There was seen an overall impact on the California economy and the real estate market as well due to the shutdown after coronavirus pandemic. But in Los Angeles, the track record of unemployment and the COVID-19 crisis hasn’t seemed to get homebuyers away from rushing into the Los Angeles Real Estate Market and purchasing houses. In fact, the buyers are more aggressive than they were in nearly all of 2019. The week ending August saw a rebound in home sales. According to research, the homes were selling four days faster than in May and eight days faster than the same week in 2019.
The home prices in Metropolitan Los Angeles saw an increase of 11.6% to a new level of $553,000 and a hike in sales of about 48%. This rise in home prices and sales have taken the market conditions to a balanced level. After seeing the inventory position being tight in the market, RTI Properties real estate markets analysts predict that with the surge in the COVID-19 cases, sellers may back out again to further decrease the listings.
The median home prices in Los Angeles County saw an increase of 4% from a year earlier to a new level of $643,000. There is a rise in sales of about 40.8% from May 2020 and a decline of 24.3% from a year earlier.
We will keep you more updated regarding the LA real estate market, news, trends, and housing market insights.
Related Article: Coronavirus Impact On Los Angeles Housing Market
Los Angeles Housing Market Report Before COVID-19 Hit The Country
The real estate market in Los Angeles faces some economic uncertainty and some analysts feel that there will be a mild recession in 2020 that will result from a drop in housing price while others feel the home prices will stay moderate. However, the declining mortgage rates in Los Angeles may be exactly what is required to offset this. These lower mortgage rates are moving to a stronger rental market in Los Angeles. This rising rental demand is likely to increase the median rent prices in LA. For home prices, the projected real estate market outlook is showing home sales to be flattened. RTI Properties real estate analysts predict for Los Angeles Housing Market Forecast 2020, although there would be a restraint on home sales prices over the next year, still, there is an increase of approximately 0.8 percent, which is more than the previous year.
In the U.S., there are many popular states that are booming in the housing market spectrum. However, California is definitely one of the hottest and most profitable markets in the entire country. Big cities, such as Los Angeles (the second-largest city in the nation), have unpredictable housing markets that seem to change with the seasons. There are many questions arising in the mind of buyers looking for real estate property in Los Angeles such as, what price range to consider, what kind of homes to buy, when is the best time to buy and how to obtain a loan.
So, is 2020 a good year to potentially invest in Los Angeles real estate? There are both positives and negatives happening in 2020 – keep reading this complete guide for buying a real estate property in Los Angeles to find out all you need to know and expect for this year’s Los Angeles housing market.
» 2020 Real Estate Market Insights and Statistics
» Apartment Demand in 2020
» Los Angeles Single-Family Housing Industry
» Rental Industry Performance
» Commercial Real Estate Projections
» Role of Private Sector Investment in Affordable Housing
» Focus on Gen-Z
» Millenials in Home-Buying Market
» Impact of Lower Mortgage Interest Rates in 2020
» Why Bidding Wars Getting Popular in 2020
» LA Home Prices 2020 Projections
» Hottest Zip-Codes
» Los Angeles Housing Market Forecast 2020-22
Los Angeles 2020 Real Estate Market Insights and Statistics
The median price of homes currently listed in Los Angeles is $859,000 while the median price of homes that sold is $743,900, according to real estate tracker Zillow. The median list price per square foot in Los Angeles is $551, which is expected to go higher. In Los Angeles, the demand for property is incredibly high but supply is the ongoing problem. Here’s a list of stats explaining the overall factors that affect home prices and availability in LA.
- » The housing demand is very high, including “all cash” bidding wars quite often.
- » The housing supply is far too low compared to the demand.
- » Home prices are sky-high and continuing to rise – the area’s persistent desirability among well-heeled buyers.
- » The number of renters is increasing at a very fast pace.
- » There is a dearth of new home construction to satisfy buyer demand – only 100k to 140k units per year.
- » Mortgage rates are at a low, and down payments are as low as 3%.
- » Regional employment is very low and staying that way.
- » Buyer income is also low and is only rising by a small percentage.
- » Millennials are entering the home-buying market – LA millennials having the lowest rate of home-buying due to low supply.
- » Tax is looking very positive for sellers.
- » In last, Los Angeles housing market heated up during the 4th quarter of 2019.
There Will Be a Mild Slowdown in Apartment Demand In 2020
Due to slower economic growth, apartment demand will drop. This year there is a projected amount of fewer apartment units, whereas, in 2019, units were 20% higher than the number of units constructed in all of 2018- or 2017. This is because millennials, who were once the major source of renting, are steadily moving into homeownership. Though our real estate analysts and management experts recommend the apartment management is the hottest market in Los Angeles, CA, and sales volume increased by 10.5% year-over-year from Q4 2018 but the median price for condos remained more or less the same. Despite the mild slope, multifamily housing will still remain sufficient enough to lower concessions in markets that are oversupplied.
The Single-family Housing Industry Will Continue To Boom In 2020
Building and/or buying in the suburbs will continue to boom and be a very safe bet for both investment returns and market performance. In fact, the suburban single-family housing industry is projected to outperform urban in 2020 – achieving a much higher rent growth and maintaining a lower vacancy rate. As per The MLS™, the overall median sales price for single-family homes in Los Angeles in Q4 2019 increased by 9.8% and sales volume increased by 22% year-over-year from Q4 2018. The median price of a single-family in Los Angeles for 2020 would be up approximately 2.5 percent from the earlier projections and lower mortgage rates are an incentive to buy rather than finding a rental.
Los Angeles Single Family Housing Market
Contact RTI Properties, Inc. for premiere Residential property management in Los Angeles.
Rent Control Will Give Low Impact for the Rental Industry
In order to alleviate rising rental costs, new rent regulations have been put into place in a few market areas. It’s likely that 2020 will bring in more rent control, despite economists thinking that building more houses is a better idea. In 2020, this will be a hot topic and debate in Los Angeles and LA surrounding areas. California, New York, and Oregon implemented rent control this year, and among the most restrictive on the list is California.
Still, Los Angeles Rental Properties Give Strong Income
It is seen that in the Los Angeles real estate market, one-bedroom apartment rents for around $1400 and a two-bedroom apartment rents for around $1800, which concludes the average rent people are paying is around $2400 per month in Los Angeles. These rental rates in Los Angeles are comparatively almost twice the national average. Whether it is because of immigrants moving to Los Angeles for the opportunity or Millenials moving to LA for the coolness factor, rental homes demand continues to grow like this way. The economic headwinds also do not affect this much. This situation explains how the rates of Los Angeles rental properties are going up 7% a year.
Related Article: Southern California Rental Market Outlook For 2020
Commercial Real Estate Will Continue To Outperform In 2020
Commercial/office real estate boom in 2019, and it’s projected to do the same in 2020. Both absorption rates and supply have been steadily increasing since 2019. Developers are optimistic about the growth, and unlike the residential market, commercial real estate seems to always make for a transparent and on-time delivery. In major markets like Los Angeles commercial management, rent may inch upwards due to a shortage of supply. For companies looking for much larger offices, stay tuned, because they are high on the list for developers.
The Role of Private Sector Investment in Affordable Housing Will Likely To Increase
It’s no surprise that affordable housing is hard to find, especially in big California cities such as Los Angeles. People absolutely need low-cost housing, and we’re not just talking about people who receive low incomes – middle class and blue-collar wage earners need affordable homes as well. Surprisingly enough, according to the National Low Income Housing Coalition (NLIHC), the United States needs roughly 7 million more affordable homes in order to meet the current housing demand.
The private sector is bringing in some positive solutions without compromising profits by constructing new housing projects. They are also working on turning the existing housing into affordable housing, creating new reuse projects – taking vacant buildings like factories and schools into residential housing or offices. Private investment will likely continue to increase in 2020, so long as there are incentives for investors such as the Low-Income Housing Tax Credit (LIHTC).
Gen Z Is the Next Big Thing
Gen Z is all about the technology side of things compared to other generations, so marketing and rental/housing strategies and terms should focus more on tech. Gen Z also takes more of a casual approach to communication, so sellers and renters should try to be a bit more tech-savvy and communicate over apps or online rather than formally and in person. This will help sellers and renters reach out to potential Gen Z prospects much easier. Renters and sellers need to market less towards millennials because they are in the home-buying stage, whereas Gen Z will grow from 8 million to roughly 55 million in the workforce within the next decade.
Millennials Will Become More Aggressive About Buying Homes
Millennials are storming the home-buying market, and very fast. In 2020, expect a very steady increase of millennial homebuyers and first-time homebuyers. Millennials in 2020 will take out more mortgages than both Gen Z and Baby Boomers, and they are in the market for homes that are roughly 1800 square feet in nice areas of the suburbs. Even if inventories are thin, expect to see many millennials buying homes this year – the oldest millennials being roughly 40 and the youngest are almost 30.
Mortgage Interest Rates Are On The Decline In 2020
Since 2019, mortgage interest rates have been declining – dropping to just under 4% for the most common loan options. Though this is no guarantee due to trade wars and tariffs shifting the economy, there are benefits for both sellers and buyers during this time.
1. What Lower Rates Mean For Buyers
In order to know exactly what your payment plan will be over your loan lifetime, opt for a 15-year fixed-rate mortgage. This conventional loan option is perfect due to relatively low-interest rates.
2. What Lower Rates Mean For Sellers
Buyers will be much more motivated to buy your home at a quicker rate if interest rates remain on the lower side. Though mortgage rates are on the decline in 2020, always stay prepared for interest rates to increase, as it might mean your home will be on the market for a bit longer.
More Demand and Less Supply Will Give Rise to Bidding Wars
Expect more aggressive bidding wars to become very popular in 2020 due to thin residential housing inventories and low mortgage rates. In fact, it is predicted that roughly one in four offers in 2020 will face bidding wars, compared to only one out of ten in 2019. Home buying demand will soar high, but since there’s a lack of new homes for sale, there will be fewer homes on the market this year than in the past five years. But fear not, the second half of 2020 will be spent putting thousands of newly built homes on the market, and Los Angeles is no exception.
Contact RTI Properties today for more info on LA home prices and Los Angeles property management.
At The End of the Day, LA Home Prices Will Moderate in 2020 but there is a Long-Term Appreciation
Since June 2019, Los Angeles home prices have risen by about $5,000. The growth of the Los Angeles metropolitan area real estate market has been quite impressive over the past three years, and the trend is likely to continue over the next two to three years. The Los Angeles housing market heated up during the fourth quarter of 2019 most likely due to low-interest rates and a strong job market. Based on our forecasts, the home prices in Los Angeles will stay grounded in 2020 but long-term appreciation is projected. Single-family homes make up 59% of the housing market in Los Angeles which is followed by multi-family housing which constitutes 19%, apartments which are 17%, and finally, condos and townhouses that make up only 5% of Los Angeles homes for sale.
It is projected that the home prices in Los Angeles will see a 4.3% increase within the next year 2021 and the price of an average home will be $755K by 2021. Los Angeles and Orange County residential property development is slow, and in short supply, so home prices continue to rise. Compared to Santa Clara and San Francisco, Los Angeles prices haven’t been too bad.
The Hottest Zip Codes in Los Angeles
Los Angeles prices are very neighborhood dependent. In some parts of LA, that amount of money could go much further. At a close second place to Gilbert, Arizona, LA’s 90012 zip code is one of the fastest-growing areas in the nation with an 8.8% growth rate. This zip code is associated with most of Little Tokyo, Chinatown, Elysian Park, and the Civic Center, parts of Bunker Hill and the Arts District, and Victor Heights. RTI Properties market analysts prove that on the terms of sales volume and the total number of listings sold, there are less than 50% areas in Los Angeles of growth and many areas of decline and 1 area of no change. Here are the top-performing areas of Los Angeles with the highest Median Sales price from Q4-2019:
- Beverly Hills – 90210 – Median Sales Price: $5.70 M
- Brentwood – 94513 – Median Sales Price: $3.35 M
- Santa Monica – 90402 – Median Sales Price: $3.25 M
- Pacific Palisades – 90272 – Median Sales price: $2.95 M
- Marina Del Rey – 90292 – Median Sales price: $2.15 M
- Manhattan Beach – 90266 – Median Sales price: $2.10 M
- Hermosa Beach – 9025 – Median Sales Price: $1.70 M
- Toluca Lake Studio City – 91602 – Median Sales price: $1 M
Los Angeles Housing Market Forecast for 2020-2022
Buyers who are looking for bargains should look somewhere else; you won’t find them in LA within the next few years. As we can see from the above data, the most predominant type of housing in Los Angeles is single-family housing. In the next two years till 2022, expect prices of homes to rise pretty high; however, mortgages will still remain pretty low – making more and more people swoon over moving to Los Angeles. For sellers, this is a great thing – there is plenty of demand. For the economy, it’s a bit of a struggle, as political battles are growing due to regulations on home construction. As of now, we have to just wait and see what will happen, but hopefully, more homes will be built to support the growing demand and population.
Choosing the right neighborhood can make all the difference in how a Los Angeles real estate property performs. Real estate investors can expect hiking rents, steady price increases, a strong economy, high demand for rental units, industry growth, and good investment activities in Los Angeles which proves it a successful long-term investment, a stable housing market and positive Los Angeles real estate market trends.
Contact RTI Properties, Inc. a professional property management company in Los Angeles today and get in touch with one of our specialists that will help you find or maintain a property in these hot areas!
Take Advantage of These Trends with a Top-Notch Property Management Company In Los Angeles
Sunny California is trending, and not just for a visit. People are looking at buying homes in the popular counties all over California, but Los Angeles is absolutely booming. Are you in the market? If so, what happens next? There will be endless things to do on your checklist. Investing in a Los Angeles real estate property or rental doesn’t mean becoming a property owner and dealing with all the hard daily work. One should hire a professional property manager to deal with all the maintenance and responsibilities of a property while enjoying the passive rental income. Luckily, RTI Properties. Inc. is here to help and bring you to that next level in your agenda. We are dedicated to finding and maintaining your Los Angeles property and the surrounding areas that suit you and your family the best. RTI Properties is a top-notch property management company serving the greater Los Angeles area and is always here to help you.
In 2020, there is no time to waste, especially with the very low-interest rates and mortgage loan rates! Give RTI Properties a call today at (310) 532-9122.