As one of California’s most desirable cities, Los Angeles continues to remain near the forefront of the current housing sector rebound. Like San Diego, the Los Angeles real estate market boasts a prosperous housing market that should promote a healthy amount of activity for the foreseeable future. Gains in the last three years have helped to pull the local market out of the post-recession price weakness. Zillow has already forecasted a 1.8 percent increase in median home values over the next 12 months. The encouraging projections are due, in large part, to employment growth in the region. That said, the Los Angeles real estate market is poised for a big 2016.
The median household income in the Los Angeles metro area is approximately $57,190. The current unemployment rate in Los Angeles County is 4.8 percent compared to the national average of 5.0 percent, with unemployment rates falling 1.7 percent from a year ago. Job creation is atypical of past cycles and should continue to reduce vacancies, increase consumer confidence and permit prospective buyers to actively participate in the market. For all intents and purposes, Los Angeles is poised to remain one of the leading hubs for housing activity. In fact, the only markets that look like they may outpace Los Angeles are Houston and the rest of the Texas markets. Real estate investors, in particular, should continue to benefit from the greater Los Angeles area, as interest rates continue to benefit those who take advantage of them. The average rate on a 30-year fixed-rate mortgage continues to rest around 3.49 percent. The Federal Housing Administration (FHA) conforming loan limit in L.A. has reached $625,500, the same as the rest of the country. Most buyers in this particular market have access to government-backed financing. Perhaps even more importantly; investment activity in Southern California should remain relatively high, as bargain hunters will look to avoid the already saturated markets of San Francisco and Seattle.
Los Angeles Real Estate Market Statistics:
According to Trulia, the average Los Angeles home is worth about $553/sqft. That price represents an increase of 10.0 percent over the same period last year. Conversely, the median home price rests at $458,900. Compared to the same period one year ago, the median home price increased 6.3 percent. Price appreciation and principal payments in the last three years have boosted total equity growth since the recession. Over the last three years (12 quarters), houses have appreciated 32.8 percent. For a more comprehensive breakdown of equity, refer to the following:
- Homes purchased in the Los Angeles, CA housing market one year ago have appreciated, on average, by $34,446. The national average was $15,781 over the same period.
- Homes purchased in the Los Angeles, CA housing market three years ago have appreciated, on average, by $132,101. The national average was $49,356 over the same period.
- Homes purchased in the Los Angeles, CA housing market five years ago have appreciated, on average, by $188,058. The national average was $68,727 over the same period.
- Homes purchased in the Los Angeles, CA housing market seven years ago have appreciated, on average, by $188,576. The national average was $59,758 over the same period.
- Homes purchased in the Los Angeles, CA housing market nine years ago have appreciated, on average, by $50,711. The national average increased $16,435 over the same period.
However, while prices are up from a year ago, the rate in which they are appreciating has begun to ease.
The Los Angeles real estate market consists of 3,785 resale and new homes, including 246 open houses, as well as 4,482 homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. The number of new foreclosure filings by foreclosure type is as follows:
- Pre-foreclosures have decreased by 16.2 percent over the past year.
- Auction homes have decreased by 18.3 percent over the past year.
- Bank owned properties have decreased by a whopping 35.8 percent over the past year.
These properties now have a strong influence over inventory levels, especially on a local level. Rising inventories, through distressed sales, place a downward pressure on median home prices – supply and demand at its very best.
Los Angeles, CA: Real Estate Market Summary:
- Current Median Home Price: $458,000
- 1-Year Appreciation Rate: 6.3%
- Unemployment Rate: 4.8%
- 1-Year Job Growth Rate: 2.6%
- Population: 13,296,946
- Median Household Income: $58,860
Los Angeles, CA: Real Estate Market (2016) — Q1 Updates:
The first quarter of 2016 has gone exceptionally well for real estate in the Los Angeles market. The current median home price in LA is $458,000, almost double the national average of $215,767, with home appreciation settling at 6.3 percent in Q1 compared to the national average of 6.1 percent. Total equity appreciation in LA has risen to $34,446 compared to the national average of $15,781.
Backed by strong real estate demand, new housing construction in Los Angeles continues to flourish as well as the current level of construction is 9.2 percent above the long-term average. However, the rising inventories whether through construction or distressed sales, could place downward pressure on the median home price for Los Angeles.
Another positive for the LA housing market is employment rates and job growth — both of which continue to improve. Job growth in Los Angeles has seen a 2.6 percent increase in the last 12 months while unemployment rates are below the national average. As of March 2016, the current unemployment rate in Los Angeles is 4.8 percent compared to 6.5 percent one year ago. 2.6 percent.
Moving forward, the housing market in Los Angeles will continue to be influenced by record low mortgage rates in 2016. These low rates should pave the way for homeownership to increase in LA in the next few months.
Los Angeles, CA: Real Estate Market Review (2015)
2015 was another step in the right direction for the Los Angeles housing market. Driven by low mortgage rates the volume of LA home sales rose significant in the 12-months following 2014, finishing the year 11 percent higher than the previous year. According to Zillow, the median sale price in Los Angeles began the year at $537,000 and continued to rise — peaking in August at $590,000 — until ending in December at $579,000. Overall, home prices in Los Angeles in 2015 finished the year approximately six percent higher than the previous year.
As the epicenter of entertainment, the Los Angeles real estate market continues to be one of the least affordable markets in the nation. Despite being below its historical average of 23.9 percent, affordability remained an issue for LA homeowners in 2015 as the monthly mortgage payment to income ration was 19.6 percent compared to the national average of 15.6 percent. In addition, homeownership in Los Angeles continued to decline as the fourth quarter of 2015 saw homeownership rates slip to 49.1 percent compared to the first quarter of 50.2 percent.
Los Angeles, CA: Real Estate Market Review (2014)
The Los Angeles housing market was one of the hottest in the country in 2014. However, that being said, affordability became a major issue. A survey issued by Redfin suggested that affordability is the largest impediment to owning a home – not just in L.A., but also on a national level. The prospect of saving enough money for a down payment is daunting to say the least. The median home value in the area is more than double the national average. Moreover, Los Angeles apartments demand some of the highest rents in the country: great for buy and hold investors, but bad for first-time buyers.
“Many homebuyers have recoiled from the dramatic increase in house prices in urban centers posted over the past three years,” Redfin Chief Economist Nela Richardson said in a statement. “They are now searching for more affordable places farther out.”
Los Angeles is one of the most expensive markets in the country. High-end neighborhoods, in particular, are even more unaffordable than they were prior to the bubble. Values in Beverly Hills, Santa Monica and Bel Air have exceeded their pre-recession peaks. In fact, Los Angeles had the strongest price growth in all of Southern California at the beginning of the year. As recently as January, the Los Angeles housing market demonstrated a 12.6 percent price increase over the same period last year. With the growth, Los Angeles County now has a median home value of approximately $460,000. Conversely, the weakest growth witnessed in Southern California was in Orange County, where the median grew 2.3 percent to $562,500. To put things into perspective, Los Angeles easily outpaced cities like Seattle and Denver.
Historically high appreciation rates have been felt across the entire Los Angeles real estate market. Ever increasing prices and a tight inventory have culminated in fewer existing home sales at the onset of 2015. However, there will always be a steady supply of demand to fill homes in the area. Despite several headwinds, the Los Angeles real estate market is primed to have a strong 2015.
Los Angeles Real Estate Market Map: