Rates remain elevated, but limited supply are creating opportunities for those who know where to look.
The Los Angeles real estate market is entering the fall with a familiar contradiction: buyers have more negotiating power than they have had in recent years, but there still isn't enough quality inventory to create a broad buyer's market.
The latest August data from the California Association of REALTORS® shows the Los Angeles metro area's median single-family sale price at approximately $850,000, up 1.2% from a year ago, while sales volume was down 3.8% year-over-year. Inventory increased modestly to 4.0 months, compared with 4.1 months a year ago.
Mortgage rates remain the biggest variable. The average 30-year fixed rate was 6.67% in August, but rates moved above 7% in September. That has clearly kept some buyers on the sidelines. At the same time, it is important to remember that today's buyer is competing against far fewer properties than in a historically balanced market.
Where I see opportunity
In the markets where I spend most of my time, Santa Monica, West Los Angeles, Beverly Hills, West Hollywood and surrounding Westside neighborhoods, as well as multifamily and development opportunities throughout Los Angeles, the best opportunities are increasingly property-specific.
For residential buyers, homes that have been sitting on the market, properties requiring renovation, and sellers with a genuine reason to transact can present substantially more negotiating room than turnkey homes priced correctly from the beginning.
For investors, the equation is even more interesting. Higher financing costs have pushed some less sophisticated investors out of the market, reducing competition for properties where there is a clear path to creating value through renovation, redevelopment, ADUs, repositioning or improved operations.
In other words, I am less interested in simply asking, "Is the market going up or down?" The better question is: Where is the spread between today's price and tomorrow's value?
The $5M+ market remains highly segmented
Los Angeles continues to have one of the deepest luxury housing markets in the country. Realtor.com estimates that the threshold for the top 10% of Los Angeles-area listings was approximately $3.92 million in August, the highest luxury entry point among the major U.S. markets it tracks.
But the market changes considerably once you move above $5 million.
At this level, buyers are not simply buying square footage. Architecture, lot size, privacy, views, location, provenance, design, amenities and scarcity become increasingly important—and there are relatively few truly comparable properties.
That is particularly relevant in Beverly Hills, Beverly Hills Post Office, Bel Air, Brentwood, Pacific Palisades and the Santa Monica/Westside luxury markets where I work. Realtor.com recently reported that the most expensive Los Angeles condo segments are showing renewed strength, with median list prices per square foot rising 2.3% year-over-year for $5M–$10M condos and 5.2% for condos above $10M over the most recent three-month period.
At the very top of the market, however, pricing remains highly property-specific. A $10 million house with an exceptional lot, architecture and privacy can have very little in common with another $10 million house a few miles away.
My outlook
I remain optimistic about Los Angeles real estate, particularly for buyers and investors who are prepared to be selective.
We are not in the frenzy of 2021–22, and I don't expect we need to be. A market with approximately four months of inventory, slower transaction volume, elevated rates and more price reductions can actually create a healthier environment for making thoughtful decisions.
And there is another potential catalyst: financing conditions. If mortgage rates eventually move meaningfully lower, today's buyer who purchased well could benefit from both a better financing environment and renewed demand.
For now, my strategy is straightforward: follow the numbers, identify motivated sellers, focus on irreplaceable locations and properties with value-creation potential, and don't confuse a slower market with a market without opportunity.
Los Angeles remains one of the world's most supply-constrained major real estate markets. Quality real estate is still scarce. The opportunity is being more selective about what, and at what price, we choose to buy.
