The current housing market report for Los Angeles and Southern California reflects the intricate interplay of various factors. While median prices show resilience and growth, the challenges in sales indicate a more nuanced and complex scenario.
According to the latest report from the California Association of Realtors, the statewide median home price in October 2023 stood at $840,360, reflecting a marginal decline of 0.4 percent from September. However, compared to October 2022, there was a notable increase of 5.3 percent in the median home price.
Los Angeles County Housing Metrics
Zooming in on Los Angeles County, a critical player in the California real estate scene, the median sold price of existing single-family homes in October 2023 was $893,650. This marked a decrease of 2.3 percent from the preceding month, where the median price was $914,640. Nonetheless, in a year-over-year comparison with October 2022, the median sold price exhibited a robust 4.6 percent growth.
- Median Sold Price: $893,650
- Month-to-Month Price Change: -2.3%
- Year-over-Year Price Change: 4.6%
- Sales Month-to-Month Change: 8.3%
- Sales Year-over-Year Change: -5.8%
Insights into Sales Performance
The sales dynamics in Los Angeles County present an interesting picture. While the month-to-month change indicates a substantial 8.3 percent increase in sales, the year-over-year perspective shows a 5.8 percent decline. This suggests that despite the month-to-month surge, the housing market in Los Angeles County has faced challenges compared to the same period last year.
Southern California Real Estate Landscape
Expanding our view to Southern California as a whole, the median sold price of existing single-family homes in October 2023 was $820,000. Surprisingly, this figure remained unchanged from September, indicating stability in the short term. However, when contrasted with the same period in the previous year, there was a significant 6.5 percent increase in the median sold price.
- Median Sold Price: $820,000
- Month-to-Month Price Change: 0.0%
- Year-over-Year Price Change: 6.5%
- Sales Month-to-Month Change: 3.0%
- Sales Year-over-Year Change: -7.4%
Stability and Challenges in Southern California
Unlike Los Angeles County, Southern California experienced a month-to-month stability in median sold prices. However, the year-over-year comparison reveals a 7.4 percent decline in sales. This suggests that while prices remain steady, the volume of real estate transactions has encountered obstacles, possibly influenced by broader economic factors and market uncertainties.
Are Los Angeles housing prices dropping?
The apparent decrease in the median sold price from September to October 2023 might raise questions about a potential drop in Los Angeles housing prices. However, it's essential to consider the broader context. The year-over-year growth of 4.6% suggests that, over the longer term, housing prices in Los Angeles have actually seen an upward trend.
Various factors contribute to the fluctuations in housing prices, including interest rates, economic conditions, and buyer-seller dynamics. The marginal month-to-month decline could be influenced by short-term market conditions or seasonal factors. It's noteworthy that despite the recent dip, the housing market has exhibited resilience and growth over the past year.
While the month-to-month data might suggest a temporary dip in housing prices, the year-over-year growth underscores the overall strength of the Los Angeles real estate market. The housing landscape is dynamic, and fluctuations are common. Investors, homebuyers, and industry observers should approach the data with a nuanced perspective, considering both short-term variations and long-term trends.
Los Angeles Housing Supply Data
Generally, a balanced market will lie somewhere between four and six months of supply. Inventory is calculated monthly by taking a count of the number of active listings and pending sales on the last day of the month. If an inventory is rising, there is less pressure for home prices to increase. With 2.9 months of supply left, it is still short of what economists say is needed for a balanced market. Hence, the Los Angeles County housing market will continue to see upward pressure on home prices.
- Months Supply of Inventory (SFH) for Los Angeles County is now 2.8 months.
- Months Supply of Inventory (SFH) for the Los Angeles Metro Area is 2.9 months.
- Months Supply of Inventory (SFH) for Southern California is 2.8 months.
Is Los Angeles a Seller's Real Estate Market?
The following Los Angeles housing market trends are based on single-family, condo, and townhome properties listed for sale on realtor.com. Land, multi-unit, and other property types are excluded. This data is provided as an informational resource only.
When it comes to the real estate market, one crucial factor to consider is whether it favors sellers or buyers. A seller's market indicates that there is more demand from buyers than the available supply of homes.
Median Listing Home Price Soars
According to Realtor.com, as of October 2023, the median listing home price in Los Angeles County, CA stands at an impressive $995K, marking a significant 15% year-over-year increase. This surge in pricing reflects the robust demand for homes in the region, making it a noteworthy trend for potential buyers and sellers to consider.
Breaking down the figures, the median listing home price per square foot comes in at $638. This metric provides valuable insights for those looking to understand the spatial value of properties in the county. Prospective buyers can use this data to make informed decisions about their real estate investments.
The median home sold price in Los Angeles County, CA is currently at $868.5K. This essential data point gives a clear picture of the actual prices homes are fetching in the market, offering both buyers and sellers a realistic benchmark to guide their expectations.
Sale-to-List Price Ratio
One notable aspect of the Los Angeles County, CA housing market in October 2023 is the sale-to-list price ratio of 100%. This indicates that, on average, homes are sold for the asking price. Such a scenario suggests a well-balanced market where buyers and sellers find common ground, fostering a harmonious real estate environment.
Market Balance
Examining the broader dynamics, Los Angeles County, CA proves to be a balanced market in October 2023. This equilibrium signifies that the supply and demand for homes are approximately equal. Both buyers and sellers can navigate this scenario with reasonable expectations, making it a favorable environment for real estate transactions.
Median Days on Market
For those eager to understand the pace of the market, the median days on market for homes in Los Angeles County, CA is 42 days. This metric measures the average number of days it takes for a property to sell. The trend over the past month has shown a decline, and compared to the previous year, there is a slight decrease. This indicates a market that is efficient and responsive to buyer demand.
Is Rent Going Down in Los Angeles?
The Zumper Los Angeles Metro Area Report offers a multifaceted view of the rental market. While some cities boast high rents, others provide more affordable options. The data also indicates significant variations in rent growth rates, both over the past year and on a monthly basis.
California One Bedroom Median Rent
As of last month, the median rent for a one-bedroom apartment in California stood at $2,063, according to the Zumper report. This sets the baseline for understanding the variations in different cities across the Los Angeles metro area.
The Most Expensive Cities
Examining the top end of the spectrum, the report identifies the most expensive cities for one-bedroom rentals:
- Newport Beach: $3,310
- Laguna Beach: $3,270
- Santa Monica: $3,160
The Least Expensive Cities
Contrastingly, the report also highlights the most affordable cities for one-bedroom rentals:
- San Bernardino: $1,400
- Hawthorne: $1,740
- Long Beach: $1,800
Fastest Growing Rents (Year-over-Year)
For those observing the trend in rent growth over the past year, the report highlights the cities with the fastest-growing rents:
- Torrance: Up 11.7%
- Newport Beach: Up 10.3%
- Costa Mesa: Up 8.7%
Fastest Growing Rents (Month-over-Month)
For a more short-term perspective, the report provides insights into the cities with the fastest-growing rents on a monthly basis:
- Newport Beach: Monthly growth rate of 6.1%
- Dana Point: Monthly growth rate of 6%
- Ventura: Monthly growth rate of 5.1%
Los Angeles Housing Market Forecast 2023-2024
The Los Angeles-Long Beach-Anaheim housing market is dynamic and has witnessed a consistent upward trend. According to Zillow, as of October 31, 2023, the average home value in this region stands at $899,401, reflecting a 2.6% increase over the past year. Homes in this area typically go pending in around 15 days.
Market Forecast:
The 1-year market forecast, as of October 31, 2023, indicates a -1.7% change in the housing market by October 2024. This forecast suggests a potential adjustment in property values over the coming year.
Key Metrics (As of October 31, 2023):
- For Sale Inventory: 16,153
- New Listings: 6,181
- Median Sale to List Ratio (September 30, 2023): 1.005
- Median Sale Price (September 30, 2023): $890,000
- Median List Price (October 31, 2023): $999,629
- Percent of Sales Over List Price (September 30, 2023): 56.0%
- Percent of Sales Under List Price (September 30, 2023): 32.5%
- Median Days to Pending (October 31, 2023): 15
Note: All data is based on information available through October 31, 2023.
These metrics provide a comprehensive snapshot of the current real estate landscape in Los Angeles, offering valuable insights for potential buyers, sellers, and investors.
Is Los Angeles Housing Market Going to Crash?
Some of housing analysts say that home prices in Los Angeles and Orange counties will fall by the middle single digits in 2023, while home prices in the Inland Empire will fall by the high single digits over the same time period. They anticipate that prices will continue to fall on a regional and national scale in 2024 but at a considerably slower rate, followed by a little increase in 2025.
Do buyers have any advantage? Is it the right time to buy a house in Los Angeles? This is a never-ending question with no definitive answer. Buyers believe it is not a very good time to buy a home in Los Angeles due to rising mortgage rates and home prices. On the other hand, it is a good time to sell so you can expect more inventory due to increasing seller optimism.
More houses are expected to be listed in the coming months which may bring down the pace of appreciation to some extent. Affordability is a big issue in Los Angeles County as nearly three in four residents can’t afford to buy a median-priced home in the area. According to HousingWire, an index that combined median income and median home prices made Los Angeles the least affordable city in the country, and several younger residents said they were concerned they will never be able to afford a house. Home shoppers are leaving Los Angeles for cheaper metros, the most popular being Las Vegas.
Is Real Estate a Good Investment in Los Angeles?
Investing in real estate in Los Angeles for the long term can be an attractive option, but it's essential to carefully evaluate the market and consider several factors before making such a significant financial commitment.
Los Angeles has historically been a sought-after real estate market due to its desirable location, diverse economy, and strong demand for housing. Here are some key points to consider:
Market Stability
Los Angeles has a relatively stable real estate market with a history of consistent, long-term appreciation in property values. This stability is driven by factors such as the city's status as an economic hub, its thriving job market, and the limited supply of land for new construction. However, it's essential to note that like any market, there can be fluctuations, and past performance is not indicative of future results.
Property Appreciation
Over the long term, Los Angeles properties have typically appreciated in value. While there can be short-term fluctuations, investing with a long-term perspective can allow you to benefit from the city's overall property value growth.
Rental Income Potential
Los Angeles has a strong rental market, with a high demand for both single-family and multi-family rentals. This presents an opportunity for investors to generate rental income. However, rental income potential can vary depending on the neighborhood and property type.
Consideration for Property Type
Investors in Los Angeles can choose between single-family and multi-family properties. Single-family homes often provide more predictable rental income and potential for appreciation, while multi-family properties can offer multiple income streams but come with added management responsibilities.
The Housing Shortage Dilemma
Los Angeles is no stranger to the housing shortage dilemma. As its population continues to grow, driven by a robust job market and desirable lifestyle, the housing market struggles to keep pace. The consequences are multifold, affecting both renters and potential homeowners. High demand has led to escalating rental costs and home prices, making housing less affordable for many.
Investor's Paradise: The Demand-Supply Gap
For real estate investors, this gap between demand and supply represents a significant opportunity. The housing shortage has created a strong demand for rental properties, offering the potential for attractive rental income and return on investment. Here's why Los Angeles is an investor's paradise:
- Rental Income: High demand for housing has driven up rental rates, providing investors with the prospect of steady rental income.
- Property Appreciation: Despite the challenges, Los Angeles properties have shown a history of appreciating in value over the long term.
- Population Growth: Los Angeles continues to attract new residents due to its economic opportunities and lifestyle. This demographic growth fuels the demand for housing.
- Construction Gap: Construction in Los Angeles hasn't kept pace with population growth, intensifying the supply-demand imbalance.
Economic Diversity
Los Angeles is renowned for its economic diversity. The region's economy spans various sectors, including entertainment, technology, aerospace, healthcare, and tourism. The presence of major corporations, such as those in the entertainment and tech industries, has been a key driver of job creation and economic growth. The city's thriving tourism industry, centered around attractions like Hollywood and Disneyland, also plays a significant role in generating revenue and job opportunities.
Job Growth
Los Angeles has consistently experienced job growth, making it an attractive destination for job seekers. The city's diverse economic landscape provides opportunities in various fields. It is a hub for creative industries, with Hollywood serving as the epicenter of the global entertainment industry. Additionally, the tech sector has witnessed substantial growth in Silicon Beach, an area on the west side of Los Angeles, home to numerous tech startups and established companies.
The presence of educational institutions, including the University of California, Los Angeles (UCLA) and the California State University, Northridge, contributes to research, development, and a well-educated workforce. The healthcare sector, with renowned institutions like the Cedars-Sinai Medical Center, further drives job opportunities.
Population Growth
The Los Angeles Metropolitan Area's strong economy and job market have attracted a steady influx of residents. The allure of the city's lifestyle, cultural diversity, and range of amenities has made it a magnet for people from various backgrounds. The region's population growth can be attributed to factors such as:
- Job Opportunities: People move to Los Angeles in search of better job prospects and career growth.
- Education: The presence of top-tier universities and educational institutions attracts students and faculty from around the world.
- Cultural Attractions: The city's vibrant cultural scene, including theaters, museums, and art galleries, appeals to those seeking a rich cultural experience.
- Quality of Life: Los Angeles offers a pleasant climate, beautiful landscapes, and recreational opportunities that enhance the quality of life.
- Entertainment Industry: The allure of the entertainment industry draws aspiring actors, musicians, and filmmakers to Los Angeles.
As the population continues to grow, the demand for housing and services surges, creating a dynamic environment for real estate investors.
How to Invest in Real Estate in Los Angeles?
Investing in real estate in Los Angeles involves several steps:
1. Research the Market: Begin by thoroughly researching the Los Angeles real estate market. Analyze historical property values, rental trends, and the performance of different neighborhoods.
2. Financial Preparation: Ensure your financial situation is in order. This may include saving for a down payment, understanding your credit score, and securing financing.
3. Property Selection: Choose the type of property you want to invest in, whether it's a single-family home, multi-family building, or another type. Consider your investment goals and budget.
4. Location Matters: Location is critical in Los Angeles. Research neighborhoods and select areas with potential for growth and strong rental demand.
5. Property Management: Decide whether you'll manage the property yourself or hire a property management company. This choice may depend on the number of units and your experience.
6. Legal and Tax Considerations: Understand the legal and tax implications of real estate investing in Los Angeles. Consult with professionals if needed.
Single-Family Rental vs. Multi-Family Investment
When considering whether to invest in single-family or multi-family properties, it's essential to weigh the pros and cons of each:
Single-Family Rental:
- Typically lower initial investment.
- Easier property management.
- Predictable rental income.
Multi-Family Investment:
- Multiple income streams.
- Potential for higher overall rental income.
- More management responsibilities.
The choice between the two depends on your investment goals, budget, and willingness to manage the property. Both can be viable options in the Los Angeles market.
Maximizing Return on Investment
Investors looking to maximize their return on investment (ROI) in Los Angeles should consider the following strategies:
- Location Selection: Carefully choose neighborhoods with strong rental demand and potential for property appreciation.
- Property Type: Evaluate whether single-family or multi-family properties align with your investment goals and budget.
- Property Management: Efficient property management can enhance ROI by reducing vacancies and maintenance costs.
- Market Timing: Keep an eye on market trends and consider timing your investment to take advantage of favorable conditions.
- Legal and Tax Considerations: Consult with legal and financial experts to ensure you're optimizing your investment from a legal and tax perspective.
References:
- https://www.car.org/marketdata/data/countysalesactivity
- https://www.zillow.com/losangeles-ca/home-values
- https://www.zumper.com/blog/los-angeles-metro-report/
- https://www.realtor.com/realestateandhomes-search/Los-Angeles_CA/overview
