LOS ANGELES—Condo prices in Downtown Los Angeles have fallen by 6% over the last two months. According to a report from the Mark Co., the condominium-pricing index saw a 5% decline in March, month-over-month, and then fell another 1% in April. Condo prices, however, are still trending 15% higher year-over-year. As of April, the average price per square foot for a condominium is $745.

“The pace of presales at Metropolis indicates that demand for condominiums in Downtown Los Angeles is still very strong; however, buyers choosing to purchase during presales at Metropolis represents buyers removed from the Downtown condominium market,” Erin Kennelly, senior director of research, the Mark Co., tells GlobeSt.com. “This is likely responsible for some short-term weakness in prices.”

New construction product had a 49% decrease in inventory month-over-month in April, but 605% increase in inventory year-over-year. The available product in Downtown is all presale at the Metropolis, a total of 155 units. “With new construction inventory down 49% from last month, this indicates continuing positive absorption and strong market fundamentals,” says Kennelly. “Furthermore, there are only 1,155 condominium units under construction in Downtown Los Angeles. Even if all of these units began marketing tomorrow, there would only be about half as many units as in 2009 when new inventory peaked at approximately 2,500 units. For comparison, there are currently more than 5,000 new apartments under construction.”

For resale condominium product, there were 83 active listings in April. The pricing index for resale condominiums alone actually trended upward, increasing by 11% over the previous month to $627 per square foot, and is 16% higher than this time last year. 

Thankfully, Kennelly doesn't expect the pricing index to continue to fall. “Low inventory and strong absorption usually precede price increases. However, the next major milestone for Downtown Los Angeles will be late next year when closings begin at Metropolis,” he says. “I expect that closed sales of high-priced, new homes in Downtown Los Angeles will inspire confidence among potential buyers that have been waiting on the sidelines.”