In recent history, the Los Angeles real estate market managed to perform well for investors. In fact, no other city captured the attention of foreign investors as much as LA County. Financial planners and seasoned real investors believe that LA County is among the world's most desirable cities for making a profitable investment.
According to AFIRE, the Association for International Real Estate Investors, the real estate market in Los Angeles was once a thriving market for investors. Along with Boston and Paris, Los Angeles ranked among the top three global cities where real estate investors would want to make investments.
There is always a risk of losing profits on a property in Southern California. That includes high-cost places like West Hollywood, Beverly Hills, and Los Angeles. However, there is little reason to believe that the housing market in Los Angeles will experience a crash anytime soon.
Los Angeles County Housing Market: Where does it Stand?
At present, the Los Angeles real estate market trends depend on how Covid-19 affects the LA county. The local real estate suffered a setback in the first quarter at the beginning of the pandemic. With rapidly appreciating assets and historically low interest rates, a lot was happening in the LA real estate market. Despite the negative effects of Covid-19, this short disruption left a window open for people who may be looking to purchase, sell, or invest.
Buyers in LA County finally got some relief in February 2021 because of the surging home prices. As per the recent findings from the California Association of Realtors, the median sold price of a single-family home reduced up to 4.8% over the previous month. The current price is $664,120. Costs peaked late last year when the average selling price for a home was $700,000+.
The number of homes selling decreased gradually, falling to 9.7%. Both metrics were considerably higher during the same period in 2020. The price of homes remained 14.4% above February 2020 levels, whereas the selling price was up to 13.9%.
In addition to that, the inventory improved and reached two months compared to 1.9 months in January. Nonetheless, the LA County housing market is still fiercely competitive, and it takes 11 days on average for a typical home to sell. Before the pandemic set in February 2020, the available supply of homes remained at 3.8 months, while a typical property remained on the market for an average of 29 days.
The mortgage rates were above 3% for the first time since last year, by mid-February. Elevated rates, coupled with a shortage of available homes for sale, stopped a small percentage of buyers from taking any action.
The LA real estate market witnessed record price gains, and the rental market is softening ever since the pandemic hit the region. The median rental price of a one-bedroom property crashed to $1,900. Many first-time buyers opted for rentals instead of purchasing a property at an increased price.
The upward movement in rates gives birth to many questions, such as whether the market will sustain its momentum? Although rates are off their record lows, we observe that they are still significantly low by historical standards. Current increases in mortgage rates may slow the rate of price growth in the future. However, these trends will also encourage those who want to purchase and enter real estate marketing before the rates move further.
LA County: Real Estate Market Overview for 2021
- Population: 3,990,456
- Unemployment Rate: 15.1%
- Foreclosure Rate: 1 in every 7,767 (1.2%)
- Median Home Value: $768,046
- Median Rent Price: $3,500
- Percentage of Vacant Homes: 6.71%
- Median Household Income: $58,385 (latest estimate by the U.S. Census Bureau)
What you Should Know for Buying a Property in LA County
If you are looking forward to buying a house in Los Angeles, make sure you have a maximum housing budget in mind. Avoid spending more than the house is worth or more than you can afford.
Currently, average rents are increasing faster than median prices, leading to just one question. Will it be a profitable investment to buy a condo in LA County? The current rental rates and the present housing demands would confirm it is.
Homeowners who can't afford to purchase a home in LA County are looking for rentals. The demand for rental properties in Los Angeles is rapidly increasing. Local real estate investors boasting cash-flowing rental portfolios are the beneficiaries of these favorable trends. Years of appreciation lead real estate investors to favor rentals over conventional flipping projects.
Are you looking to invest in the profitable real estate market of Los Angeles County? Welcome to Park Regency Realty. We rank among the top fifteen real estate companies in LA County and have more than 190 full-time agents on board. Get in touch with us or call us at 818-363-6116 to find out more about how you can earn profits through real estate investments.