable housing indicators.
The proverbial “perfect storm” is brewing. The implications of which will be felt for years, if not a decade. Our current economic environment will trigger a massive shortfall of available homes. With near zero supply, expect real estate values to hit new heights…sooner than you think.
Know nothing TikTokers and shock value real estate sites looking for likes, clicks, followers and shares immediately draw a conclusion that a recession will decimate real estate values, as it did in the Great Recession. That’s a huge leap in thinking and massively flawed logic. Historically speaking, recessions have bode well for the housing market. Furthermore, the environment of today looks nothing like it did prior to the Great Recession.
Assuming any current or impending recession is immediately going to decimate housing values is like comparing apples to onions. Let’s finally put an end to this: Since 1968 we have had a total of eight recessions. Only ONE of those recessions resulted in a loss of home values in California. In the other seven recessions—home values went UP, not down. Recessions have historically brought forth lower interest rates. Today’s environment looks nothing like it did in the run-up to the Great Recession. Home owners are well qualified for their loans, employed and have more equity than ever before.
Shelburn’s ultimate 2023 prediction:
I expect prices in West L.A. and coastal CA to be relatively flat over the next 12 months. They could be up or down a few points, but nothing substantial in either direction. However, once demand returns, even in the slightest bit—whether that’s in the form of inflation getting under control, an end to the War in Ukraine or a recession where the Fed lowers the Fed Fund Rate— expect buyers to come out of hiding…only to find themselves dejected by the amount of available inventory. The relationship of supply and demand will be completely out of whack. Seller’s will need top dollar in order to retire their Golden Loan and lose their tax basis. It will be “deja vu all over again” for those who bought or attempted to buy in 2021. Expect multiple offers, cash offers, closings well above asking prices, and home values reaching new heights.
To read Kevin Shelburn’s full outlook on the market, click here.