Los Angeles is a great place to live. A young city with an average age of just 35.8 years old, and it offers plenty of opportunity for people who want to change their life. However, the major issue with LA is its lack of affordability. In fact, almost 3 in 4 people cannot afford to purchase a medium-sized home.
A combination of house prices and income makes LA one of the most expensive cities in the country, and this poses a problem for younger residents. They worry that their dream of owning a property, rather than renting one, will never come true.
So, what is the house market forecast and trends for Los Angeles in 2020? And how will it affect home purchases and real estate activity in the coming year?
The Los Angeles Housing Market Forecast
Over the past year, properties in Los Angeles have risen by 2%. In the coming year, the real estate market predicts that housing prices will increase by as much as 4.2%. By December 2020, LA homes will cost around $747,000.
The accuracy of the forecast is just under 80% and is considered a positive trend. With such a high probability of house prices increasing, by the third quarter of 2021, you can expect higher home prices than those in 2018.
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Los Angeles Housing Market Trends
Despite such predictions, it is the analyzing data that gives a much clearer picture of the potential housing market trends you can expect for 2020. This provides a broader perspective on how the market moves so you can decide which is the best action to take if you're looking to purchase or rent a home in Los Angeles.
To discover the trends for the future, however, you need to look at the past. This is the only way to understand current trends and make a sensible prediction for what homeowners, both existing and potential, can expect to see in the upcoming year.
According to historical data, LA property prices peaked at an increase of 8.2% in April 2018. Since then, there has been a consistent decline. Even so, in October of the same year, houses in LA and surrounding countries were 5.5% more expensive than they were at the same time the previous year.
So, what does this tell us? Experts postulated that the reasons for this are that potential buyers are regularly priced-out, making it impossible for them to purchase a property or at least the property that they desire. The housing prices, after many years of consistent escalation, are beginning to taper off. Even with this, the National Association of Home Builders and Wells Fargo Housing Opportunity Index designated Los Angeles with the title of least affordable housing market.
This comes with the fact that out of all homes sold during Q4 of 2019, there were only 11.9% of sold properties that were affordable for families who earn the median income, which is just over $73,000. The median list price of an LA home, as stated on Movoto, is $1,195,000, with a price-per-square-foot averaging at $696, which is down from the $678 the peak value home buyers saw in August 2019.
It's no secret that LA is an expensive city to live in, but if you're desperate to find your place in the city of Angels, then it's not impossible to find somewhere for you. Contact Cher and speak to the helpful team of experts that can provide information on the market's best co-owning or co-borrowing properties. Considering that median house prices fall below the national average, you always have the potential for you and a like-minded, ambitious friend or partner to find a place to live and build a life in LA.
If you can purchase a home in Los Angeles this year, there are still essential things to consider. While you may be able to afford a down payment and mortgage costs, you should also make sure that you can provide other factors that come with owning a property, especially one as expensive as the Los Angeles area.
Mike Fratantoni, Chief Economist of the Mortgage Bankers Association, understands the importance of this, informing anyone planning on purchasing a property this year to "understand your budget before you go shopping." Doing so helps you to understand what you can afford upfront, rather than pinch pennies after putting down an offer and potentially experience disappointment later on.
As Los Angeles has been a hot market for many years, it is still an excellent time to consider purchasing a property. While prices peaked last summer, the cooling of the market is a sign that there is an opportunity for homebuyers to find a great property for them across the city. Even if buying isn't on the agenda, the freedom and relaxed rent control laws make it an appealing place, even if you're not ready to own a home just yet.
The Current Climate
Even with these trends and forecasts, some attention should focus on the current global pandemic. Coronavirus has recently affected the real estate and housing market. This is because people are unable to buy houses due to lockdown and quarantine measures. Just recently, the city of Los Angeles allowed homes to go back on sale. However, even with this, only one person could view an open house at a time, and if two people did need to be there, it must be people who currently live together. These regulations have slowed down the efficiency of the housing market.
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Living in LA is a dream come true for many people. Just imagining living in a place that gives you the glitz and glamor of Hollywood, celebrity parties, and sunsets over the beach. The housing market is also a competitive one, which could make it a challenge to purchase the home that you want. Even so, with solutions in place to make homes more affordable and flexible for young buyers, especially first-time buyers, there is a chance that living in LA could become more affordable within the next few years, particularly as the market recovers from the current drop in interest and purchases.