San Francisco and Los Angeles are both strong real estate markets - but their dynamics have varied over the past several months since shelter-in-place. We take a look below at these two markets in detail, but first let's contextualize against the broader economic environment.
1
The gap between the money supply and the fiscal deficit has widened dramatically since Q1
Ongoing stimulus efforts and economic slowdown will likely lead to currency debasement, keeping home prices high
Source: Bloomberg
2
The strength of the residential real estate market is fueling new construction across the country
Home builder sentiment is at an all-time high with privately owned housing starts annualizing at 1.41m
Source: National Association of Home Builders, US Census Bureau
3
In California, 22% of all recent home sales have been over $1 million
Demand for larger homes combined with price appreciation is pushing up the luxury segment of the market
Source: California Association of Realtors
4
So how have SF and LA fared since the shutdown? Check the receipts.
With online sales flat in SF, signs point to a decline in occupancy. Meanwhile, LA spending has jumped 31%.
Source: SF Office of the Controller
5
Inventory levels in SF are on a meteoric rise; LA remains more constrained
Sellers in SF are motivated to capitalize on pent-up buyer demand while LA supply levels remain low
Source: MLS, Redfin, mikedp.com
6
On the demand side, LA has yet to fully recover from waning purchase volume driven by the shutdown
Even with inventory levels soaring in SF, buyer interest has rebounded 25% higher year-over-year
Source: MLS, Redfin, mikedp.com
7
The rental market in both cities has softened, with a 4x steeper decline in SF
While many SF residents seek more space, the geographical diversity of LA has been a hedge against outward migration.
Source: Apartment List, Realtor.com
8
Every vote counts, especially yours.
If one thing is true, it's that the markets will continue to change in the coming months. We'll report back in November, and will see you at the polls on November 3rd.
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