Los Angeles, CA Real Estate Market Trends & Analysis

Key Takeaways

  • The Los Angeles real estate market continues to remain a hotbed of activity for both buyers and investors to partake in.
  • Real estate in Los Angeles is expected to appreciate for the foreseeable future.
  • Despite historically high home values, demand remains in tact.
  • Not unlike the rest of the country, Los Angeles real estate market trends suggest the same lack of inventory that has lead to high prices will persist for at least another 12 months.

The Los Angeles real estate market has cemented itself as one of the premier housing markets for both investors and homeowners. As with its West Coast counterparts, the City of Angels has witnessed rapid price growth in the face of increasing demand. If for nothing else, real estate in Los Angeles has become the beneficiary of some much appreciated momentum. As a result, there are a number of things both Los Angeles real estate investors and buyers need to pay special considerations to.

Median Home Price Los Angeles

The greater Los Angeles area currently has a median home value of $663,500. At its current level, the median home price in Los Angeles is approximately 8.6% higher than it was last year at this time, and there’s nothing to suggest prices won’t continue to increase. In fact, the experts at Zillow are convinced the median home value in Los Angeles has the potential to increase at least an additional 2.9% in the coming year.

It is worth noting, however, that Los Angeles real estate market trends aren’t expected to keep up with national trends, at least as home values are concerned. Again, according to Zillow, national home values are expected to increase, on average, 3.1% in the coming year. Despite the modest 0.2% increase over LA, however, the West Coast mega city boasts an average home value that is more than three times the national average ($207,600).

[ What’s the best investment strategy for YOU? Take “The 10-Minute Real Estate Investor Personality Test” and find out ]

Los Angeles real estate

Median Rent Price Los Angeles

Due, in large part, to more than a half a decade of home value increases, median rent prices in Los Angeles have witnessed their own impressive ascent. Recent data presented by Zillow acknowledges that the median rent In Los Angeles is $3,490.

Of course, it’s worth noting that today’s historically high rents are skewed by equally impressive outlier neighborhoods. For example, Los Angeles’ priciest neighborhood to rent in was Santa Monica, where one-bedroom units went for more than $3,000 a month as recently as a few months ago. Not far behind, similar units in the equally popular Venice neighborhood rented for just a couple hundred dollars less. Even the famed Beverly Hills and Pacific Palisades couldn’t keep up with Santa Monica, at least in terms of rent.

Los Angeles Foreclosure Trends & Statistics

According to data provided by RealtyTrac, the Los Angeles real estate market currently has about 1,934 properties that are currently in some stage of foreclosure or are at risk of being foreclosed on. In other words, there are nearly 2,000 homes that are either in pre-foreclosure, default, up for auction, or currently owned by banks. As recently as January, however, the number of foreclosure filings was 23% lower than the same time the previous year. So while today’s foreclosure number for the Los Angeles real estate market may seem high, the numbers appear to be dropping.

Those considering investing in the Los Angeles real estate market shouldn’t ignore those homes that are currently in foreclosure. If for nothing else, foreclosures represent a significant opportunity to secure a deal at a good price. According to RealtyTrac, the median sales price of a foreclosed home in the Los Angeles area is $480,250, or — perhaps even more importantly — an impressive 27% less than their non-distressed counterparts. At their current discount, foreclosed homes in LA are about $174,750 cheaper than homes that are not at risk of foreclosure.

The majority of LA’s distressed properties are currently in a state of pre-foreclosure, amounting to 53.6% of the entire city’s distressed properties. And while pre-foreclosures may represent more than half of Los Angeles’ distressed properties, they have declined 4.8% in the last year. An additional 22.6% of LA’s foreclosures are scheduled to be placed up for auction, which could represent a great opportunity for investors that know how to navigate the auction process. And finally, 23.8% of the foreclosures in the Los Angeles real estate market are known as bank-owned, meaning the loan originator has already reposted the property from delinquent homeowners. Not unlike those homes up for auction, bank-owned homes represent a great opportunity for today’s Los Angeles real estate investors to acquire a deal at a good price.

Real estate in Los Angeles

Los Angeles Real Estate Market Predictions

We have seen prices rise in the Los Angeles real estate market for more than a half a decade, and this year doesn’t appear to be the year in which the increases subside. Instead, prices are expected to grow, albeit at a tempered pace. Forecasts are convinced real estate in Los Angeles can increase its median home values anywhere from 2.9% to 6.4% in a matter of 12 months. It is worth noting, however, that while predictions can span the spectrum, just about all of them are bullish on the idea of real estate in Los Angeles increasing in value for the foreseeable future.

Of particular interest, is the persistent presence of demand. Despite today’s high prices, demand is still in tact. In fact, the strength of the economy (as evidenced by the Fed’s willingness to increase interest rates) has seen to it that more and more buyers are ready and able to come out of the woodworks. Simply put, more people can afford to buy homes today than in recent history. As a result demand is high, but I digress. Los Angeles luxury real estate has cooled off and housing inventory hasn’t been able to keep up in areas like the Los Angeles real estate market.

The inherent lack of housing will continue to push prices higher, and more people will be forced to rent. As they tend to do, rents will increase in the face of mounting home values, making buy and hold strategies particularly enticing for those interested in Los Angeles real estate investing. You see, buy and hold real estate strategies award investors the opportunity to recoup some of the additional costs that coincide with today’s high prices. That said, if you are looking to invest in the Los Angeles real estate market, you may want to consider buying a rental property. If the Los Angeles real estate market forecast predicted by the overwhelming majority or professionals comes to fruition, buying a property to hold on to could result in years of appreciation and high rent collections.

Los Angeles remains a hotbed of real estate activity. Home prices will continue to shape the direction things head for quite some time, and an inherent lack of inventory will see to it that prices keep rising. Even with all that, however, the City of Angels remains a great place to invest, especially if you can find the right buy and hold property.

Los Angeles Real Estate Market Summary

Real estate in Los Angeles, not unlike several other major West Coast metropolitan areas, has become the beneficiary of a torrid housing market. Since the depths of the recession, somewhere around 2012, home values have increased nearly exponentially. Anyone that already owned at the time will be happy to hear that median home values went from somewhere in the neighborhood of $370,000 in early 2012 to today’s $663,500.

Today’s home values appear to be the direct result of inventory levels, or an inherent lack thereof. You see, even though prices remain high, demand is still in tact. As a result, there simply aren’t enough homes on the market to satiate the demand from buyers. Due, in large part, to the mechanics of supply and demand, the housing inventory shortage in LA will push prices higher, as we have already witnessed.

It is important to note, however, that today’s high prices are not necessarily indicative of an impending bubble as they were back in 2008. For starters, prices aren’t even at the same level as they were a decade ago. And, perhaps even more importantly, we have learned from our mistakes. The same lending practices that got us in trouble in the first place are all but gone, and prospective buyers are no longer awarded loans they can’t afford. All things considered, real estate in Los Angeles should continue its hot streak.

The Los Angeles real estate market is a great place for investors to consider if the high prices don’t scare them away. Have you considered investing in real estate in Los Angeles? If so, what is it you like about the area? Feel free to let use know in the comments below.

*The information contained herein was pulled from third party sites. Although this information was found from sources believed to be reliable, FortuneBuilders Inc. makes no representations, warranties, or guarantees, either express or implied, as to whether the information presented is accurate, reliable, or current. Any reliance on this information is at your own risk. All information presented should be independently verified. FortuneBuilders Inc. assumes no liability for any damages whatsoever, including any direct, indirect, punitive, exemplary, incidental, special, or consequential damages arising out of or in any way connected with your use of the information presented.

🔒 Your information is secure and never shared. By subscribing, you agree to receive blog updates and relevant offers by email. You can unsubscribe at any time.