Why the Beverly Hills Housing Market Won’t Crash: 2 Key Reasons for Stability in 2024
Why the Beverly Hills Housing Market Won’t Crash: 2 Key Reasons for Stability in 2024 | Christophe Choo at Coldwell Banker Global Luxury is Your Local Real Estate Expert
In recent months, you may have heard concerns about the economy and rumors of a potential housing market crash. If you're feeling uneasy, you're not alone. But here's the reality: the housing market is not on the verge of a crash, especially not in Los Angeles or Beverly Hills.
Real estate journalist Michele Lerner explains that a housing crash occurs when home values drop due to low demand or an oversupply of homes. Fortunately, that’s not where we stand today. Here are two major reasons why the housing market remains strong, particularly in prime areas like Los Angeles and Beverly Hills.
- Demand for Homes Exceeds Supply
One of the leading causes of the 2008 housing crash was an oversupply of homes on the market. Today, we’re facing the opposite problem. In Los Angeles and Beverly Hills, inventory remains tight, with more buyers than available homes. The National Association of Realtors (NAR) defines a balanced market as having six months of housing supply. However, we’re currently sitting at only 4.2 months nationwide, and in hot markets like Beverly Hills, that number is often even lower. This imbalance between supply and demand is driving home prices up, not down, which significantly reduces the risk of a market crash.
In fact, many luxury neighborhoods in LA, such as Beverly Hills, Bel Air, and Holmby Hills, continue to see high demand, especially for properties priced above $20 million. In these exclusive areas, buyers are still competing for limited inventory, keeping prices stable or even rising.
- Unemployment Is Low
A high unemployment rate can lead to foreclosures, which puts downward pressure on home prices. That’s exactly what happened during the 2008 financial crisis. But today’s employment landscape looks much brighter. Unemployment currently stands at just 4.1%, compared to 8.3% during the 2008 crash. This means more people are financially stable, able to make their mortgage payments, and even in a position to buy homes, fueling demand and helping to maintain home values.
In high-end areas like Los Angeles and Beverly Hills, where many buyers are well-established financially, the market remains resilient. These buyers are less affected by interest rate fluctuations and more focused on finding their dream home in one of the world’s most sought-after cities.
Today’s Housing Market Is Stronger Than in 2008
While it's natural to be concerned about economic uncertainty, the housing market—especially in luxury hotspots like Beverly Hills and Los Angeles—is in a much better position than it was during the last crash. According to Rick Sharga, Founder and CEO at CJ Patrick Company, “Literally everything is different about today’s housing market dynamics than the conditions that led to the housing crisis.”
In markets like Beverly Hills, Bel Air, and Brentwood, demand continues to outpace supply, and with low unemployment, we’re unlikely to see a significant downturn any time soon.
Bottom Line
The housing market today is fundamentally stronger than it was in 2008, especially in key luxury markets like Los Angeles and Beverly Hills. Demand still exceeds supply, and unemployment remains low, making a housing crash highly unlikely. If you want to stay updated on how these factors are influencing our local market, or if you’re thinking about buying or selling in Los Angeles or Beverly Hills, reach out to discuss your options and stay informed.
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