Home-buying trends in Los Angeles

There were serious fears at the start of the pandemic shutdown in March 2020. Much construction went on pause, non-essential workers stayed at home, a lot of new projects were put on hold, and nobody knew how long it would last for. The predictions were grim, and yet within a year the Los Angeles residential real estate market is continuing its extraordinary growth. 

The median home-buying prices in Los Angeles continue to increase, according to the California Association of Realtors https://www.car.org/marketdata/data/countysalesactivity. An average home in LA cost $766,010 in September 2020, and this had jumped to $830,070 by August 2021. Less than a month later it was up to $886.050.

This trend has been seen in many other cities and countries, and was heavily influenced by lockdown living where people spent far more time at home and realised they wanted a different style of living – whether it was more home-office space, a garden or more living space. 

The new ADU laws in Los Angeles (https://arm-adu.com/) have been a great boost to people who want more room on their property, whether it is to create extra living space for their family or if they want to take on tenants and generate an income stream. The additional dwelling units in Los Angeles can be up to 50% of existing home, which is a massive bonus. 

On March 5th 2021 Mayor Eric Garcetti announced a change in Los Angeles city planning laws when he launched the Accessory Dwelling Unit (ADU) Standard Program Plan, which allows Los Angeles homeowners a faster way to get planning approval on new units. The ADUs are work for single-family units and multi-family buildings, and a $100,000 investment in building your ADU can instantly result in a $300,000 valuation increase on your home! It is a fairly extraordinary and guaranteed way to boost the price of your home – whether you plan to move, to stay where you are and extend your mortgage, to take on tenants or just to enjoy the extra living space.

Due to the increase in cost of properties, for many homeowners it makes sense to enlarge the size of their property rather than buying a new home, spending money on increased property taxes, realtor fees and more. 

The California Association of Realtors reported that in the summer of 2021 there was a decrease of single-family home inventory of 4.1%. This may not sound like a lot, but Los Angeles has an estimate 3,898,747 residents (https://en.wikipedia.org/wiki/Los_Angeles), so every percentage point counts. By building an ADU you can immediately help boost inventory, which is good for everyone (especially your net value!).

There was pandemic and growing prices prompted lots of people to leave Los Angeles, or so we thought. Los Angeles magazine (https://www.lamag.com/citythinkblog/california-exodus-study/) quoted a study from the University of Southern California that showed the majority of people were not leaving Los Angeles after all (https://www.universityofcalifornia.edu/press-room/uc-studies-contrary-popular-belief-residents-are-not-fleeing-california). “The majority of Californians still believe in the “California Dream.”, according to the researchers, and “California’s economy attracts as much venture capital as all other states combined.”

In other words, now is a good time to own a home in Los Angeles, and to build additions to your home if you can afford it. The California dream is alive and well, and here at ARM Builders we love the City of Angeles. 

ARM Builders, Inc. · CSLB Lic. #915352 · 877.755.1350 · armbuildersinc.com