GlobeSt.com: What needs to happen to bring home prices down?

Steuernol: Historically we've seen a reduction in home prices as demand slows from buyers. Rising interest rates, economic recession, a lack of confidence in the market, over supply, all have a negative impact on home values. We may see an uptick in interest rates moderate the growth in sale prices. There is no land available for large-scale single-family home construction in L.A. County to create an oversupply situation. High-rise/high-density condo and apartment development would really be the areas that could potentially create an overbuilt situation; however, there remains such a real shortage of housing.

GlobeSt.com: Rental rates are also rising. At what point will rental rates push people back to the home market?

Steuernol: Trends in the rental market and single-family market often coincide with one another. The 2008 financial crisis pushed those that could not keep their homes into the rental market, en masse. Prior to that, a strong economy and historically low interests rates drove home ownership to an all-time high. At that time, because of artificially low zero-interest/interest only variable mortgagees it was cheaper to own versus rent. I don't anticipate seeing the point in our market area when high rental rates will push renters into the single-family market, as it was experienced before. For many, apart from the sticker shock of home prices, home ownership expenses in Los Angeles, i.e. taxes, insurance maintenance, and a mortgage will often not outweigh the costs associated with renting.

GlobeSt.com: How do condos play a role here, if at all?

Steuernol: The condo market fluctuates similarly to the multifamily housing market. Although in the downturn we've seen that for-sale condos often times get hit the hardest in terms of value, and condo of developers and owners that don't sell tend to place their units into the rental pool along with the apartments creating a shadow market. It is a supply and demand issue. Condos are also have the added cost of Home Owner Association fees, on top of taxes, insurance, maintenance, and a mortgage. That cost has an impact on the demand for condos and rental rates.

GlobeSt.com: What is your forecast for the remainder of the year concerning the relationship between home prices and the rental market?

Steuernol: I believe we will continue to see growth in both the single-family market and rental market. A key driver in this relationship will be the impending rise of interest rates. We will know rates are expected to climb which negatively impacts values of homes and borrowers his ability to obtain financing. We might see rental rate start to level off, although I believe the rental market will remain extremely strong in Los Angeles. LA is one of the strongest economies in the world, people want to live here and we already have a shortage of viable affordable housing. We will have to hold on for the ride and see where the market takes us. Generally speaking, I believe we are in an incredibly dynamic time in the marketplace and the future is bright.