The Los Angeles Housing Market Predictions and Forecast for 2024

If you are a real estate investor, you know more than anybody how important the housing market is.

Moreover, how important it is to be able to predict how the market is going to behave.

Since the real estate market depends on many other market trends, it can be difficult to pinpoint exactly how it will behave.

But, it is possible to give some predictions and forecasts for the real estate prices.

In this guide, we will be going over some of the Los Angeles County market trends, as well as some predictions for 2024.

First, let's look at an overview of the current markets for Los Angeles.

Los Angeles Housing Market Overview

To begin, we will be going over a broad overview of what the Los Angeles real estate market is looking like now. We will be going over metrics like median home price, median listing price, price appreciation, and much more.

Los Angeles Home Value

First off, we will be going the Los Angeles home values or, more specifically, the median home price. The median home price is basically the middle point for real estate prices.

It is important to note that this is not the same as the average home price. It is the very middle of a data set, so the middle of all the home prices in an area.

The median home price in Los Angeles right now sits at around $928,000. This value is around $600,000 more than the U.S. median home price and $130,000 more than the statewide median price. In the past year, this figure has risen about 16.7%. And, in the past 5 years, the home price growth has been about 114.2%.

Los Angeles Home Listings

Another important aspect to look at in the real estate market is the listings. Since home sales are affected by the number of new listings and active listings, it is important to look at those before making predictions.

The median listing price for a home in Los Angeles is around $941,000. This number has actually gone down about 5.9% in the past year. Consequently, the number of existing home sales has also gone down.

Also, the number of new listings has been 1,006, which is a huge decrease of about 22.4% from last year. The number of active listings has also immensely decreased, falling 39.3% to 8,555 listings.

Los Angeles Rent

The Los Angeles rent has actually not suffered in the past year. The rent growth has been about 11%, rising to about $2,644 per month. This means that the price-to-rent ratio for a rental property is about 29.25.

Los Angeles Population

Although these numbers are not exactly about the real estate market, they have a very strong impact on things like mortgage rates, interest rates, and the California housing market in general.

The population of Los Angeles is currently sitting at around 3,979,576. This is obviously a very large number, especially considering the size of the entire city. Within this population, the unemployment rate is about 6.2%.

And, the median household income is only about $62,142. If this number seems small compared to the median home price, it is.

So, now that we have gone provided an overview of the current state of the Los Angeles market, let's look into some real estate market trends that could help us predict the housing markets for 2024.

Los Angeles Housing Market Forecast for 2024

In general, the Los Angeles housing market has been consistent with those of many other cities. These recent trends are particularly the result of the COVID-19 pandemic. Also, most of this information is provided by one organization, the Mortgage Bankers Association (MBA). So, these are the forecasts for the median prices of existing homes, the housing inventory, and the median sales price.

Steady Increase in Home Value

The first prediction for Los Angeles is that there will be a steady increase in the median home value. This means that there will still be an increase in the home prices, but they will be increasing at a slower pace.

Over the past year, the Los Angeles housing market has seen an increase in home values of as much as 15.9%. This has been caused by lower borrowing costs, increased demand, and a lack of inventory.

This means that the home values will still see continued growth, but nowhere near last year's growth. The reason for this is that there is essentially not much room for home values to continue increasing. Thus, the home value will only increase around 8-13% in the next year.

This leads us to our next forecast, which has to do with rising mortgage interest rates.

Rising Interest Rates

For homebuyers, or international real estate investors, interest rates are one of the most important things to consider. High-interest rates can completely change the value of a property so any changes can be drastic.

Last year, the interest rates on 30-year fixed mortgages rose by 0.33%. This low percentage is mostly due to regulations by the FED (Federal Reserve System). These regulations basically restricted the interest rate growth as the home prices rise.

However, since inflation has become a major threat, this might change for 2024. The FED has already announced that interest rates will be rising in 2024. However, it is still too soon to determine by how much these rates will be increasing. But, we can safely assume that they will be increased by more than they did last year.

Lower Housing Inventory

Another prediction for the Los Angeles housing market is that there will be a very small housing inventory. What this means is that there will not be as many houses in the market for sale.

This is a huge problem because it will only drive the prices of the homes further up. The reason for this is due to simple supply and demand. As supply goes down, the demand goes up. And this higher demand means higher prices.

Sometime throughout the year, there may be a decrease in bidding wars over houses for sales. But, this does not take away from the fierce competition for desirable and median price homes.

Increased Renting Prices

Similar to many cities with large populations, it is actually cheaper to rent in Los Angeles than to buy. One of the main reasons for this is the hefty real estate taxes imposed on homeowners in the area.

Other factors that have led many California residents to run to rental markets include:

• Low Inventory
• Lack of Property
• Flexibility

Although this may not be great news for renters, it's amazing news for investors. This is because they will have a chance to cash out on their investments with this large source of cash flow.

As mentioned before, the home values have increased by about 15%. Due to this, the rental prices have also increased by about 11%. This number will only keep increasing as the value of the homes goes up. This is because as homes get more and more expensive, renting becomes more popular.

So, now that we have gone over some of the forecasts for 2024, let's go over some of the trends that we also might see going into the new year.

Los Angeles Real Estate Market Trends for 2024

Many of the trends that are being witnessed today in Los Angeles are products of the COVID-19 pandemic. It is rare to find some sort of real estate investor that has not felt the impact of the global pandemic on their investments.

Below, we will be going over some of the things that have happened as a result of the COVID-19 pandemic.

How COVID-19 Affected the Los Angeles Real Estate Market

COVID-19 has had a huge impact on everyone's lives, no matter where you live. One of the greatest victims, however, was the California housing market. We actually have an entire blog post dedicated to the California housing market at large, so be sure to check that out for more information.

With rising housing prices and lowered housing sales, the pandemic has been a nightmare for anyone looking to buy a home. Since many people have been hesitant to put their homes on the market, it is hard for the Los Angeles metro area to meet the housing demand.

This also means that buyers have been met with extremely steep prices for a home that would not have cost as much before. Overall, these high prices have begun to price-out buyers and make them leave Los Angeles. As a result, Los Angeles has suffered a negative net migration. This means that buyers and sellers are not able to keep up with the prices of the market, so they simply leave.

Unemployment

One of the most impactful ways that the pandemic affected the Los Angeles housing markets was by spiking unemployment. With an increased unemployment percentage, people have been more hesitant with spending their money and in turn, have not wanted to buy any homes.

However, this was only a temporary setback. As soon as the FED announced that interest rates will be maintained at a very low rate, the market trends started picking right back up. And even better, the setbacks that were caused by the unemployment and the lack of demand were completely taken over by people rushing to buy homes after the market started picking itself back up.

But, the only thing that has not recovered from the pandemic is still the unemployment rate. Sitting at a rate of around  6%, the unemployment rate is still single-handedly holding back the ultimate growth of the real estate market. For Los Angeles to fully recover from the pandemic and return to all-time high markets, the unemployment must go back down.

Working From Home

Another aspect of the pandemic that has messed with the Los Angeles housing market is the fact that so many people were working from home. In big cities, many people move to the center of the city to be closer to their place of work.

However, when they are able to work from home, there is no longer a need to be stationed in the city. For this reason, the demand for urban housing has been decreasing. This is because workers can simply opt to stay home and not really have to commute within the city.

So, as a result, Los Angeles saw a lot of people trade their expensive, city apartments for more spacious, suburban homes. This leads to some predictions that say that there may be an uptick in the demand for suburban homes in 2024 and coming years as well.

Foreclosure

The last thing that we will be discussing in this guide is the rate of foreclosures in the country. According to some statistics, lenders foreclosed on 25,209 U.S. properties in the third quarter of 2021. This is a 32% increase in foreclosures from the previous quarter. Even crazier, that is a 67% increase from the year before.

The reason for this increased rate of foreclosure is the expiration of government assistance programs. For a couple of years, the government had restricted foreclosures and had basically forced lenders to forgive late and missing payments. However, now that these programs are expiring, lenders are finally able to act on these missing payments. Thus, homeowners will have to find a way to come up with the money before their property is foreclosed.