LANCASTER — Limited inventory is hitting the residential and commercial real estate markets, while the changing economic landscape is having a greater impact on the residential market, forecasters said during Friday’s Antelope Valley Economic Development & Growth Enterprise (AV EDGE) 2023 Spring Business Summit.

As part of an overview of the Antelope Valley’s economic status and a peek into the future, real estate experts in both markets provided an update.

The nation’s economic forecast, with increasing interest rates and rising inflation, is not as big a factor on real estate as one might expect, experts said.

“A shifting real estate market is nothing new for us.”  “It’s nothing that we should really be surprised about.”

A tightening credit market and rising interest rates have slowed housing sales as loans may be more difficult to obtain, she said.

This also means that more people are looking to the rental market and those who are buying homes may be looking for smaller, less expensive ones.

The challenge here is a limited supply of housing, which works to keep prices higher.

“We simply do not have enough housing to begin with.” 

The issue is compounded by a lack of movement in existing housing as people are not moving from one house to another.

The COVID-19 pandemic has delayed an expected housing crash, as pandemic-era regulations allowed homeowners to delay mortgage payments for 12 to 18 months. This delay may prevent the expected number of foreclosures.

The Antelope Valley remains a haven of affordability in California and the area will continue to see migration here for that reason.

“You know you can just get more house for your money in the Antelope Valley.” 

The combination of tight credit and low inventory has set up a buyers’ market, in which buyers may be able to obtain concessions from sellers.

Until the inventory changes, housing prices are expected to remain stable, 

These conditions also mean fewer residential real estate transactions, overall. In January 2017, the Valley recorded 1,129 transactions. Last month, the number was 971 transactions, she said.

The average list price for homes in the Antelope Valley is $524,000.

On the commercial side of local real estate, “2022 was a remarkable year,” as commercial real estate trends tend to lag behind residential.

There were 220 commercial real estate transactions totaling $590 million last year. The largest sale among these was the $60 million sale of the Antelope Valley Mall.

In leasing activity, there were 176 verified leases signed last year, totaling 600,000 square feet of space, at rates from $1.09 per square foot to $1.76 per square foot. The new retail center under construction at the corner of 15th Street West and Avenue K, totaling 35,000 square feet, was pre-leased at 100% occupancy by national businesses, Toneman said.

Leasing rates have seen a steady increase, which began to level out at the end of last year and the beginning of this year, which is already impacting leasing in the Valley, she said. Leases are of a shorter term — one to two years — but with higher annual rent increases of 4% to 5%.

In terms of commercial property sales, there are 76 active properties listed.

“That is simply not enough inventory.”

This lack of inventory is reflected in higher prices than last year and they do not seem to be leveling off.

That inventory picture could be changing in the future, with 16 million square feet of “shovel-ready” industrial space in the development process in the Valley.

“The AV is in a prime spot for this type of large scale development.” 

In addition to new construction, re-purposing existing buildings is also expected to impact inventory. Projects such as these, to re-use vacant big box stores and shopping centers save cost and time for developers.

One example on the horizon is changing a 28,000-square-foot retail center in Lancaster into a medical clinic and adult day care facility.