Los Angeles Housing Market Trends And Forecast for 2024 – Norada Real Estate Investments

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The current housing market report for Los Angeles and Southern California reflects the intricate interplay of various factors.  According to the latest report from the California Association of Realtors, in November, existing single-family home sales in California totaled 223,940, reflecting a 7.4% decrease from October and a 5.8% dip from the same month in 2022. These figures, when adjusted for seasonality, provide insights into the overall real estate activity in the state.

November’s statewide median home price stood at $822,200, marking a 2.2% decline from October. However, on a year-over-year basis, the median home price saw a significant 6.2% increase, underlining the resilience of the California housing market despite short-term fluctuations.


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Los Angeles County Housing Metrics

Zooming in on Los Angeles County, we find specific metrics that shed light on the local real estate landscape. The median sold price of existing single-family homes in November 2023 was $897,990, with a marginal 0.5% increase from the previous month, when it was $893,650. On a year-over-year basis, this reflects a robust 7.3% surge from November 2022.

However, the sales dynamics present a more nuanced picture. While the median price exhibited positive momentum, the sales figures tell a different story. Month-to-month, there was a 15.6% decline in sales, and on a year-over-year basis, the drop was 5.1%. This divergence between price and sales highlights the complexities and challenges within the Los Angeles housing market.

Comparative Analysis with Southern California

For a comprehensive understanding, let’s compare Los Angeles County with the broader Southern California region. In November 2023, the median sold price of existing single-family homes in Southern California was $824,500, slightly lower than Los Angeles County’s figure. However, the year-over-year increase was higher at 9.9%, emphasizing the regional variations in real estate performance.

Similar to Los Angeles County, Southern California experienced a 0.5% month-to-month increase in median home prices. However, the sales dynamics exhibited a more significant decline, with a 14.2% drop from the previous month and a 5.6% decrease compared to November 2022.

Key Takeaways and Future Considerations

This in-depth analysis of the Los Angeles housing market provides valuable insights for both current homeowners and prospective buyers. The rise in median home prices indicates the market’s overall strength, but the decline in sales raises questions about factors such as affordability, market saturation, or economic uncertainties.

As we navigate the intricacies of the housing market, it’s essential for stakeholders to stay informed about these trends. Whether you’re planning to buy, sell, or invest in real estate, a comprehensive understanding of the market dynamics is a valuable asset.

Deciphering the Trends: Are Los Angeles Housing Prices on the Decline?

Understanding the current state of the Los Angeles housing market is pivotal for residents, potential buyers, and investors alike. Let’s delve into the data to address the burning question: Are Los Angeles housing prices dropping?

Statewide Context

Starting with a statewide overview, the November 2023 data reveals a nuanced scenario. Existing, single-family home sales in California totaled 223,940, showing a 7.4% decrease from October and a 5.8% drop from November 2022. Despite this dip, the statewide median home price stood at $822,200, reflecting a 2.2% decline from the previous month but a notable 6.2% increase from November 2022.

Los Angeles County Metrics

Zooming into Los Angeles County, a key focal point for many, the median sold price of existing single-family homes in November 2023 was $897,990. While this marks a modest 0.5% increase from October, it signifies a robust 7.3% surge from November 2022.

However, the sales dynamics present a more complex narrative. The month-to-month sales figures reveal a 15.6% decline, and on a year-over-year basis, the drop is 5.1%. This discrepancy between rising prices and declining sales raises questions about the factors influencing the Los Angeles housing market.

Comparative Analysis with Southern California

For a more comprehensive perspective, let’s compare Los Angeles County with the broader Southern California region. In November 2023, Southern California experienced a median sold price of $824,500, slightly lower than Los Angeles County’s figure. The year-over-year increase, however, was higher at 9.9%, indicating regional variations.

Similar to Los Angeles County, Southern California saw a 0.5% month-to-month increase in median home prices. Yet, the sales dynamics in the region exhibited a more substantial decline, with a 14.2% drop from the previous month and a 5.6% decrease compared to November 2022.

Are Los Angeles Housing Prices on the Decline?

The question of whether Los Angeles housing prices are dropping does not have a straightforward answer. While median prices have shown resilience and even registered growth, the decline in sales suggests underlying challenges in the market. Factors such as affordability, economic conditions, and market saturation may contribute to this complex scenario.

Stakeholders in the real estate market, including buyers, sellers, and investors, should monitor these trends closely. It’s advisable to stay informed, conduct thorough research, and, if needed, seek professional guidance to make well-informed decisions in the ever-evolving landscape of the Los Angeles housing market.

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 2.9 months.
  • Months Supply of Inventory (SFH) for the Los Angeles Metro Area is 3.1 months.
  • Months Supply of Inventory (SFH) for Southern California is 3.0 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.

In November 2023, Los Angeles County, CA maintained a balanced market, signifying an equilibrium between the supply and demand for homes. This delicate balance contributes to a stable and competitive real estate landscape, where both buyers and sellers can navigate transactions with confidence.

Median Listing Home Price Soars to $995K

As of November 2023, the median listing home price in Los Angeles County, CA stands impressively at $995K, reflecting a substantial 13.7% year-over-year increase. This surge underscores the robust demand and the dynamic nature of the housing market in the region. The median listing home price per square foot follows suit at $639, indicative of the premium placed on property value.

Median Home Sold Price: $872.8K

For those considering a home purchase, the median home sold price in Los Angeles County, CA hovers around $872.8K. This figure provides prospective buyers with a realistic benchmark as they navigate the diverse options available in this bustling real estate market.

Sale-to-List Price Ratio at 100%

One striking aspect of the Los Angeles County housing market is the 100% sale-to-list price ratio. This implies that homes in the area are selling for approximately the asking price on average. This balance between buyer and seller dynamics suggests a healthy equilibrium, fostering a fair and transparent real estate environment.

Median Days on Market: 49 Days

Time is of the essence in the Los Angeles County housing market, with homes typically spending an average of 49 days on the market. This metric serves as a crucial indicator of market activity and consumer behavior. While the median days on market have experienced a slight increase since last month, they have seen a modest decline compared to the previous year.

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 $2,052, 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:

  1. Santa Monica: $3,210
  2. Beverly Hills: $3,130
  3. West Hollywood: $2,990

The Least Expensive Cities

Contrastingly, the report also highlights the most affordable cities for one-bedroom rentals:

  1. San Bernardino: $1,400
  2. Hawthorne: $1,730
  3. Riverside : $1,780

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:

  1. Beverly Hills: Up 18.6%
  2. Oxnard: Up 7.3%
  3. Ontario: Up 6.7%

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:

  1. Santa Ana: Monthly growth rate of 5.8%
  2. Torrance: Monthly growth rate of 2.3%
  3. Irvine: Monthly growth rate of 1%
Los Angeles Metro Rental Market Trends
Credits: Zumper

Los Angeles Housing Market Forecast 2023-2024

According to Zillow, as of November 30, 2023, the average home value in the Los Angeles-Long Beach-Anaheim area stands at $903,521, reflecting a notable 4.0% increase over the past year. Homes in this region are moving swiftly, with an average time to pending status of approximately 16 days, indicating a dynamic and competitive real estate environment.

One-Year Market Forecast

Zillow’s market forecast for Los Angeles reveals a modest decline with a 2.2% decrease in home values expected over the next year. This forecast, valid as of November 30, 2023, provides valuable insights for both buyers and sellers, guiding them in navigating the market’s anticipated changes.

Inventory and New Listings

As of November 30, 2023, the Los Angeles housing market boasts 15,863 homes for sale, offering a diverse range of options for potential buyers. In the same period, there were 5,662 new listings, showcasing the dynamic nature of the market with a continuous influx of available properties.

Price Dynamics

The median sale price for homes in Los Angeles, as of October 31, 2023, was $891,333. In comparison, the median list price, as of November 30, 2023, was slightly higher at $999,267. This discrepancy may indicate the competitive nature of the market, with sellers listing properties at slightly higher prices than the recent sale averages.

Sale Trends

Examining the sale-to-list ratio, which stood at 1.003 as of October 31, 2023, provides insights into the negotiation dynamics between buyers and sellers. A ratio above 1 indicates that, on average, homes are selling slightly above their list prices, highlighting the competitive nature of the Los Angeles housing market.

Price Negotiation Metrics

The market dynamics further unfold when considering the percent of sales over and under list prices. As of October 31, 2023, 53.7% of sales were over the list price, emphasizing the competitive bidding environment. Additionally, 34.7% of sales were under the list price, showcasing the diversity of pricing negotiations within the market.

Will the Los Angeles Housing Market Crash in 2024?

The question on everyone’s mind—will the Los Angeles housing market crash? While Zillow’s forecast anticipates a 2.2% decline in home values over the next year, it’s crucial to note that real estate markets are influenced by a myriad of factors. Economic conditions, interest rates, and unforeseen events can shape market trends. Individuals navigating the real estate landscape should stay informed, monitor market indicators, and consider seeking professional advice for a well-rounded perspective.

Los Angeles Housing Market Forecast 2023-2024Los Angeles Housing Market Forecast 2023-2024
Source: Zillow

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

This post was originally published on 3rd party site mentioned on the title of this site

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