A Guide to the Los Angeles Housing Market

Buying a home—especially for the first time—can be equal parts daunting and exciting. It means falling in love with a forever home-to-be and being willing to stop at nothing to get it. If you’ve set out on this quest in Los Angeles, well, let’s just say you’ve got quite a doozy on your hands. For many buyers, the City of Angels can be a difficult place to house shop; and, believe it or not, pricing isn’t the only stumbling block standing in the way. There are also questions of where to start looking, what price range to consider, how to obtain a loan, and whether or not there’s any room for creativity. 

To make you feel less alone in the pretty (but tricky maze) that is the Los Angeles housing market, we’ve written up a guide to give you a running start.

Overview of Los Angeles’ Housing Market 

According to the Los Angeles housing market forecast for 2021, L.A. Metro home values will rise by around 12 percent in the next 12 months. And given that Los Angeles homes are in a state of constant demand, prices for these residences are also said to rise by double digits over the coming year.

L.A.’s Average House Price 

According to Zillow, Los Angeles County’s median home price was estimated to be around $790,000. While this isn’t exactly the highest price tag you’ll see in all of California, you should take into account that the median sale price includes starter homes and smaller residences meant to house one or two occupants—this means it may actually understate the priceyness of Los Angeles’ real estate market. Back in November 2020, the median asking price was around $440,000, meaning that a typical single-family residence of around 2,000 square feet could potentially cost much more than the Zillow estimates.

As with most Golden State home prices, Los Angeles residences retail on a very neighborhood-dependent basis. In a few parts of L.A., Zillow’s median estimates could be much higher and others—well, how comfortable are you in a tiny bungalow?

Why so Pricey?

“Enviable” is the word of the day when it comes to Los Angeles. Because so many people want to live here, L.A.’s persistent desirability naturally places the cost of buying on a steady ladder. Gone are the housing bubble days leading up to the Great Recession—living in L.A. is going to cost you a pretty penny. 

What Kind of Homes can you buy in Los Angeles? 

While La La Land is famous for its Spanish-style mid-century moderns, you’re bound to find many more types of homes in your search. And as local leaders are drawing focus on developing dense housing around transit, the city’s housing types are growing more and more diverse. Here are a few that you’re most likely to come across:

Single-family residences: These are classic American-style homes; sitting on a plot of land with a white picket fence and all that jazz.

Condos: These are individual units that are purchased rather than rented; condominiums can be similar to apartment buildings.

Duplexes/triplexes: A property with more than one self-contained unit; seem to be popular with investors, more often than not.

Townhomes: Generally attached to neighboring units, these types of homes look like single-family residences but function more like condos.

Small lot homes: Somewhat unique to the City of Angels, these homes look like townhomes but are more similar to single-family residences. Units in small lot complexes do not touch, but there is communal space.

Co-ops: More affordable than condos, these types of places allow residents to own shares in an association run by a co-op board (hence the name).

TICs: Short for Tenancy in Common, this type of housing has become increasingly more common in Los Angeles. Complexes are converted from pre-existing rental properties, making for affordable starter home options.

Vacant lots: You can always buy vacant land and build your own dream house. While we must warn you that the rules around this practice are far more complex than this article—plus, quite costly—it’s well worth transforming your vision from fantasy to reality.

What’s the Deal with the Down Payment?

If you’re paying for your new home in cash, then congratulations on your successes and/or luck in life—this question is not for you. But if you’re not, you’re going to need to save up for a mortgage agreement and practice patience—this process takes time.

Attempting to produce a traditional 20 percent down payment can be a serious obstacle in a place like Los Angeles, given the area’s real estate costs. But of course, not all hope is lost because most loan providers don’t require the 20 percent to begin with. Many home shoppers are asked to pay 10 percent (and often less) upfront when purchasing a home or other property.

Don’t think you can afford the 10 percent either? You have nothing to worry about. There are numerous programs geared towards homebuyers who don’t have much cash on hand. There’s Federal Housing Authority Loans if you’re a first-time buyer, Home Possible Mortgages if you have a low or mid-level income, as well as VA loans for veterans and active members of the service.

Are Real Estate Agents Really Necessary?

You may think you don’t need a real estate agent but imagine successfully navigating the tangled web of real estate on your own… Especially if you’re a first-time homebuyer, real estate can truly be an overwhelming challenge without a professional by your side. Not only can real estate agents help you find the property of your dreams, but they’ll also be by your side through the bidding process, price negotiations, and more.

Is a Bidding War Likely?

We lean towards “yes” on this one. According to the California Association of Realtors, homes in the City of Angels usually sell for much more than the sticker price. And what does that mean for you? Well, it basically means that sellers receive multiple offers, and you have to do everything in your power to appear as the most suitable candidate of all.