Los Angeles housing market prices, trends, and forecasts 2023
Known as the world’s entertainment capital, Los Angeles is home to Rodeo Drive, the Sunset Strip, landmark museums, Venice Beach, and so much more. The Los Angeles-Long Beach-Anaheim metropolitan area ranks as the second-largest economy in the U.S. and, if considered a country, would have the 18th-largest economy in the world.
The Los Angeles housing market mirrored the overall U.S. housing market in 2020 and experienced an influx of bidding wars and rising home prices. The Los Angeles housing market has experienced highs and lows in the past few years and is currently predicted to favor sellers and landlords.
California housing market forecast 2023
Home values decreasing
Before April 2023, single- and multi-family homes selling for over $5 million sold quickly before the Measure ULA, also known as “the mansion tax,” went into effect. The ballot, passed in November 2022, added an additional transfer tax of 4% to 5.5%, depending on the sale amount.
Rising interest rates
In 2020, interest rates fell to the lowest level in over 50 years, which impacted the housing market, as people were actively buying homes while the interest rates were low. As a result, from 2019 to 2022, homebuyers in California experienced a jump in purchasing power. The California Association of Realtors reported the
interest rate effect on purchasing power to be 24% when the interest rates fell from 5% to 3%. However, sales activity has declined slightly, which could be influenced by rebounding mortgage rates. The
purchase applications rose for the fourth consecutive week but were still down 35% year-over-year, according to the Purchase Index from the Mortgage Bankers Associations for the week ending March 24.
Negative net population migration
Residents of the Los Angeles area have relocated away from the coast to find cheaper housing further inland. In 2021 and 2022, the Census Bureau reported Los Angeles County and Orange County
lost over 100,000 residents, while the nearby counties of San Bernardino and Riverside amassed nearly 22,000 new residents.
Southern California housing market trends 2023
In April 2023, homes in Southern California were on the market for a median of 22 days and sold for the listing price. Additionally, the number of pending sales improved slightly compared to previous months, and almost half of the homes sold in April 2023 were located in Southern California, according to the
California Association of Realtors.
Los Angeles Median home prices 2023
An increasing timeline of homes for sale in the latter half of 2022 helped moderate home values in the downtown Los Angeles real estate market. The
median price is 109% higher than the national median of $383,00. As a result, home values in Los Angeles fell 11.2% from their peak of $900,000 in May 2021. In 2023, the
average home value for houses in Downtown Central and Downtown Fashion District is $925,318, which is approximately $60,000 lower than the average home value in 2022.
In 2023, the
average rent for a two-bedroom apartment in Los Angeles is $2,222 per month. 2022 the average rent was $2,044, resulting in an 8.71% increase year-over-year.
Los Angeles real estate market: should you invest?
Los Angeles continues to attract businesses and people because of all the area has to offer, such as the numerous beaches, views, temperate weather, and its status as the nation’s entertainment capital. While the city faces traffic gridlock, rising prices of housing, and other challenges, there are many proposed solutions to address these concerns. For example, the U.S. News Housing Market Index forecasted approximately
4,000 single-home permits from February through June, in addition to almost 7,000 permits approved for multi-family homes in the Los Angeles area.
In 2022, homes for sale in California rose to a
12-year high and were selling quicker than ever, with a median of seven days on the market. Sellers only needed to negotiate a little, as there was high demand, little supply, and low rates, which made homes for sale sell for a higher price. In May 2022, homes in California sold for a median sales price of $900,170. In 2023, the California Association of Realtors forecasts the housing market evening out after the flurry of activity. As interest rates increase, a homebuyer’s purchasing power decreases, making the buyer more selective about their next investment property.
The rise in interest rates makes affordability decline as homeownership subsides after increasing in 2020. The California Association of Realtors forecast that investors are focusing on rentals as the moratoriums expire. In 2022,
82% of investors bought rental properties, compared to 18% of investors that concentrated on flipping houses. Investing in California real estate property is still a great idea, as the population in 2021 rose to nearly 40 million people, with 115,000 building permits. Owning a rental property in California is an excellent opportunity for investors as the demand for housing increases. The California Association of Realtors predicts that if there is any
price volatility in the housing market, it will be temporary.
Should you buy a home in the current market?
Depending on your list of “must-haves,” there are many neighborhoods in Los Angeles that you could call home, whether exploring homes for sale in
downtown Los Angeles or real estate in other neighborhoods, such as Mid City. Whether you want to rent or buy a home, working with an
experienced realtor will provide peace of mind.
Contact Lorissa Singleton today with any questions.
