Last updated on January 31st, 2024 at 08:06 am
No, we don’t see a housing crash nor do the majority of real estate professionals.
The last Los Angeles housing market crash began in late 2007 and lasted until 2012.
Home prices in Los Angeles, California have been on a rise since then. Over time LA will appreciate based on its history and is one of the best places to invest in real estate.
Affordability is also a major factor [everyone knows it’s an expensive place to live], as its becoming harder and harder to buy real estate in Southern California on some sort of budget.
San Diego and San Francisco (2 metros in California) home values have soared since the great recession, and there are very few deals
Los Angeles real estate market trends
The California Association of realtors is predicting housing prices to increase 6.2 percent in 2024.
However, when was the last time a realtor predicted a housing crash?
Probably never
Mortgage rates and affordability will always impact sales and construction of new homes.
30 year Mortgage rates are stills stubbornly high.
If you can get a low mortgage rate [probably not as rates are at recent all time highs that most people can remember], then you’ll be able to save money on your home purchase.
Current mortgage rates aren’t doing buyers any favors.
Next, you need to look at the total sales-to-listings ratio in your area.
This ratio will tell you whether a neighborhood is a buyer’s or a seller’s market.
If you live in a seller’s market, then you have more people looking to buy homes than there are homes for sale.
In a balanced real estate market, this ratio is typically between 0.12 and 0.2.
- As of December 2023, the median sales price of single family homes in Los Angeles increased to $853,340. Remember in Dec 2022 prices were hovering around $799k.
- The Inland Empire in comparison based on those same statistics was just $570,000.
- Southern California prices have dropped just .7%
Are home rents going up or down in LA
Rents in LA always seem to go up. This year WILL BE different.
Rents are now dropping; which is a huge relief to renters.
Apartments sites like, Apartmentlist says rents have gone down 4%, year over year.
LA is still in the top 20 for most expensive cities to rent an apartment though, coming in with a median rent of $2055.
A one bedroom apartment will set you back just over $1800 per month in Los Angeles.
What is the current average home price
According to the search results, the current average home price in Los Angeles, California is $975,000 (source: Redfin) as of June 2023.
key housing values
Home prices in Los Angeles have soared to levels [which are unaffordable for many people] over the past few years.
However, potentially lower interest rates and an increase in housing supply are poised to shake up the market, leaving many wondering if there will be a housing crash in 2024.
Despite these warnings, some experts believe the housing market will still see some sales and price appreciation.
These factors could help keep housing prices at high unaffordable levels. That is especially true in areas that have remained affordable in relation to median income.
- According to the California Association of Realtors, acting listings are down to 1,673.
- The median days on market is 25.
- That means most homes sell in 25 days, which is very strong.
Another key factor influencing home prices is the number of homes for sale.
This Is called housing inventory [ you will see a chart later] and it is very low!
This is an indicator of how many people are actively shopping for a home.
Is real estate a good Investment in California
Buying real estate in Los Angeles is not as easy [many people lose money] as people think. With home prices skyrocketing, it’s a challenge for many people to afford to buy a home in the city.
However, there are still plenty of investment opportunities available in the city.
If you’re willing to invest in a rental property, it’s an excellent way to earn a steady cash flow and secure your financial future.
Real estate in Los Angeles has a track record of high appreciation rates [and this probably will stay true} in the state of California.
This makes it an ideal long-term investment option.
The real estate market in Los Angeles is expected to continue to rise, but the rate of increase will slow down a bit.
It looks like the Federal Reserve is done raising interest rates. Their last rate hike was in 2023.
Many experts expect them to start cutting rates in 2024 which would make homes more affordable.
How Much can home prices drop In LA
In 2024, the housing market could experience more price increases.
Remember though, the California Association of Realtors is predicting more price increases.
This is due to high interest rates and inflation.
If unemployment suddenly begins to increase, this could cause many sellers into forced selling.
This could start a chain reaction of selling.
What is the average monthly mortgage payment
The average monthly mortgage payment in Los Angeles, California depends on several factors including the loan amount, interest rate, and down payment.
- According to Business Insider, the median monthly home payment [including utilities, insurance, and HOA fees] was more than $2,700 per month in the United States as of 2021
- Realtor.com says as of August 2023, the current mortgage rates in Los Angeles, CA are 7.05% for a 30-year fixed loan, 6.21% for 15-year fixed loan, and 6.32% for a 5-year ARM
What is the average home price to income ratio
- According to NBC Los Angeles if you want to qualify for a single-family home at the median cost in Los Angeles County, your annual income will have to ring in around $127,000.
- According to Construction Coverage, as of 2021, Los Angeles was one of the U.S. cities with the highest home price-to-income ratios, with a ratio of 9.1
Housing inventory is low, but has begun to increase in the latter part of 2022.
This has helped the Los Angeles market to stay afloat, but it also still hard for for potential buyers to find homes.
While the housing market is currently entering a small correction, there are still a lot of positive signs that suggest it will continue to grow in the future.
Are foreclosures going up
Home prices in Los Angeles rise and fall. However, supply levels have decreased a bit and this could affect whether or not home prices rise, dip or level off in 2024 and into 2025.
The housing market is a seller’s market in Los Angeles County, meaning there are more people looking to buy than there are homes for sale. This is a good thing for home buyers as it makes it easier to find and secure a home.
Foreclosures occur when homeowners don’t make payments. Job losses are directly correlated to foreclosures.
When a homeowner’s loan goes into default, the lender or government can seize their property and sell it off at auction or through a real estate-owned (REO) sale.
In a recession, foreclosure rates tend to increase as more homeowners lose their jobs and can’t make their mortgage payments.
The good news is that the country’s housing crisis ended in 2011 and foreclosure rates have since remained fairly low.
The number of foreclosures in Los Angeles County increased dramatically [from 2007-2011] during the Great Recession
Attom Data shows us [1 out of every 401 housing units] that foreclosures in 2019 were very low and have been consistently dropping since the Great Recession.
are home inventories going up
Housing inventory says a lot about the health of a particular market.
Inventories are still though. Typically you can’t have a housing crash with low inventories.
Los Angeles housing inventories have recently declined to 8,756 according to Fred Economic Data.
Remember, pre-pandemic crested above 15,000 listings in 2018. We are over 40% away from those recent highs.
Cities and counties that have plenty of houses on the market will equate to higher inventories which can mean longer days on the market and eventually a seller will lower their asking price.
The housing market is still in the midst of tight inventories. With 3.1 months of supply left, it’s not close to what economists say is needed for a balanced market. That means there’s still a lot of upward pressure on home prices.
However, other cities likes Seattle and Austin some of the lowest inventories in the country.
Impact of Tax Policies on home prices
Tax policies play a significant role in shaping the housing market, and the city of Los Angeles is no exception.
Property Tax Rates
Property tax rates directly affect the overall cost of homeownership. In Los Angeles, the property tax rate is determined by Proposition 13, which limits the annual increase in property taxes to 2% for properties that haven’t changed ownership.
This policy provides stability for homeowners but can also impact affordability for potential buyers.
Proposition 19 and Transfer Taxes
Proposition 19, passed in 2020, made significant changes to property tax rules in California.
It allows homeowners who are 55 or older, disabled, or victims of natural disasters to transfer their property tax base to a new home within the state.
While this policy can incentivize empty nesters to downsize, it may also reduce the availability of larger homes for growing families.
Proposition 60 and Proposition 90
Allow eligible homeowners to transfer their current property tax base to a replacement property in a different county.
This can encourage inter-county moves within California, offering homeowners more flexibility while maintaining their tax benefits.
So How much could housing prices crash in California
There is no definitive answer to how much housing prices could decline.
Right now in LA, we are seeing drops in prices of over 5%, but that can change fast.
It’s no secret that housing prices are at an all-time high in the USA.
Home prices are driven by a combination of factors including the local job market, real estate inventory, new housing starts, and the overall cost of living in that particular region.
Remember in 2008, housing prices in Southern California dropped 35%.
Part of the reason for that huge decline was the debt of each homeowner.
The housing market has been on fire for the past few years, with some markets seeing prices shoot up [at a historic pace quite frankly] fast, and others experiencing a small decline.
However, most experts agree that the housing bubble is not yet about to burst in any significant way.
Nevertheless, the market is undergoing a shift as interest rates have peaked, making home ownership achievable for many with future upcoming cuts coming.
This can lead to more buyers in the market and a increase in overall home sales.