AppraiseAI Weekly Newsletter - 05/28

Home Renovation Spending Remains Strong Despite Economic Uncertainty

Sales at building materials and garden supply retailers rose 0.8% from March and 3.2% year-over-year in April. The cost of home remodeling increased nearly 4% in Q1 2025, primarily due to labor costs. High mortgage rates near 7% are deterring homeowners from selling, leading to increased investment in current homes. Nearly half of U.S. owner-occupied homes were built before 1980, increasing the need for upgrades.

Home improvement spending reached $513 billion in Q1 2025 and is projected to rise to $526 billion by Q1 2026.
Experts caution that a downturn in the housing market or broader economy could slow this trend.

Despite economic uncertainties, homeowners are prioritizing renovations, driven by aging housing stock and high mortgage rates discouraging moves.

Southern California Housing Market Shifts Toward Buyers

Los Angeles County's median sale price increased by 4.29% year-over-year to $852,190. Inventory levels surged by 48.10%, providing buyers with more options. Homes are spending more time on the market, with a 42.86% increase in median days on market. The market has transitioned from a strong seller's market to a balanced or buyer's market.

Buyers now have increased negotiating power due to higher inventory and longer listing times.
Sellers may need to adjust expectations and strategies to attract buyers in this evolving market.

The Los Angeles housing market is becoming more favorable for buyers, with increased inventory and longer listing times providing greater opportunities for negotiation.

Los Angeles 2024 Housing Report: Progress and Ongoing Challenges

The city permitted about 17,200 new housing units in 2024, achieving only 30% of its annual target under state housing goals. Just 3,000 of the permitted units were affordable for low-income residents, highlighting a major shortfall in addressing housing needs. Mayor Karen Bass’s Executive Directive 1 significantly reduced approval times for affordable housing projects, advancing more than 30,000 units.

Reform ideas include self-certification for smaller projects and updating building codes to allow single-stairway buildings to speed up development.
State legislation such as SB 79 could increase allowable housing density near transit-rich areas, unlocking more development opportunities.

Los Angeles is still falling short of its housing production goals. While progress has been made to streamline approvals, deeper policy changes and financial incentives are essential to meet demand—especially for affordable housing.

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Weekly Newsletter - 5/28