In Los Angeles, areas such as Beverly Hills, Malibu, West Hollywood, and Santa Monica constitute a region called Los Angeles Westside, or simply the Westside. While there’s no clear and official delineation of the Westside, it generally covers the area south of the Santa Monica Mountains and Sepulveda Pass, and the west Downtown LA, the 110 Freeway, La Cienega Boulevard, and the 405 Freeway, among others.
Westside is well known for its beaches, cultural destinations, and, of course, for being the hub of all things glamorous as the quintessential home of the world’s biggest movie stars and studios that churn out their global blockbusters. However, Westside has also been attracting companies from a host of other industries, from tech to creative. Plus, it’s home to cultural spots and institutions such as UCLA and Pepperdine University.
All in all, Westside is vibrant, with much to see and do, which is why it remains eminently desirable as a residential address promising your share of the good. If you’re looking to settle here or invest in premier properties, read on to learn about the Westside, Los Angeles real estate market and the trends that are expected to define the rest of 2022.
The Westside, Los Angeles real estate market
The Westside, Los Angeles real estate market offers a range of properties as diverse as the neighborhoods in the area. For those who want to live the luxe life, Beverly Hills is iconic for sprawling estates once owned by illustrious stars and larger-than-life personalities, with home prices soaring well above $60 million. The legendary status of neighborhood, home, and pedigreed property owners are enough to justify the price tags. But such homes have been royally enhanced by each succeeding owner, which only served to up property values over time.
In Culver City, home prices are less stratospheric. Spacious condos resembling single-family homes can begin at $700,000 and provide residents with easy access to the beach and restaurants. Single-family homes, on the other hand, start at $1 million.
In West Hollywood, newly constructed boutique homes are among the latest developments. These innovatively designed residential structures go for at least $2 million and boast ultra-modern furnishings. The heritage homes in the area are also worth a ook. Some that date back to the 1920s have been refurbished to today’s standards in both functionality and aesthetics. A few serve as multi-family homes.
Overall, the Westside real estate market offers a broad enough choice for you to find a home to suit your needs.
Recent developments affecting the L.A. housing market
Whatever the L.A. housing market faces, the region is historically able to bounce back from unfavorable trends. Here are some of the factors that have recently been making their effects felt on the L.A. housing market.
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Higher interest rates. To curb inflation, the Federal Reserve has hiked interest rates, which were at historic lows during the height of the pandemic. Higher interest rates mean that homeowners taking out a mortgage will have to pay a lot more for borrowing money. This will be felt in the additional interest charges that will be imposed over the life of, say, a 30-year mortgage. The development is expected to further shrink the number of aspiring homebuyers, leaving the market open to buyers who pay in cash, investors who think long term, and high net-worth individuals. In short, the L.A. housing market will remain desirable and robust.
New state laws. A number of laws have recently been implemented to address the housing crisis in the state. One of these, Senate Bill 9 (SB 9) or the “California Home Act” signed into law on September 16, 2021, allows a residential lot to be subdivided into two separate parcels, making room for up to four homes or duplexes/fourplexes, as long as certain conditions are met (e.g., the parcel must be within a single-family residential zone, located outside a historic district, or must not have been previously subdivided under the senate bill, among others).
Effective January 1, 2022, SB 9 is expected to help make more housing available throughout the state. Right now, however, this law is too new to make a discernible impact on the Westside, Los Angeles real estate market, and any new developments constructed in response to this law will not be available in time to meet the current demand.
The pandemic. While COVID-19 has significantly hit every aspect of our lives, people learned to live with it. Notwithstanding recurring surges, people have gone about their business like the pre-pandemic normal. Even during the height of lockdowns, the real estate sector performed stunningly. “No one could have predicted it. Not the economists, not the real estate agents, and especially not the nation’s homebuilders. But a pandemic caused an emotional run on housing unlike any other,” said CNBC back in 2021.
While people initially held on to their money amid fears of the unknown, that quickly changed as people stuck in small city apartments chafed and yearned for more space. Demand for single-family homes spiked, with people moving away from downtown areas in favor of locations that are more spacious and slower paced.
Today, the pandemic buying frenzy has tapered. While rising interest rates have had a cooling effect on the market, fewer buyers mean that there are now more houses for sale.
These developments have spurred a variety of trends in the real estate market in 2022.
Current Los Angeles housing market trends
A key word that describes the Westside, Los Angeles real estate market is “competitive.” This is a trend as much as it is a defining characteristic of this local market. Bidding wars have been known to take place, and even rising property prices haven’t discouraged people from scouring Westside properties.
With the housing inventory dropping by 41.3%, from 6,119 available homes in February 2021 to 3,590 homes in February 2022, and new listings shrinking by 15% from 2,842 new listings in February 2021 to 2,416 in February 2022, there were fewer houses to go around, with sellers rejecting offers that were $100,000 above their asking price.
Even if bidding wars have abated due to higher interest rates, it pays to come prepared. Consult with your Westside real estate agent for the best strategy to take. Especially when the housing market is fluid, your local Realtor is in the best position to assess the changing market conditions and offer you their educated advice.
Buyers might also want to temper their expectations and prepare for heartbreak. If you do find yourself in a bidding war, remain calm and listen to your agent. You don’t want to end up house poor with heftier mortgage payments month after month.
Assess, too, how the following developments in the Los Angeles housing market may affect your buying decision.
- A boom in new construction, especially of multi-family dwellings. The second half of 2021 saw an increase in the rate of new residential construction in the area, with single-family homes growing by 23% and multi-family homes increasing by 22% from the previous six months and 17% overall in 2021. The effects of California’s new housing laws that would effectively end single-family zoning so that more homes could be built on single lots are yet to be seen.
Even Downtown LA is exploring the affordable housing market with new development projects, one of which is The Grand, a mixed-use development that includes outdoor spaces; numerous shopping, dining, and entertainment options; and a 39-story apartment tower, where 20% of its 400 units will be affordable. Another development is West Edge, which is expected to include 121 affordable and workforce units in its residential mix. A six-story multi-family residential building has also broken ground near Century City, featuring 91 one-, two-, and three-bedroom dwellings, with 11 of them being set aside for low-income buyers. This rise in multi-family housing is expected to address LA’s housing crisis and provide more equitable opportunities for people of all income levels.
- A spike in the number of millennial homebuyers. Survey findings indicate that generally, millennials prefer to live in multi-family residences and are renting for much longer than previous generations did. Those who decide to buy their own homes, however, are eyeing new construction in locations such as West Hollywood, not only because this gives them access to numerous restaurants and shops, but also because of this area’s walkability and the new construction projects that are underway.
New housing options are increasingly starting to include townhomes and multi-unit complexes, consistent with the type of housing that millennials are interested in. Moreover, such housing options enable renters to become actual homeowners while allowing them to avoid the usual pitfalls that come with homeownership.
- A surge in the luxury market. This may seem to run contrary to the prevailing efforts to promote affordable housing in the area, but it’s undeniable that the luxury market in LA did experience growth, with the fourth quarter of 2021 seeing higher sales of luxury homes priced at $8 million and above. This shows that, across the board, the Westside, LA real estate market thrives no matter who it’s catering to.
Westside, Los Angeles real estate market forecast
With the trends currently at play, how is the Westside, Los Angeles real estate market looking for the rest of the year? While the number of buyers has dropped because of the rise in interest rates, L.A. still offers the best long-term real estate investment, ranking fifth in the US. Southern California has witnessed a 13.8% increase in its median sales price in March 2022 compared with that in March 2021, rising to $802,500. Homes in the Westside continue to appreciate; home values in Los Angeles have basically increased by almost 130% since April 2012, and the property appreciation rate in the past year was around 7.77%. For the rest of the year, a double-digit increase may yet be achieved.
Here are a few more considerations to keep in mind:
First, while home values will continue to rise, they may do so at a slower rate, especially with the increase in inventory resulting from fewer buyers.
Second, interest rates are what are driving people to purchase homes, but rates have increased in 2022. Rates on a 30-year fixed-rate mortgage have jumped by 2.5 percentage points since the start of 2022, according to Fortune. As a result, there’s been a drop in the number of homebuyers and a price adjustment on homes for sale. Thus, cash buyers who don’t have to think about the impact of interest rates on mortgage payments may recognize an opportunity to sniff out “bargains” because of price adjustments.
Third, renters will increase, as those who are either priced out of the market or simply unable to purchase homes due to the limited supply and lack of new builds will opt to stay in their apartments instead of buying a house. This is particularly favorable for investors and homeowners who want to cash in on their property.
Is it a good time to buy a home in Westside LA?
With the present challenges in the Los Angeles housing market, it’s best to consult with a real estate professional to hash out options and scenarios. You may opt to wait and see or seize opportunities before interest rates go higher.
If you’re an investor, you may consider buying a suitable property to turn into apartments. Think about the number of renters who have deferred on their dreams of becoming a homeowner. Or anticipate the return of international immigration, which saw around 140,000 settle in California pre-pandemic. Many of them will be looking for apartments to rent before they chase homeownership.
Even if your main goal in purchasing a Westside property is simply to live in it, your investment is secure. According to Zillow, California’s housing market is the most valuable in the US, whose total value of $9.24 trillion in 2021 is 21.3% of the national total.
Work with a Westside, Los Angeles real estate expert
The Westside is no doubt an attractive place both for buyers who want to live here permanently and for investors who are savvy enough to know that the region will always be a magnet for growth spurred by startups and innovators across industries.
If you want to assess your risk when it comes to buying Westside, Los Angeles real estate, start by finding the right real estate professional to consult. Martin Feinberg’s insight into the region is second to none.
As a Westside, Los Angeles real estate specialist, Martin has been in the real estate business for 32 years, far longer than any of his competition. As a Realtor, he also owns and operates a full service property management company. Therefore, he’s got his ear on the ground when it comes to discerning the needs of homebuyers, home sellers, and renters.
As a full-time Realtor since 1988, Martin has seen many real estate trends come and go, but what’s certain is that he will utilize his depth and breadth of knowledge in the Westside, Los Angeles real estate market, particularly Culver City, to help you meet your real estate goals. He is able to deliver under any market conditions and address any questions and problems you might raise throughout the property search and purchasing process, all while staying in regular touch with you, ready to lend a hand. Martin and his team will go the extra mile for you, assisting you in everything from finding the right home to managing paperwork and, if you wish it, manage your rental for you.
Once you’re ready to start looking for the perfect piece of Westside, Los Angeles real estate , get in touch with Martin here or call him at 310.729.6573.
