Los Angeles real estate remains one of the most dynamic markets in the United States, characterized by high demand, limited inventory, and significant regional disparities. Home prices have surged over the past decade, driven by population growth, limited new construction, and strong investment appeal. However, affordability challenges have intensified, particularly for first-time buyers, as wages struggle to keep pace with rising costs.

The market is heavily influenced by supply-demand imbalances. As of mid-2023, Los Angeles County’s inventory stood at approximately 1.5 months of supply, far below the 6-month equilibrium typically indicating a balanced market. This scarcity has pushed median home prices to $1.1 million in Q2 2023, a 15% year-over-year increase. Data from the California Association of Realtors highlights that 68% of sales involved properties priced above $1 million, reflecting a shift toward luxury segments. Meanwhile, entry-level homes under $500,000 account for just 12% of transactions, underscoring affordability crises in suburbs like Long Beach and Inglewood.

Economic factors exacerbate these trends. Interest rates, averaging 7.25% for 30-year mortgages in late 2023, have cooled demand compared to the 2021-2022 peak but remain elevated relative to historical averages. Foreign investment, particularly from Asian markets, continues to fuel purchases in prime areas like Santa Monica and West Hollywood, where foreign buyers purchased 24% of homes in 2022. Additionally, remote work flexibility has spurred demand for suburban and rural properties, with the Inland Empire and Antelope Valley seeing 22% price growth year-over-year. However, regulatory hurdles—such as zoning restrictions and lengthy approval processes—constrain new development, perpetuating shortages. The combination of these elements ensures Los Angeles real estate will remain a high-stakes market with divergent outcomes across price points and locations.