The events of the past years, coupled with the rising inflation, drastically affected the housing market on a national scale. However, hotspots such as Los Angeles and California as a whole have experienced the greatest changes and reported the sharpest spikes in house and rent prices.
But what does the future look like for the LA housing market? Although predictions might be contrasting, a few emerging trends seem to have the power to be reshaping the housing landscape in Los Angeles and beyond. Let’s look at these key trends below.
The Median House Price Will Remain Above the National Average
There is no doubt that mortgage payments are one of the priority categories to include in a household budget. And, because of how much these payments can impact your overall financial situation, it is crucial to use a mortgage calculator and understand how much you’ll be paying each month.
In Los Angeles, the median house price has risen to a whopping $999,000 in 2023 and, on average, LA homeowners pay over $1,696 per month on mortgage payments. Although estimates show that house prices should rise at a slower rate in 2023, mortgage rates have increased alongside interest rates, thus increasing monthly expenses for the 7 million people in the US with a variable-rate mortgage.
Cash-Out Refinancing Might Still Make Sense – With the Right Deal!
Cash-out refinancing is a financial move that allows you to tap into the equity you have built in your home and free up the cash tied up in your property, which is considered to be an illiquid asset.
But does refinancing still make sense? Cash-out refinancing certainly reached its peak over the course of the pandemic, and the unfounded optimistic feeling reigning among buyers will likely face a sharp reckoning this year. Nonetheless, interest rates in LA are set to rise even further and, if you have been considering housing loan refinancing options, this might be the right time to contact your lender!
Home Renovations Might Be a Convenient Option
Although the housing market in and around LA is cooling down – as shown by homes staying on the market for longer and selling for the asking price – property prices remain among the highest in the nation. This has made it challenging for homeowners to upgrade to a more spacious or newer home
Luckily, home renovation projects can help LA property owners mold their homes to their stay-at-home lifestyle, add more livable square footage, and upgrade their living environment at a lower cost.
Both Inventory and Sales Volume Are Decreasing
Throughout the pandemic, young families and professionals experienced a renewed interest in home buying. However, now, the market isn’t as hot as it used to be.
According to a report by Redfin, houses listed for sale are on the market for an average of 57 days compared to the 42-day average of last year.
What’s more, only 1353 properties were sold in Los Angeles in the past 12 months, which is nearly 50% lower than the levels reached in June 2021. Although the LA housing landscape remains somewhat competitive, homes sell for around 1% more than the asking price, while hot homes sell for just 2% more than their price.
Rent Is Still on the Rise
Even if you are not looking to buy a home in the Los Angeles area in 2023, it is important to have a clear idea of what to expect from rent fluctuations in the next few months. In the decade between 2009 and 2019, rent in L.A. increased by 65%, which is 30% faster than the national average.
Additionally, while some areas of the city benefit from rent stabilization systems that keep rent hikes to a maximum of 3%, many families found themselves dealing with increased rent costs in 2022 – a trend that is bound to remain present throughout 2023 and beyond.
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