Hello and welcome to the real estate minute. I’m your host Ivan Estrada with Ivan Estrada properties at Douglas Elliman. In this episode we’re discussing the events and variables that are affecting the Los Angeles real estate market on a micro standpoint, then we’ll go out to a national level and then a global perspective. So, the real estate minute is going to work like this. There are three segments, one minute each, three minutes total. Let the real estate minute begin.
Los Angeles is the second most populated city in the entire country, which means that there’s a lot of people looking for homes. And it takes us back to supply and demand. There is a lot less supply, and a lot more demand. But there are four growing industries at the moment that are going to take this to the next level. The first one is construction. A multibillion-dollar industry that’s employing over a hundred and twenty thousand people here in Los Angeles and is expected to grow in the next five years. The second one is logistics and transportation. With some of the most important ports here on the western region, including San Pedro, Long Beach and San Francisco. The third one is manufacturing. On a national level it continues to go down but here in Los Angeles it continues to rise, especially in areas such as aerospace, medical devices, and apparel. And the last is Health Care. Health Care continues to rise employing more people in Los Angeles than ever before especially as Baby Boomers continue to retire.
The health of the national real estate economy really depends on the national economy as a whole with key factors such as the GDP, income growth, and the unemployment rate. But there are three variables that will affect the real estate market in the next couple of years. The first one being the interest rate. The Federal Reserve is already said that it will continue to raise the interest rate within the next couple of months, which means that depository institutions will have to pay more money to borrow money, which will then trickle down to you the consumer. The second one being politics. With a tax cut and job act was enacted in 2017 it’s yet to be seen how it’ll affect our economy’s GDP in 2019 on a corporate level as well as an individual level. The third one being demographics. With Baby Boomers about to retire and a new wave of buyers of Generation X, Millennials and Z. We all see real estate much differently. Through function, utility as well as investment.
Although real estate is seen as more of a local market, you’d be surprised how global events can really affect the price of your home. For example, wars, natural disasters, or interest rates not just here in our country, but on a global perspective. For example, our current Administration has imposed a 25% tariff on Chinese steel. Although single-family homes won’t be affected, areas such as condominiums and apartments will have to increase their prices because they use about 40% of steel in all of their projects. The second one is a 25% tax on Canadian timber. We get about one third of our timber from Canada, which means that newly constructed homes will have to eventually rise in price as well. The third one is the rise of inflation. With any trade wars and increases in the general interest rate, which will then increase inflation. Now what does the rise of inflation mean for you? Well it’s less purchasing power towards your next home or investment.
Thank you so much for watching this episode of the real estate minute. I’m your host Ivan Estrada with Ivan Estrada properties at Douglas Elliman checking out from Westwood. If you like the video subscribe comment and share. Don’t forget to follow me on Facebook, Instagram, YouTube and Twitter at Ivan Estrada properties. I’ll see you next month.
About Ivan Estrada Properties: Ivan Estrada and his elite team of real estate agents are dedicated to providing an unforgettable experience in finding your dream home in Beverly Hills and other areas in Los Angeles County. Call us today at 323.574.2317 or contact us here.