The Los Angeles housing market has been closely watched by real estate professionals and potential buyers alike, as it is one of the most active and competitive markets in the United States. In this report, we will take a closer look at the current state of the Los Angeles housing market, including prices, trends, and forecasts for the rest of 2023. We will analyze the latest data on median home prices, sales volume, and inventory levels to provide insights into what buyers and sellers can expect in the months ahead.
The May 2023 Los Angeles Housing Market Report reveals a mixed picture of the current state of the market. While the median sold prices experienced some fluctuations, the sales volume demonstrated an overall upward trend. These changes may indicate shifting dynamics in the demand and supply of housing in the region.
Median Sold Price of Existing Single-Family Homes
· Los Angeles County's median home price in May 2023 was $744,770.
· The median home price in April 2023 was $738,520.
· Last year, in April, the median home price was $798,720.
The median sold price of existing single-family homes is an essential indicator of the overall health and stability of the housing market. C.A.R.’s resale report for May 2023 shows that the median sold price for Southern California stood at $800,000. This represents a slight increase of 1.9% from the previous month but a significant decrease of 5.3% compared to May 2022.
Within Los Angeles County, the median sold price was slightly lower at $744,770, with a month-to-month increase of 0.8%. However, when compared to May 2022, the median sold price in Los Angeles County witnessed a decline of 6.8%.
The Los Angeles Metro Area experienced a median sold price of $765,000 in May 2023, showing a month-to-month increase of 3.4%. Comparing this to May 2022, the median sold price dropped by 5.0%.
Examining the sales trends in the Los Angeles housing market provides us with valuable insights into the level of activity and demand. In May 2023, the Southern California region reported a month-to-month increase of 19.4% in sales, indicating a rise in buyer interest. However, when compared to May 2022, there was a significant decrease of 22.3% in sales.
Within Los Angeles County, the sales figures for May 2023 showcased a month-to-month increase of 20.6%. However, in a year-over-year comparison, the sales volume dropped by 21.8%.
Similarly, in the Los Angeles Metro Area, sales experienced a month-to-month increase of 25.0%. Nonetheless, there was a notable decline of 20.9% in sales when compared to May 2022.
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 2.2 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 2.2 months.
· Months Supply of Inventory (SFH) for the Los Angeles Metro Area is 2.2 months.
· Months Supply of Inventory (SFH) for Southern California is 2.1 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. Let's explore whether Los Angeles County, CA qualifies as a seller's real estate market based on data from May 2023.
Median Listing and Sold Prices
In May 2023, the median listing home price in Los Angeles County, CA was $965K, showing a significant increase of 7.3% compared to the previous year. The median listing home price per square foot was $625, indicating the high value placed on real estate in the area. Furthermore, the median home sold price in Los Angeles County during May 2023 was $830K.
Sale-to-List Price Ratio
The sale-to-list price ratio in Los Angeles County was 100% in May 2023. This means that, on average, homes were sold for approximately the asking price. A sale-to-list price ratio of 100% suggests that sellers have the advantage in negotiations, as buyers are willing to meet their asking prices.
Los Angeles County, CA can be classified as a seller's real estate market in May 2023. The combination of high median listing prices, rising year-over-year prices, and homes selling for the asking price indicate a market that favors sellers. In other words, there are more people looking to buy than there are homes available.
Average Days on Market
On average, homes in Los Angeles County, CA sell after spending 37 days on the market in May 2023. This metric, known as the median days on market, provides insights into the pace of home sales. It is worth noting that the trend for median days on the market in Los Angeles County has decreased since last month, suggesting a faster-selling market. However, compared to the same month last year, the median days on market has slightly increased, indicating a potentially more balanced market than before.
Hence, Los Angeles County, CA can be characterized as a seller's real estate market in May 2023. The combination of high listing prices, homes selling for the asking price, and relatively quick sales suggests that sellers have the advantage in negotiations.
Are Home Rents Going Up or Down in Los Angeles?
The Zumper Los Angeles Metro Area Report analyzed active listings across the metro cities to show the most and least expensive cities and cities with the fastest growing rents. Rents in Los Angeles are higher than the state median rent. The California one bedroom median rent was $2,065 last month. Laguna Beach was the most expensive city with one-bedrooms priced at $3,500 while Twentynine Palms was the most affordable city with one bedrooms priced at $1,000.
The Fastest Growing Cities in the Los Angeles Metro Area For Rents (Y/Y%)
· Laguna Beach had the fastest growing rent, up 16.7% since this time last year.
· San Bernardino saw rent climb 15.7%, making it the second fastest growing.
· Beverly Hills ranked as third with rent jumping 15.5%.
The Fastest Growing Cities in Los Angeles Metro Area For Rents (M/M%)
· Twentynine Palms had the largest monthly rental growth rate, up 6.4%.
· Ontario rent increased by 6% last month, making it second.
· Newport Beach & West Hollywood tied for third with rents climbing 5.9% last month.
Los Angeles Housing Market Forecast 2023-2024
Let us look at the price growth recorded by Zillow, a leading real estate marketplace. As of May 31, 2023, the average home value in the Los Angeles-Long Beach-Anaheim area stands at $885,564. This figure represents a 4.3% decrease over the past year, indicating a slight decline in home prices. Additionally, homes in this region typically go pending in around 13 days, showcasing a fast-paced market with properties quickly attracting buyer interest.
Home Value Forecast
Based on the market data available as of May 31, 2023, a 1-year market forecast for the Los Angeles housing market suggests a 4.3% increase. While the past year has seen a decline in home values, the forecast anticipates a rebound and a positive trajectory for home prices in the coming year. It is important to note that market forecasts are subject to various factors and should be interpreted with caution.
Sale to List Ratio and Pricing Trends
The median sale to list ratio in Los Angeles, as of April 30, 2023, is 0.998. This ratio indicates that, on average, homes are selling very close to their list prices. It suggests that sellers are generally achieving their desired sale prices, with minimal deviation from the initial asking price.
Sales Price Performance
In April 2023, approximately 42.3% of home sales in Los Angeles were closed above the list price. This statistic reflects a competitive market environment where buyers are willing to pay more than the listed price to secure a property. On the other hand, around 45.1% of sales were closed under the list price, indicating that some buyers were able to negotiate a price lower than what was initially advertised.
Median Days to Pending
The median days to pending, as of May 31, 2023, is 13. This metric represents the median amount of time it takes for a property to receive an offer and go under contract. A relatively low median days to pending value indicates a fast-moving market where buyers are actively engaging with properties and making timely purchase decisions.
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 Angles? 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 Housing Wire, 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?
Should you consider Los Angeles real estate investment? Many real estate investors have asked themselves if buying a property in Los Angeles is a good investment. You need to drill deeper into local trends if you want to know what the market holds for real estate investors and buyers in 2023.
Los Angeles is a moderately walkable city in Los Angeles County. It is home to around four million people. It is the largest city in California and the second-largest in the United States. Los Angeles Metropolitan Area is a 5- region that includes Los Angeles, Orange, Riverside, San Bernardino, and Ventura. The L.A. metropolitan area with over 13 million people rivals New York in population as the largest in the country. However, being a huge real estate market is not reason enough to invest here.
The Los Angeles real estate market is considered one of the premier markets for both investors and homeowners. It is also touted as the nation’s least affordable housing market. If you look in the long-term, it’s always a good investment to buy in Los Angeles. It is said that you will always get your money back or you would make a profit, as Los Angeles has a track record of being a great long-term investment.
Los Angeles Rental Market Trends 2023
Current Rent Prices in Los Angels: Before the pandemic, the average rent for an apartment in Los Angeles was $2,524, growing by 2% YTY, according to RENTCafé. The average size for a Los Angeles, CA apartment is 792 square feet. 40% of the households in LA are renter-occupied while 60% are owner-occupied. Studio apartments are the smallest and most affordable, 1-bedroom apartments are closer to the average, while 2-bedroom apartments and 3-bedroom apartments offer more generous square footage.
As of June 2023, the average rent for a 1-bedroom apartment in Los Angeles, CA is currently $2,399. This is a 1% increase compared to the previous year. Over the past month, the average rent for a studio apartment in Los Angeles remained flat. The average rent for a 1-bedroom apartment decreased by -1% to $2,399, and the average rent for a 2-bedroom apartment increased by 2% to $3,375.
· The average rent for a 2-bedroom apartment in Los Angeles, CA is currently $3,375. This is a 5% increase compared to the previous year.
· The average rent for a 3-bedroom apartment in Los Angeles, CA is currently $4,750. This is a 12% increase compared to the previous year.
· The average rent for a 4-bedroom apartment in Los Angeles, CA is currently $6,700. This is a 28% increase compared to the previous year.
Some of the most affordable neighborhoods in LA are:
· Jefferson Park, where the average rent goes for $1,355/month.
· El Sereno, where renters pay $1,396/mo on average.
· Vermont Knolls, where the average rent goes for $1,445/mo.
· Glassell Park & Cypress Park, where the average rent goes for $1,485/month.
· Cypress Park, where renters pay $1,396/mo on average.
· North Hills, where renters pay $1,530/mo on average.
Construction Isn’t Meeting Housing Demand in LA
The Los Angeles housing market has seen a bump in residential construction. This has helped to satisfy some demand from renters. However, due to increasing demand, the new supply hasn’t brought prices down. The current supply of existing single-family homes is 1.4 which is insufficient to meet the demand. This also suggests that any new wave of construction will at most result in rental rates remaining steady instead of causing them to fall.
The geography of this region also limits the supply. The Los Angeles metropolitan area is perched between the ocean and the mountains. You obviously can’t build on water. There’s only so far you can build into the hills when mudslides and earthquakes limit how much you can build there. The Los Angeles real estate market is further constrained by the vast national parks around L.A. like the Angeles National Forest. These areas simply cannot be turned into residential areas.
Two of the most fundamental economic indicators are employment and income. Home sales usually are directly tied to an economy's health and rise and fall with economic activity. As economies slow, the supply of money tends to become more restrictive. What makes Los Angeles unique is the employment market. Want to work in Hollywood? Move to L.A. Want to work for a production company or in fashion? Come to L.A. If rent is too high, share an apartment or single-family home with friends. In terms of home prices, income, and employment indicate whether people can afford current and future increases.
The Golden State added 310,300 jobs in 2019, a 1.8% increase, to a total of 17.61 million, according to data released by the California Employment Development Department. The previous year’s increase was 1.6%. In Los Angeles County, nonfarm jobs grew by 67,800 to a total of 4.65 million. That was a 1.5% rise, led by healthcare and social assistance (up 28,000) and construction (up 8,500). The unemployment rate was 4.4% in December, down from 4.7% a year earlier.