Whether you’re looking to buy, sell or rent a home in Los Angeles, know that you’ll always have some competition – not just because the metro area is home to more than 13 million people, but because it attracts a wide variety of people looking to work, play and live. Dozens of smaller cities and suburbs combine to make the Los Angeles area, each with its own personality.
“Los Angeles is wonderful because it offers something, I think, for everyone. It’s not just a city, it’s a compilation of different city types,” says Simon Aftalion, development director for Markwood, a real estate investment, development and management firm based in Beverly Hills, California.
To help sellers know what to expect when they put on a house on the market, and what buyers and renters might see in terms of competition, we’re breaking down current trends in the LA housing market, as well as offering insights into how forecasts for the coming months may change how you buy, sell or rent in the area.
Here are seven things you should know about the LA housing market:
It’s a seller’s market in the Los Angeles metro area, meaning there is more demand among buyers than housing available to purchase, which drives prices up.
The real estate market was a bit more balanced for buyers and sellers before the coronavirus pandemic led to shelter-in-place orders and a sharp decline in housing market activity, though multiple offers on a home were still common. Since the orders lifted, however, Lindsay Katz, a real estate agent with Redfin in the Los Angeles area, says people are eager to correct issues they found with their living situation while they were stuck at home, and they want to move quickly and before another possible shutdown occurs.
Redfin reports the median home sale price in the Los Angeles metro area is $655,000 as of June, a 3.1% increase from May.
The lowest price you can purchase at – a one-bedroom condo – would be in the $400,000 range, Katz says. Single-family houses start in the $600,000 range. The stiff competition naturally means that some buyers are struggling to find homes and being priced out by other buyers.
Contributing to competing offers and rapidly rising sale prices is the fact that Los Angeles is short on housing compared to the number of people looking to buy or rent. Very little space in the metro area remains undeveloped, though the land is largely made up of single-family homes and smaller apartment or condo communities.
“We have different neighborhoods where every building is only two and three stories tall,” Aftalion says. In many of the cities and neighborhoods that make up the Los Angeles area, zoning laws and ordinances make increasing density difficult, if not impossible.
Los Angeles residents know that traffic can be brutal, so the time to commute to work is considered a major factor when people choose the neighborhood in which they want to live. When residents make the switch from renting to owning a home, they often sacrifice a short commute and move a bit farther away.
“It has to do with what people can afford. If they’re a renter in a certain area because they want to be close to where they work and close to a nightlife area, they may not be able to afford to buy there,” Aftalion says. “I often see people move to another neighborhood because that’s what they can afford.”
As work-from-home options increase for many people, commuting becomes far less of a concern. Katz says she is working with multiple homeowners looking to move farther from work in exchange for a larger home, knowing that they won’t have to make the drive every day in the foreseeable future.
When it comes to what people are looking for in their next home, the answer for many renters and buyers is access to outdoor space. Katz says many buyers are seeking properties with larger backyards, and ideally a pool.
The desire for indoor-outdoor living options isn’t exclusive to a post-pandemic world, though it has certainly increased the immediate desire for a place to be outside. New construction reflects the preference as well, Aftalion says: “Outdoor rooftops or terraces, be it private or common – you’ll see more and more of that.”
Larger apartment buildings that can increase density in certain areas will be the likely be one solution to housing shortage issues. Aftalion notes that areas like downtown Los Angeles are seeing a bit of a resurgence in interest among people who want to live in an urban setting, with close access to shopping, entertainment and even work.
New development must also anticipate changing needs and future trends in lifestyles. While most people get around Los Angeles by car today, Aftalion notes that the development of better public transportation in the area and continued efforts to reduce reliance on cars means there will eventually be fewer cars in LA. As a result, apartment buildings constructed today should anticipate less need for parking “so you’re not just building these cities underground for parking that might not be used in the future,” Aftalion says.
While many parts of the Los Angeles metro area require a certain number of parking spaces, Aftalion explains part of challenge for developers is figuring out how to provide the parking spaces needed today while factoring in the changing role of vehicles – increasing the number of spaces designated for electric cars to plug in is one example.
If Los Angeles endures another shutdown for a prolonged period that halts in-person home tours, there will likely be a significant dropoff in homebuyer activity. While virtual tools for viewing properties and house hunting have made it easier for people to continue the process without risking exposure to other people, the majority of homebuyers will want to visit a house before buying, and moving homes amid a lockdown can be equally challenging.
Because Los Angeles is traditionally expensive compared to most of the U.S. housing market, many residents remain long-time renters, and a combination of economic uncertainty and strong demand for homes on the market will keep more people from becoming first-time homebuyers in the LA area.
However, because Los Angeles is home to a wide array of industries and employers, there will always be high earners who are financially able to buy homes. It may take more time from the buyers who would be limited to the lower end of the market's price range to feel confident about buying until there’s more stability in employment.
Which spot in the Golden State is best?
Whether it’s because you consider the West Coast the best coast or simply because the right job is calling to you, you may be one of many people considering a move to California. But while your mind might first jump to Los Angeles or San Francisco as the epitome of life in the Golden State, there are many more major metro areas to consider. Out of the 125 most populous metro areas in the U.S. that make up the overall Best Places to Live rankings – calculated based on affordability, job market, access to quality health care and desirability, among other factors – 12 of them are in California. Read on for the Best Places to Live in California.
Updated on Sept. 17, 2019: This story was published at an earlier date and has been updated with new information.12. Bakersfield
Best Places 2019 Rank: 124
Metro Population: 878,744
Median Home Price: $226,908
Median Annual Salary: $47,680
Bakersfield is an inland California metro area and ranks No. 124 on the overall Best Places to Live list. Bakersfield residents spend 25.9% of the median annual household income on living expenses, including mortgage payments, rent, property taxes and utilities. With an unemployment rate of 8% and a median annual salary of $47,680 – $3,000 below the national median – Bakersfield has a job market that ranks fourth-worst out of the 125 most populous metro areas in the U.S., with San Juan, Puerto Rico, and McAllen and Brownsville, Texas, having poorer-performing job markets.
Learn more about Bakersfield.11. Stockton
Best Places 2019 Rank: 123
Metro Population: 724,153
Median Home Price: $352,350
Median Annual Salary: $46,770
In California’s Central Valley, Stockton is surrounded by farms and vineyards characteristic of the northern part of the state, but the metro area is also home to many manufacturing and distribution hubs for companies such as Safeway and Whirlpool Corp. Although Stockton was hit hard by the Great Recession and was forced to declare bankruptcy in 2013, the metro area has made positive strides in recent years. However, unemployment in the area remains high at 5.9%, compared to the national unemployment rate of 3.9%.
Learn more about Stockton.10. Modesto
Best Places 2019 Rank: 120
Metro Population: 803,074
Median Home Price: $289,168
Median Annual Salary: $46,176
Located about halfway between San Francisco and Yosemite National Park, Modesto is another major California metro area with proximity to farms and a deep connection to agriculture. The job market in the metro area, however, has room for growth. The median annual salary in Modesto is about $4,000 less than the national median of $50,620, and the unemployment rate is 7%. Additionally, residents endure a high cost of living, which requires 27.32% of the area median annual household income, making it the 13th-most expensive place to live out of the 125 metro areas on the list.
Learn more about Modesto.9. Fresno
Best Places 2019 Rank: 119
Metro Population: 971,616
Median Home Price: $260,733
Median Annual Salary: $45,510
Ranking No. 119 on the overall Best Places to Live list, Fresno is located in the San Joaquin Valley – roughly a two-hour drive to the coast. Like many inland California metro areas, Fresno is best known for its connection to agriculture, with fruits like tomatoes and peaches among its most common crops. A largely agricultural focus also keeps many residents from having to travel far for work, as the average morning commute in Fresno is just 22.4 minutes, four minutes less than the national average.
Learn more about Fresno.8. Salinas
Best Places 2019 Rank: 117
Metro Population: 433,168
Median Home Price: $581,342
Median Annual Salary: $48,290
Located along the Pacific coast, Salinas is one of the smaller California metro areas on the list, with less than 500,000 residents calling the area home. While the city of Salinas does not sit directly on the coast, other parts of the metro area, including Monterey, are on the water, which helps them attract many visitors and residents for the ocean access. As a result of its prime location, Salinas is the 24th-most desirable place out of the 125 metro areas on the list, based on the results of a SurveyMonkey analysis that asked 2,000 U.S. residents where they would prefer to live.
Learn more about Salinas.7. Los Angeles
7. Los Angeles
Best Places 2019 Rank: 107
Metro Population: 18,585,594
Median Home Price: $526,214
Median Annual Salary: $53,803
The home of Hollywood, Los Angeles ranks No. 107 on the overall Best Places to Live list for 2019. The second-most populous metro area in the U.S. after only New York City, Los Angeles offers a healthy job market and desirable location, but the popularity comes at a price. Los Angeles residents spend 30.28% of the median household income on housing, which makes this metro area too pricey for many people. Los Angeles area residents also spend more time getting to work – the average morning commute is 30.4 minutes.
Learn more about Los Angeles.6. Sacramento
Best Places 2019 Rank: 82
Metro Population: 2,268,005
Median Home Price: $389,858
Median Annual Salary: $55,010
California’s state capital receives its best scores for its job market – the median annual salary, at $55,010, is $5,000 above the national median, while the unemployment rate is 3.7%, just below the national average of 2.9%. As a result, Sacramento’s job market ranks 20th out of the 125 most populous metro areas in the U.S. Higher income in Sacramento helps reduce the impact of housing costs, though not by much. More than 26.55% of the median household income is required to cover typical housing costs for the area.
Learn more about Sacramento.5. Santa Rosa
5. Santa Rosa
Best Places 2019 Rank: 74
Metro Population: 500,943
Median Home Price: $629,917
Median Annual Salary: $53,890
If you’re looking to live in the middle of California wine country, look no further than Santa Rosa. Ranking No. 74 on the overall Best Places to Live list for 2019, Santa Rosa receives its strongest scores for low property crime and murder rates, college preparedness among high school students and an average morning commute of just over 25.2 minutes, a little under the national average of 26.4 minutes. The cost of living in Santa Rosa requires 28.22% of the area median household income.
Learn more about Santa Rosa.4. Santa Barbara
4. Santa Barbara
Best Places 2019 Rank: 73
Metro Population: 442,996
Median Home Price: $463,750
Median Annual Salary: $54,320
The least-populated California metro area on the list, Santa Barbara has just over 442,996 residents – but it appears to keep them happy and healthy. In the annual Gallup-Sharecare Well-Being Index, which measures residents’ satisfaction with their hometown, overall health and economic success, Santa Barbara is third out of the 125 most populous metro areas in the U.S. Combined with high scores for its proximity to quality hospitals, based on U.S. News Best Hospitals data, low rates of property crime and murder and a short average morning commute, Santa Barbara ranks No. 1 for quality of life.
Learn more about Santa Barbara.3. San Diego
3. San Diego
Best Places 2019 Rank: 36
Metro Population: 3,283,665
Median Home Price: $555,325
Median Annual Salary: $56,410
The fifth-most desirable place out of the 125 places on the list, San Diego attracts many residents for its sunny weather, warm climate and proximity to the beach. But sandy shores aren’t the only thing bringing people to San Diego – a median annual salary of $56,410 and an unemployment rate of 3.3% mean the job market is stronger than the average metro area in the U.S. But with a cost of living that requires 29.52% of the area median annual household income, San Diego is also the fifth-most expensive metro area in the U.S.
Learn more about San Diego.2. San Jose
2. San Jose
Best Places 2019 Rank: 14
Metro Population: 1,969,897
Median Home Price: $1,080,017
Median Annual Salary: $77,180
It shouldn’t be a surprise that the capital of Silicon Valley ranks highly on the overall Best Places to Live list at No. 14. San Jose is home to nearly 2 million people, and with a median home price of $1,080,017, it has even higher home prices than San Francisco. But like its Bay Area neighbor, a high income offsets the mile-high prices. With a median annual salary of $77,180, San Jose residents aren’t hurting as much when it comes to buying a house.
Learn more about San Jose.1. San Francisco
1. San Francisco
Best Places 2019 Rank: 7
Metro Population: 4,641,820
Median Home Price: $768,517
Median Annual Salary: $69,700
San Francisco has plenty going for it to attract new residents, from its reputation as a fun city to live in to a strong job market. And while San Francisco’s real estate market is notoriously expensive – with a median home price of $768,517 according to data from real estate information company Zillow – the higher median income offsets those high costs. Tied with Honolulu, Portland, Oregon, and Colorado Springs, Colorado, San Francisco ranks No. 1 for desirability out of the 125 metro areas on the Best Places to Live list.
Learn more about San Francisco.The Best Places to Live in California include:
The Best Places to Live in California include:
- San Francisco.
- San Jose.
- San Diego.
- Santa Barbara.
- Santa Rosa.
- Los Angeles.
She has appeared in media interviews across the U.S. including National Public Radio, WTOP (Washington, D.C.) and KOH (Reno, Nevada) and various print publications, as well as having served on panels discussing real estate development, city planning policy and homebuilding.
Previously, she served as a researcher of commercial real estate transactions and information, and is currently a member of the National Association of Real Estate Editors. Thorsby studied Political Science at the University of Michigan, where she also served as a news reporter and editor for the student newspaper The Michigan Daily. Follow her on Twitter or write to her at email@example.com.