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Los Angeles Housing Forecast for Second Half of 2020

Key highlights from this real estate report: 

  • A forecast for the Los Angeles housing market suggested prices could level off.
  • Overall, the California real estate market is doing better than expected, despite COVID-19.
  • The COVID crisis has also shifted demand from crowded cities to outlying suburbs.
  • Economists don’t expect the Los Angeles housing market to crash anytime soon.

L.A. Home-Price Forecast Favorable, Considering

According to a recent forecast from the research team at Zillow, home prices in Los Angeles could level off during the next 12 months or so. That’s a somewhat favorable outlook, given the current public-health and economic situation playing out.

To quote their forecast from June 2020: “Los Angeles home values have gone up 5.8% over the past year and Zillow predicts they will fall -0.4% within the next year.”

Zillow’s forecast for the Los Angeles housing market suggests that the median home value will essentially flatline over the next year. That prediction was issued during the first week of June, and therefore stretches into early summer 2021.

Previously, some housing analysts were predicting home-price declines of 2% to 3% due to the coronavirus (COVID-19) pandemic. But so far, home values in many U.S. cities are holding up better than expected.

Depending on how things play out over the next few months, home prices in the L.A. area might actually keep rising. Or they could flatten, as the above forecast suggests.

Either way, there’s no sign of a real estate market “crash” or collapse in the Los Angeles area. The supply-and-demand situation continues to put upward pressure on prices.

According to Christopher Thornberg, director of UC Riverside School of Business Center for Economic Forecasting and Development: “it’s important to remember that this is a sharp bump, not a protracted hole. Depending on how quickly we get in front of this pandemic, real estate is going to pick up where we left off.”

Buyer Demand Shifting to Los Angeles Suburbs?

A growing number of home buyers in California and nationwide are shifting their attention away from cities and toward suburban and rural housing markets.

According to Javier Vivas, director of economic research at Realtor.com, the coronavirus (COVID-19) situation has a lot to do with that trend:

“After several months of shelter-in-place orders, the desire to have more space and the potential for more people to work remotely are likely two of the factors contributing to the popularity of the burbs,” Vivas said.

The Los Angeles housing market is large and diverse. It offers urban / city housing options for home buyers, as well as outlying suburban neighborhoods for those who want more space. And it seems a lot of folks are putting a premium on space these days.

Through the rest of 2020 and into 2021, we could see a shift in demand where more and more home buyers choose the “burbs” over crowded city centers. The rising number of remote work-at-home jobs could bolster this trend.

The national real estate brokerage Redfin reported that a a record number of house hunters on its website sought to relocate from large cities to smaller towns. This is another key factor influencing real estate market forecasts for the Los Angeles area.

L.A. Housing Market Sees ‘Greatest Recovery’ in Summer 2020

The Los Angeles housing scene has actually heated up a bit over the past few months, despite the COVID-19 health crisis. This is partly the result of low mortgage rates drawing buyers into the market, and partly due to the increasingly digital nature of the real estate business.

These and other factors caused an increase in home-buying activity in May and June of 2020. They’ve also created a kind of mini recovery within the Los Angeles housing market, with some forecasts suggesting a continuation of this trend.

On July 9, 2020, the housing research team at Realtor.com published a report that showed an ongoing real estate recovery in some U.S. cities. They singled out Los Angeles as being one of the housing markets with the strongest recovery, as of June 2020.

To quote that report:

“The overall recovery index is showing greatest recovery in Boston, San Francisco, Denver, Philadelphia, and Los Angeles, with growth in demand and the pace of sales surpassing pre-COVID benchmarks.”

Other forecasts in this series: Sacramento | San Diego | Oakland | San Jose

What Does the Future Hold?

Real estate market forecasts and predictions can be hard to formulate in the best of times. During times of economic uncertainty, they’re even more challenging. The truth is no one knows exactly what the market (or broader economy) will look like months from now.

But the latest reports and forecasts for the Los Angeles housing market in 2020 suggest that things aren’t so bad after all. Recent predictions suggest that home prices in L.A. and elsewhere across the country could hold up better than previously expected.

Disclaimer: This article includes forecasts / predictions for the Los Angeles real estate market through 2020 and into 2021. Such statements are the equivalent of an educated guess and should be treated as such. We’ve collected them here as an educational service to our readers.

Mike Trejo

Mike Trejo

Mike Trejo is a Bay Area mortgage broker with 20+ years of knowledge and experience.

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