The Los Angeles housing market remains hot going into 2022, with home prices and rent prices both trending upwards. Rental prices took a dent during the pandemic, but since then, prices bounced back and are now north of pre-pandemic levels going into 2022.
Read on for the trends and statistics that are shaping Los Angeles’s housing market as of 2022.
1. The Median Los Angeles Home Price Is $945k – Up 11.2% Annually
Home prices in Los Angeles have risen by 11.2% year over year, reaching $945,000. That’s more than twice the national average of $389,520.
Across the United States, housing prices rose an average of 16.1%. While the impact of the increase is smaller when home values are lower, it does show that the growth potential in Los Angeles is a bit more limited.
2. The Average Los Angeles Rent Is $2,563, Up 14% Annually
The average renter in Los Angeles pays $2,563 a month in rent. That figure is up 14.6% year-over-year.
It’s important to note that rent prices initially fell during the start of the pandemic, dropping by about 9.6%. However, the subsequent increases didn’t just recover the losses; they pushed prices past pre-pandemic levels.
3. Less Than 1% of Apartments Rent for Less Than $1,000 Per Month
If a person is looking for an apartment with a budget of less than $1,000 per month, their odds of success are incredibly low. Overall, just 0.7% of apartments in Los Angeles rent for less than $1,000 per month.
Additionally, only 9.7% of apartment rentals fall in the $1,000 to $1,999 per month range. Once you get into the $2,000 to $2,999 per month range, the number of properties increases significantly, coming in at 34. 2% of the market. However, the largest segment is $3,000+ per month, representing 55.4% of apartments in Los Angeles.
4. Los Angeles Metro Area Housing Inventory Level Is a Mere 1.2 Months
Monthly supply of inventory (MSI) figures estimate how long it takes for the current inventory on the market to sell. Generally, a six-to-seven-month supply is considered stable, allowing prices to level out and create an even overall market. When a supply exceeds seven months, it’s a buyer’s market. For inventory levels below six months, the market favors sellers.
In the Los Angeles Metro area, the supply sits at 1.2 months. In broader Los Angeles County, it’s 1.3 months, a difference that most would consider negligible. As a result, housing prices may continue to rise, as there simply isn’t enough supply to support demand.
5. Sales of Existing Single-Family Homes Declined by 1.6% in the Los Angeles Metro Area
While prices are rising, the number of single-family home sales declined in Los Angeles in 2021. Overall, the number of sales fell by 10.6% when compared to 2020 figures.
The reason for the decline is likely attributed to several factors. Rising prices are part of the equation, as well as remote work. With the latter, some living in Los Angeles decided to head out of the region to find a lower-cost alternative. However, that’s balanced off by individuals who were unwilling to list during the recession, effectively keeping inventory levels incredibly low.
[Source: Norada Real Estate Investments]
6. Larger Residential Properties Prices Up 20.8% Since 2020
While prices are rising for properties of all sizes in Los Angeles, the higher the number of bedrooms, the larger the overall difference. For a one-bedroom property, the increase between February 2021 and February 2022 came in at 9.3%. For three bedrooms, the prices rose by 16.3%. When you get in the 5+ bedroom category, prices skyrocket, increasing by 20.8% year over year.
[Source: Rocket Homes]
7. Two-Bedroom Condo Sells for a Record-Breaking $4,848 per Square Foot
In mid-2021, a two-bedroom condo in Los Angeles sold for around $13 million. The property offered 2,681 square feet of space. When the cost is broken down based on the square footage, it calculates out to about $4,848 per square foot, a price that sets a new record in the area.
For the sake of comparison, the previous record was $3,858 per square foot. That’s a difference of $990.
[Source: Los Angeles Times]
8. Property Tax Appraisal Appeals Cost Los Angeles County $2.2 Million a Year
Property owners that believe their tax assessments are incorrect have the ability to appeal. However, Los Angeles County has seen an uptick in appeal activity, much of which is spurred by tax agents submitting requests in bulk for numerous clients.
Since every appeal has to be reviewed, assessed, and responded to, Los Angeles County is required to dedicate a significant amount of manpower to the process. Those activities are costing around $2.2 million annually.
[Source: Los Angeles Times]
9. Top LA Real Estate Agents Cross $1 Billion in Real Estate Transactions
The top-producing real estate agents in Los Angeles often benefit from high prices in the area. Overall, each of the top five performers in the area crossed the $1 billion threshold when it came to real estate transaction total values during 2021.
The highest total was secured by a Beverly Hills-based agent, coming in with $1.6 billion in total sales. In second, a real estate team secured $1.5 billion in sales, while a husband and wife team tied with an individual agent for third, hitting $1.2 billion.
[Source: Los Angeles Business Journal]
10. Average Annual Office Leasing Down by 38.5% in 2020 and 2021
During the early days of the pandemic, shelter-in-place orders lead to widespread workplace closures. Since most office environments didn’t qualify for exemptions, companies set employees home to work remotely, reducing the need for leased office space.
Overall, average annual office leasing was down by 38.5% in 2020 and 2021, compared to the prior 20-year averages, coming in with a total loss of approximately 6.6 million square feet. 2020 actually represented the first occupancy decline in 10 years.
[Source: Avision Young]
11. Total Office Vacancy Rate Hits 15.9% at the End of 2021
At the end of 2021, there was a total office vacancy rate of 15.9%. That’s a 4.7 percentage point increase over 2020 levels, which sat at 11.2%.
Additionally, it broke a record previously set in 2010. During the aftermath of the housing market crash, office vacancy rates hit 13.1% in 2010, a mark that 2021 rates significantly surpassed.
[Source: Avision Young]
12. Retail Vacancy Rates Remain Flat at 5%
While the brick-and-mortar portion of the retail sector was hard hit during the pandemic, the situation largely leveled off in 2021. Overall, vacancy rates sat near 5% at the end of 2021, leaving them level YoY.
[Source: The Registry]
13. Retail Rental Prices Rose by 2.1% in 2021
While vacancy rates remained level, prices are starting to rise. Overall, the cost of retail space increased from $2.74 to $2.80 per square foot, leading to a YoY increase of 2.1%.
[Source: The Registry]
Ultimately, the Los Angeles real estate market took its fair share of hits during the pandemic. However, barring office rental spaces, the metro region is largely recovering. Overall, that’s good news for aspiring home sellers and landlords, as prices are trending upward in both areas.
Homebuyers and renters will likely have to pay far more to secure housing than was the case during the pandemic. As prices rise, growth may slow as more people decide to exit the markets. However, any slowing may simply allow inventory levels to reach a reasonable point, creating more stability instead of leading to price drops.