Los Angeles Real Estate Market 2018

Overview and Forecast

Learn about investing in the Los Angeles real estate market 2018 based on an overview of the city, its real estate market performance, its Airbnb laws, and a brief forecast to where the market is headed.

Los Angeles Real Estate Market 2018

Los Angeles City Overview

The City of Los Angeles is considered as the entertainment capital of the world as well as a cultural paradise with over 100 museums that attract tourists from all over the world. With an idyllic weather, Los Angeles is becoming one of the most sought out tourism destinations in the country, which played a big role in boosting the city’s economy to the level that it is today.

In fact, Los Angeles’ economy has developed to an extent that if it were a country, it would have the 20th largest economy in the world.

With major attractions such as the Hollywood Sign, the Walt Disney Concert Hall, or the Griffith Observatory, as well as some of the biggest leading industries in the nation, including a heavy focus on leisure and hospitality; LA has become one of the most travelled-to tourist destinations nationwide, and a major travel destination for millennials and people looking for a foothold to start their new careers while still enjoying a luxurious and under-the-sun lifestyle.

Los Angeles Real Estate Market 2018

Los Angeles City Overview

Additionally, the City of Los Angeles is also known for its low-rise buildings, with a few high-rise and skyscrapers centered in areas like Downtown, Warner Center, Hollywood, and Westwood. Most construction in LA is done in separate units rather than wall-to-wall. Los Angeles, however, is becoming a city of apartments rather than single-family dwellings, especially in denser areas in the inner city and Westside neighborhoods.

All of these aspects of LA have made it a solid destination for real estate investors looking for opportunities to invest in a fast growing and developing area with a high demand for rental properties in particular, making it one of the best places to invest in real estate 2018.

Los Angeles Real Estate Market 2018

Los Angeles Real Estate Market 2018 Stats

Now that you have an overview of the city, it’s time to jump into the Los Angeles real estate market 2018 stats to get a better understanding of how the context of the city affects its real estate performance.

Here are Mashvisor’s rental property calculator’s stats for the Los Angeles real estate market 2018:

  • Median Property Price$891,446
  • Median Traditional Rental Income$3,074
  • Median Airbnb Rental Income$1,697
  • Average Traditional Cap Rate1.39%
  • Average Airbnb Cap Rate0.89%
  • Average Airbnb Occupancy Rate61.94%

Although the average cap rates in LA are considered low in comparison to some of the other real estate investment destinations in the country, the overall growth and development of the city makes investing in LA real estate a good choice due to the high potential for the property values to grow and appreciate, which is perhaps why the median property prices in LA are among the highest nationwide.

Los Angeles Real Estate Market 2018

Top Neighborhoods for Investing in the Los Angeles Real Estate Market 2018:

Here are our picks for the top neighborhoods that you should consider when investing in the Los Angeles real estate market 2018:

Los Angeles Neighborhood: Westlake

  • Median Property Price$897,000
  • Median Traditional Rental Income$2,571
  • Median Airbnb Rental Income$3,075
  • Average Traditional Cap Rate1.29%
  • Average Airbnb Cap Rate1.22%
  • Average Airbnb Occupancy Rate60%

Westlake might not be the most affordable neighborhood for purchasing an investment property in LA, but it is one of the best options when it comes to investing in Airbnb rental properties, which is a very viable strategy if you want to focus on renting out to tourists and short-term travelers.

Los Angeles Real Estate Market 2018

Los Angeles Neighorbood: Venice

  • Median Property Price$1,797,500
  • Median Traditional Rental Income$4,702
  • Median Airbnb Rental Income$4,951
  • Average Traditional Cap Rate1.27%
  • Average Airbnb Cap Rate2.00%
  • Average Airbnb Occupancy Rate60%

Venice is the second most expensive neighborhood for buying a property in LA (Mid City West is the highest with a median property price of $2,025,000). If you can afford to buy a property in Venice, however, you should expect some high profits from a traditional rental property due to the high rental rates in the neighborhood.

Los Angeles Real Estate Market 2018

Los Angeles Neighborhood: Mid Wilshire

  • Median Property Price$1,030,000
  • Median Traditional Rental Income$2,727
  • Median Airbnb Rental Income$2,914
  • Average Traditional Cap Rate0.33%
  • Average Airbnb Cap Rate0.66%
  • Average Airbnb Occupancy Rate58%

If you’re looking to invest in an Airbnb rental property, then Mid Wilshire might be your best option in the City of Los Angeles. This neighborhood is one of the few neighborhoods where Airbnb rentals have higher projected returns than traditional rentals.

Return on Investment

Los Angeles: Additional Stats

  • Crime Rate: 16% (safer than 16% of US cities)
  • Walk Score: 67 (highest is 95 in the Downtown area)
  • Transit Score: 51 (highest is 98 in the Downtown area)
  • Bike Score: 56 (Highest is 74 in the Central Hollywood area)
  • Cost of Living Index: 79.28 (20.72% lower than New York, and it ranks 98th out of 569 cities in the world)
  • Buyer’s Market vs. Seller’s MarketThe Los Angeles real estate market is strongly a seller’s market.
Palm Springs Real Estate Market 2018

Los Angeles Real Estate Market 2018: Airbnb Laws and Regulations

If you’re considering investing in LA real estate, it is important to first learn about the laws and regulations related to owning and running short-term/Airbnb rentals.

Here are the major laws and regulations that you should be aware of:

  • Business License: A business license is required for certain types of businesses in Los Angeles. You can find more detailed information here.
  • Zoning Laws: The LA Municipal Code contains zoning rules that you should be aware of, such as Article II, Section 12.30, which defines terms such as “bed and breakfast”, “hotel”, and “boarding or rooming house”, which may be applicable to you.
  • Taxes: The City of LA imposes a 14% transient occupancy tax on the listing price (including cleaning fees) for stays of 30 nights or less. However, hosts are still required to report the monthly returns to the Office of Finance, and they can take deductions for the taxes collected and remitted by Airbnb (and any other applicable platform, such as VRBO).
Palm Springs Real Estate Market 2018

Los Angeles Real Estate Market 2018: Forecast

The Los Angeles real estate market witnessed a good growth during 2017, and predictions are for additional growth in prices and better conditions for sellers.

However, and according to Curbed LA, only 4,847 homes were sold in LA in January 2018 compared to 6,613 in December 2017 and 5,188 in January 2017.

Additionally, home prices grew by $41k this spring, and predictions indicate that home prices will continue to grow due to the shortage of supply.

Palm Springs Real Estate Market 2018

Los Angeles Real Estate Market 2018: Forecast

The California Association of Realtors reported that:

  • Single-family home sales slowed down in January, with 388,800 homes sold, which is 2.9% lower than January 2017.
  • The statewide median home price in California was $527,800, which is down by 4%, but still higher by 7.3% than January 2017.
  • Entry-level homes in California rose to $220,000, which is up by 10% from 2017 when entry-level homes averaged $200,000.
  • The days on the market for a single-family home remained low at 27 days in January 2018 compared with 36 days in January 2017.

Looking at these stats, it is obvious that the home sales in California are slightly slowing down, while the prices are still going up. The City of Los Angeles is still suffering from a low supply and an increasing demand, making it a strong seller’s market, and the demand for homes is resulting in homes selling much faster and at a higher price.

Los Angeles Real Estate Market 2018

Los Angeles Real Estate Market 2018: Conclusion

Investing in the Los Angeles housing market might not be accessible to all due to the high and still growing home prices.

However, and if you have enough cash on you to make an investment in LA, you should expect to make some good profits from your investment due to the high rental rates, especially for traditional rental properties, and due to the fast-growing economy in the city.

Finally, if you’re looking to find the best investment properties to purchase and start renting out either traditionally or on Airbnb, Mashvisor can help you locate the perfect investment property for you based on your available budget and investment criteria.

Who is using Mashvisor?

First Time Real Estate Investors

New real estate investors usually don’t know where to begin their research. Mashvisor helps an investor quickly understand and analyze any city or neighborhood’s average investment performance. Investors are able to save time selecting the optimal area for investing and can save months worth of research deciding on this alone.

Experienced Real Estate Investors

Investors that are looking for their next property are used to analyzing their returns and having built many spreadsheets in the past. Mashvisor automatically calculates the returns of a property for the investor so that they never have to use a spreadsheet again.

Real Estate Brokers/Agents

Real estate brokers and agents now have another place to advertise their properties. They can place their listings in front of investors and Mashvisor’s data helps the property better appeal to clients.

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