The continued demand for Los Angeles real estate stems from a combination of factors, including a high quality of life, great weather, a solid economy with vast business opportunities, and a second-to-none landscape that provides beautiful scenery and recreation.
Residents love that the greater Los Angeles area provides a reprieve from the hustle and bustle of commerce, with quick access to the coast, as well as the mountains, and many options for luxurious living. Housing options include everything from high-rise condos for fast-paced downtown Los Angeles lifestyles — to thriving upscale mansions in the calm of the suburbs.
All of these factors contribute to the sustained appeal and growth of Los Angeles real estate — a trend that’s continued for decades. Los Angeles real estate has been hot on both the residential and commercial property side, making the L.A. and surrounding area markets attractive to seasoned and first-time investors.
Let’s take a look at 2022 real estate data and a recap of the L.A. real estate market report for Q4.
Q4 Real Estate in Los Angeles By the Numbers
The fourth quarter of 2022 proved to have a steady stream of activity for buyers and sellers in Los Angeles and the surrounding areas. Although new listings slowed slightly in the 4th quarter in Los Angeles and its submarkets, this is typical.
It’s consistent with cyclical nationwide trends in Q4 when new listings slow down around the holidays. Despite this, demand persisted for Los Angeles real estate, with historically low inventory in many areas.
Overall, the Los Angeles area saw the same seller’s market we have experienced since the pre-pandemic period, but with a subtle taper on bidding wars and a slight decrease in competition among buyers (potentially due to inflation and higher unemployment rates). This is attributed to economic factors and affordability fundamentals, including market conditions and rising interest rates.
Sales-to-List Price Ratio
One data point that can reflect trends in real estate market demand is the Sales-to-List Price Ratio. In an ultra-hot real estate market, such as Los Angeles, this metric can indicate when the market is experiencing a decrease in price escalation as a result of bidding wars.
To put it simply, the sale-to-list price ratio is the final price a buyer pays for a home divided by the price the house was listed for. This number is measured as a percentage and reported as a ratio.
Sale-to-List Price Ratio was 99.1% in November 2022
For example, if a house lists for $850,000 and sells for $850,000, the Sales-to List Price Ratio is 100%. In November 2022, the sale-to-list price ratio was 99.1% for Los Angeles home sales. This indicates that, on average, houses in L.A. sold for very close to the asking price in November.
As the Sales-to-List Price Ratio drops lower, this indicates that houses, on average, are selling for lower values compared to the listed asking price. Alternatively, if you see the sale-to-list price for a home over 100%, this indicates a buyer paid more than the asking price. Such a number is likely the result of a competitive bidding war against one or more other buyers.
Review Sale-to-List Prices for Neighborhoods, Cities, and Counties
If you’re researching investment options with Los Angeles real estate, using this metric for an isolated property sale is not an effective way to accurately evaluate market trends.
For example, some properties are overpriced, to begin with, and this can be misleading when reviewing the sale-to-list price for a single property. It can falsely lower the ratio and skew the results. As with any metric, a larger data set provides the most accurate information.
Real estate industry analysts recommend reviewing sale-to-list prices for a neighborhood, a city, and even the county, to get a true indication of real estate market demand.
Partnering with a real estate firm like Christina, who is well-versed in L.A. market analysis, can help lower the risk for investors. Christina works with investors to diversify their portfolios and carefully selects portfolios in Los Angeles submarkets that include a mix of multi-family and commercial properties.
Let’s review Sale-to-List Price Ratios for Los Angeles submarkets in November 2022:
- Malibu: The Sale-to-List Price Ratio was 92.28%
- West Hollywood: The Sale-to-List Price Ratio was 98.6%
- Beverly Hills: The Sale-to-List Price Ratio was 92.9%
- Venice/Silicon Beach: The Sale-to-List Price Ratio was 99.5%
- Santa Monica: The Sale-to-List Price Ratio was 99.1%
What Was the Median Home Price in Los Angeles County in November 2022?
The median home price represents the data point that half of the homes in the data set in a geographic area sell above a price, and half of the homes sell below a price.
Let’s review this data for all of Los Angeles County.
- A review of statistics in Los Angeles County showed the median home price was $829.9K
- To compare the previous year, in November 2021, the median home price was $11,160 higher, at $847,790.
Real Estate Data on the City of Los Angeles in November 2022
- Los Angeles real estate had a median price per square foot of $564 for homes.
- Data showed the median home price was $965k. This reflects an increase of 3.4% when compared to November 2021.
- Homes in Los Angeles were on the market for 49 days, on average, before selling. This days-on-market metric was a slight increase from the average of 39 days-on-market in November 2021.
Los Angeles Real Estate: Hot Market or Cooling Down?
When interest rates are low, and there’s plenty of interest from qualified buyers, residential real estate is booming: We understand this to be a hot market or a seller’s market. A seller’s market is simply defined by more buyers than sellers in the real estate space.
At the end of December 2022, Los Angeles, CA, remained a seller’s market, on par with most other geographic areas in California and much of the U.S. By real estate industry standards, the difference between a seller’s market and a buyer’s market has a specific definition.
This is tied to the number of available real estate properties:
Seller’s Market Defined By the Industry Standard
- Seller’s market indicates less than three months of inventory.
- Neutral market indicates three to six months of inventory. When the real estate market is neutral, it’s said to be in balance.
- Buyer’s market indicates six months or more of inventory. Some industry real estate experts consider four to six months of inventory to be a balanced market.
No matter if it’s a buyer’s market or a seller’s market, there are real estate opportunities at any stage and cycle of the market. It comes down to the real estate strategy applied and the types of opportunities available. Expert real estate firm, Christina, has seen the ups and downs of the Los Angeles area and its submarkets over the last 45 years. Christina knows that each market has its own specific strategy.
Did Mortgage Rates Impact Q4 Real Estate in Los Angeles, CA?
In an effort to curb inflation, the federal reserve imposed multiple rate increases in 2022, with rates fluctuating from 3.5% to as high as 7%. This rate increase has started to impact housing affordability around the U.S., including the Los Angeles area, which has long been a challenge in the entire state of California.
Due to higher rates, a scarcity of listed properties, building, and zoning constraints, and historically low inventory over the past year (and long before that), many who may have purchased homes are opting to rent. Investors can’t control the interest or mortgage rates, but evolving rates and changing market conditions aren’t always bad, as this can present opportunities for knowledgeable investors.
Los Angeles real estate investment firm, Christina, utilizes a strategy to purchase distressed properties that are discounted, making them ripe for investor portfolios. Changing economic conditions can sometimes be the perfect time to diversify your investment strategy.
The Los Angeles real estate market ebbs and flows, as with any asset class, but when it comes to real estate, some categories are impacted more than others. Fortunately, there are many types of real estate investment opportunities in the Los Angeles area to consider based on your risk tolerance and interests.
Industrial Property and Office Space
As we look at various types of properties, the industrial market has remained in high demand, evidenced by rents that have stayed steady and strong. Commercial real estate valuations as a whole have started to show signs of cooling slightly compared to the industrial property category.
Retail Property
As people continue the trend to seek out bricks and mortar stores in a post-pandemic era, rents for retail property had an uptick from the previous year, climbing to $3.03 per square foot. Retail property in the Los Angeles area showed vacancy rates of 5.4% in Q4.
Commercial Multi-Family Units
Commercial multi-family units in Los Angeles are excellent investments and continue to be high-demand properties for investors, with space at a premium in the Los Angeles submarkets. Commercial multi-family units feature five units or above (unlike residential commercial units, which have four units or less).
Multi-family units are on the rise in California, especially as Governor Newsom signed a bill in the third quarter of 2021 to limit the reach of single-family zoning.
Location Is Luxury —The Larrabee
One of the latest multi-family investment opportunities in West Hollywood is The Larabee. A rare joint investment opportunity, The Larrabee is a highly coveted residential condominium project. The Larrabee is prime real estate, and the project consists of the Christina 4 investment portfolio, consisting of six multi-family units and one commercial property.
The Larrabee property is a condo development built in 1982. Formally known by the locals as 1129 Larrabee, the sought-after property is known for its stellar location, with close proximity to the Sunset Strip, the well-known 1.7-mile stretch on Sunset Boulevard in West Hollywood.
The Larrabee location is a magnet for entertainment and close to the action, just south of the prestigious Hollywood Hills, known for several landmarks, including the Hollywood Sign and the Hollywood Reservoir.
From an entertainment standpoint, Forest Lawn Memorial Park is nearby for recreation, and residents will enjoy being close to the John Anson Ford Theatre, a well-known amphitheater that seats 1,200 people. Close by is the Hollywood Bowl, another music venue that was named one of the ten best music venues by Rolling Stone magazine.
Larrabee Units – Premium Property
With space at a premium in Los Angeles, the Larrabee units are spacious by California prime real estate standards. Units clock in at around 1,200-2,700 square feet and feature luxurious details. Larrabee units boast custom cabinets, spacious walk-in closets, and private patios where residents can take full advantage of the weather and views of the city. It includes other amenities such as secured building access and parking.
An exclusive, ultra-prime property with just 15 total units spanning three floors, the Larrabee offers an inclusive community feeling, and the location is touted as one of the best, most convenient locations for condo living in the area.
For investment interest in The Larrabee, contact Christina for more information.
Ultra-Prime Submarkets of Los Angeles – Real Estate Data
The city of Los Angeles has 107 neighborhoods, each with its own personality and unique vibe. But for those interested in investing in the submarkets of L.A., the hidden gem areas, or high-end coastal luxury, there are plenty of places not far outside of Los Angeles for living, working, and investing.
As additional data comes out for real estate in Q4, let’s review highlights, data, and trends for Los Angeles submarkets in the second half of 2022.
- Beverly Hills
- Malibu
- Century City
- Brentwood
- West Hollywood
Q4 Data for Beverly Hills Real Estate
- Living up to its reputation for luxury and opulence, the median home sale price in Q3 for 2022 in Beverly Hills was $3.3M. This was a 4% decrease year-over-year.
- Beverly Hills had the second-highest median home values for all of the Los Angeles submarkets, with Malibu topping the list at a median home value of $4M.
- Total transactions, or sales, were a mere 66, and this reflects a decrease of 46% in transactions compared to the same period in 2021. Contribution factors for the decrease include less inventory, as many homeowners opted to hold rather than sell.
- There were zero condo transactions during Q3 in Beverly Hills, as all transactions were private home sales.
- With a 9% YoY decrease in the median price per square foot, Beverly Hills real estate was $1K. The median home sale price in Los Angeles County was $820K.
Q4 Data for Malibu Real Estate
- The median sales price for a home in Malibu was $4M. This was a 12% increase year-over-year from 2021.
- There was a decrease in properties closed, with 53 fewer transactions than in the same period in 2021.
- The median price per square foot was 30% higher year-over-year from 2021, at $1K per square foot.
- The median listing home price in November 2022 was $4.7M. This was a 17.5% increase year-over-year from November 2021.
Q4 Data for Century City Real Estate
- Houses in Century City were on the market for only 51 days in November 2022, compared to 81 days in November 2021.
- The median home sale price in
- There were 22 homes sold in November 2022. This was a decrease year-over-year, as 52 homes were sold in November of the previous year.
Q4 Data for Brentwood Real Estate
- Housing prices dropped slightly in November 2022, with an 8.4% decrease and a median price of $760k.
- Brentwood homes sold quickly, with an average of 39 days on the market, up from a mere nine days from the previous year.
- In November 2022, only 49 homes were sold in Brentwood, a decrease from 99 home sales in November 2021.
Q4 Data for West Hollywood Real Estate
- Home prices decreased 14.5% in November 2022 when compared year-over-year to November 2021.
- The average median selling price in West Hollywood was $885K in November 2022.
- There was little change with days-on-market in West Hollywood, increasing from 53 days in November 2021 to 57 days in November 2022.
- West Hollywood saw a significant drop in home sales in November 2022, with only 24 sales, compared to 55 homes in 2021.
Renter Demand for Multi-Family Units
There is no shortage of people who want to reside in the Los Angeles area, or in the state of California for that matter. In fact, there’s a known housing shortage in the golden state, and affordability remains a struggle for would-be buyers, which increases the demand for rental properties.
Renters have a variety of motivations for opting to rent over buy. Reasons range from holding off on purchasing because they don’t feel ready, not wanting the responsibility of ownership, or lacking the down payment funds to purchase, and waiting for the real estate market to cool down. When the rental market is strong, this presents opportunities for investors.
Rent Growth in Los Angeles and Vacancy Rates
Rent growth is showing some slight signs of slowing down in growth in Los Angeles and statewide in California, but this is relative, as California is historically known for its ability to command high rents and was previously steadily on the rise.
In fact, when it comes to rent growth in California, 2022 was projected to be among the fastest-growing years to date. With limited housing options in southern California, rental rates have been up overall since 2020, topping $2,358 per unit on average, an increase of 19.8%.
Demographics and Population
Let’s break down the data on demographics and population. To put it in perspective, the entire state of CA reported a population of 39.03 million by year-end 2022. Let’s break down population trends in the Los Angeles metro area for 2022, 2021, and 2020.
- In 2022, the population of the metro area in Los Angeles alone was 12,488,000 in 2022, an increase of 0.23% from 2021.
- In 2021, the metro area population of Los Angeles was 12,459,000, a 0.1% increase from 2020.
- In 2020, the metro area population of Los Angeles was 12,447,000, a 0.01% decline from 2019.
Q4 Real Estate in Los Angeles — What’s Next?
Between established companies, entrepreneurs, and real estate investors, the Los Angeles area is appealing on the business front to both domestic and international investors. Additionally, savvy investors know that CA offers a multitude of tax incentives, adding to the advantages for investing in real estate property in the Los Angeles area.
As we evaluate Q4 real estate data in Los Angeles, the economic experts have weighed in on 2023 predictions and projected real estate trends. The data suggests that real estate demand will persist nationwide, especially in sought-after geographic locations, such as the golden state of California and, specifically, the Los Angeles area.
List prices are predicted to moderate, and experts say we should achieve more of a balanced real estate market at some point in 2023. This is good news for buyers and investors.
Location Rules
Real estate prices will always fluctuate, as with all other asset classes. It’s important to note that although many factors affect price fluctuation and long-term appreciation, location will always be the single most important factor when it comes to real estate.
When investing in real estate in the L.A. area, consider the reasons behind the demand, think long-term, and look at the long history of property appreciation in Los Angeles and surrounding areas. Consider the security of investing in multi-family units. Of all investment and asset classes, 35% of people say real estate is the best long-term investment option.
Partner with a real estate firm that knows the Los Angeles area better than anyone else. Contact the experts at Christina about diversifying your investment portfolio with real estate in Los Angeles and surrounding areas.
Sources:
California Association of Realtors | Market Minute Write Up
Southern California Multifamily Market Report | Avison Young
In U.S. Real Estate Still Leads Stocks as Best Investment | Gallup
California is ending a rule that helped cause its housing crisis | Vox