Is Affordability Starting to Improve in Los Angeles and Beverly Hills?

Is Affordability Starting to Improve in Los Angeles and Beverly Hills? | Christophe Choo at Coldwell Banker Global Luxury is Your Local Real Estate Expert

Over the past couple of years, many potential homebuyers in Los Angeles and Beverly Hills have struggled with affordability. While the market remains tight, recent trends suggest that conditions may be starting to improve, offering a glimmer of hope for those looking to buy. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), recently commented, “Housing affordability is improving ever so modestly, but it is moving in the right direction.”

Let’s dive into the latest data on the three key factors affecting home affordability—mortgage rates, home prices, and wages—specifically in the context of the Los Angeles and Beverly Hills real estate markets.

1. Mortgage Rates Mortgage rates have been unpredictable this year, fluctuating between the mid-6% to low 7% range. However, there’s been some positive movement. Data from Freddie Mac shows that rates have been trending downward overall since May, influenced by recent economic, employment, and inflation data. For buyers in Los Angeles and Beverly Hills, even a small drop in mortgage rates can significantly impact affordability, potentially making that dream home more within reach. While it's unlikely we'll see rates return to the historically low levels of 3%, continued downward trends could help ease the burden on buyers.
2. Home Prices The second major factor to consider is home prices, which in Los Angeles and Beverly Hills have seen a slower growth rate this year compared to the rapid increases during the pandemic. While prices are still climbing, they’re doing so at a more manageable pace. For buyers in these luxury markets, this slower price growth can make purchasing a home less daunting. The gradual appreciation allows more time to consider options without the pressure of skyrocketing prices, making the idea of owning a home in these prestigious neighborhoods more attainable.
3. Wages Rising wages are another factor that’s helping to improve affordability. According to data from the Bureau of Labor Statistics (BLS), wages have been increasing faster than usual, which is particularly beneficial in high-cost areas like Los Angeles and Beverly Hills. As incomes rise, prospective buyers may find it easier to allocate a portion of their earnings toward a mortgage, reducing the percentage of their paycheck required for housing costs. This trend is crucial for maintaining a balanced lifestyle while investing in prime real estate.

Bottom Line When you combine these factors—falling mortgage rates, slower home price growth, and rising wages—the outlook for homebuyers in Los Angeles and Beverly Hills starts to look more promising. Although affordability remains a challenge, these trends suggest that the situation might be improving. If you’re considering buying in these sought-after markets, it’s essential to stay informed and be ready to act when the time is right. Let’s connect to discuss how these trends impact your home-buying journey and explore the best opportunities available in Los Angeles and Beverly Hills.

Call Christophe Choo at (310) 777-6342 to tour your future home "HERE" or click "HERE" to estimate your home value