Wednesday, June 20, 2018

Los Angeles Condo Market Remains Healthy and Strong

- Intended for Students/New Analysts to Learn Analytics -

(Click on the image to enlarge)

The Los Angeles Condo Market steadily moved up from $440K to $500K (14%) in a year, proving strong fundamentals. Obviously, the large drop in December (#12) and the meteoric rise in February (#14) are outliers. Both trendlines are confirming these outliers and ignoring the interim breakout attempts, thereby pointing to stable but resilient market internals.   

The normalized trend (bottom chart) is in tandem as well, rising from $370/SF to $420/SF (14% annualized growth). Again, the trendlines are ignoring the outliers and the interim breakout. Of course, it's not a linear growth as evidenced by the lower angle of the slope. LA market did however experience linear growth for 4-5 years post recession, averaging 30% growth. 

While constructing the normalized trend one needs to ensure that the monthly median sizes remain well within 4-5% (expected margin of error) of the overall median. Any abrupt shift (in demand) could skew the normalized values. It was a non-issue in this study.

Note: This study covers the entire LA county.

- Sid Som, MBA, MIM
President, Homequant, Inc.

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