2021 Los Angeles Real Estate Market Investing Forecast

Note: Our market forecast includes data from Los Angeles and data from the surrounding area including Long Beach and Anaheim.

Why should you consider Los Angeles for real estate investment?

Bordering mountains, deserts and the Pacific Ocean, Los Angeles is the second largest city in the United States after New York City. Although the city is only about 469 square miles, around four million people live here. The statistical metropolitan area of ​​Los Angeles, which includes both the Inland Empire and Ventura Counties, expands to 13.1 million.

Los Angeles, also known as the “City of Angels,” is home to a range of different populations and neighborhoods, so investors of all types can find something that fits their investment strategy.

The state of the market

While real estate markets across the country have been profoundly affected by the COVID-19 pandemic, only some of the markets we covered have been as badly affected as the Los Angeles area. Investors looking to add this market to their portfolio should be aware of the following trends.

The vacancies are rented

In Los Angeles, vacancies are up 2.5% year over year. As a result, rental prices have also fallen. In particular, however, they have only decreased by 0.4%.

However, investors will be encouraged to know that this is likely a short-term problem. Vacancies have increased due to improved access to remote work. However, with LA appearing to be preparing to reopen in the near future, it is likely that staff will return to the office and the vacancies will be decreasing soon.

The inventory is better than average

While the LA metropolitan area currently reports that it only has a 2.2 month housing stock, it should be noted that this number is above the national 1.6 month average. Increasing the number of single-family and multi-family permits should also help alleviate the shortage of storage in the not-too-distant future.

Unemployment is relatively high

Investors should also be aware that Los Angeles unemployment is still relatively high, which could result in longer vacancies. As of February 2021, the unemployment rate will be 9.9%, a value that has increased by 5.6% compared to the same period in the previous year and is well above the national average of just 6.2%. As LA prepares to move into the next phase of its reopening plan, chances are a lot more jobs will become available and the rate should gradually decline.

Los Angeles Housing Demand Indicators

All data and graphs are from Housing Tides by EnergyLogic.

A look at indicators of residential demand in Los Angeles shows that the city’s real estate market has been badly hit by the pandemic and is still trying to gain a foothold.

Unemployment trends

While unemployment has been high across the country as a result of the coronavirus pandemic, few areas we’ve covered have been as badly hit as Los Angeles. At its peak in April 2020, the unemployment rate was an astonishing 17.9%, well above the national average of 13.3% at the time.

Since then, that metric has started to recover. However, as of March 2021, it is still 9.9%, an increase of 5.6% over the previous year and well above the national average of 6%.