Should You Buy Los Angeles Real Estate in 2026?

Real estate in Los Angeles in 2026:
Buying a house in L.A. seems pretty impossible now. Median prices are around $850,000 and mortgage rates are higher than 6%. So, should I really jump into the market?
Numbers Show Normalization
L.A.’s housing market is entering a “normalization” phase — not a bust, nor is it the wild west of 2021 – 2022. As reported by CAR (California Association of Realtors) California’s median home price is expected to increase 3.6% to $905,000 in 2026. Specifically, the L.A. metro area saw an increase of 1.1% year-over-year in prices to $845,180 in October 2025. Zillow is projecting a slight decrease of 1.3% in home values in L.A. from mid-2025 to mid-2026. In other words, prices may slightly pull back before they go up again.
Also, the market is slowing. Homes that once sold in 28 days are now taking 37 days to sell. While that is still not a lot of time to wait, it is some time — and maybe you will actually get to think before you decide to make an offer.
Rates: The Unpredictable Factor
Everyone keeps telling me to “just wait until the rates come down.” Well, here is how it works: Mortgage rates do not directly follow what the Federal Reserve does. Mortgage rates follow the 10-Year Treasury Yield, which is their own separate animal.
As of now, rates are running at approximately 6.0-6.6% in 2026, based on the forecast by C.A.R. That is better than the 7% + rates we had in 2023, however, it is far from the sub 3% rates that your parents will continue to tell you about.
The good news is that at 6.5% with a 20% down payment, a monthly budget of $5,000 will now qualify you to purchase a $1.015 million home; that is $75,000 more purchasing power than when the rates were at 7%, according to a recent analysis of the market.
Neighborhoods Matter (a Lot)
Not all of L.A.’s neighborhoods are seeing the same reality. Premium areas such as Santa Monica and West L.A. are still appreciating at 2-3.5% in 2025 and are projected to appreciate 3-5% in 2026.
Areas such as Highland Park, Eagle Rock and North Hollywood are emerging as hotbeds for first-time homebuyers. These neighborhoods offer more reasonable entry points, while still providing buyers with great school districts and access to public transportation.
Downtown L.A. Condos Are Struggling
Remote work created an earthquake that altered the landscape of demand in L.A. Demand hasn’t rebounded in the way that many areas of the city have.
Inventory Is Up
One factor that is working in your favor is that there are more homes available. According to First tuesday Journal, the inventory of homes in L.A. rose 28% in 2024 and then another 14% by October 2025. That is 14,343 active listings — the highest number of active listings for this time of year since 2018.
More options = Less Competition. Sellers are starting to be more realistic with pricing. Homes are currently selling at 98.3% of the original listing price versus 99.4% last year. Sellers are even willing to pay closing costs or reduce your interest rate to complete the sale.
Should I Really Buy Now?
If you plan to live in the property for 5+ years: Yes, you should. A 1-2% fluctuation in value will have little impact on the amount of equity you build in the property over time. Focus on finding the best location/neighborhood and a monthly payment you feel comfortable paying.
If you plan to invest: Approach with caution. Cap rates in L.A. are around 2%, meaning the rental income will barely cover the expense of owning the property. Long term appreciation is the key here — not cash flow. Look for undervalued neighborhoods that provide good schools and access to public transportation.
If you are waiting for a crash: You may be waiting a while. There is a fundamental housing shortage in L.A. — construction has not met demand and zoning restrictions limit the ability to create additional supply quickly. This creates a floor under prices, even in times of slowdown.
What Can Change Everything?
There are several factors that can cause a major shift:

Rate reductions that actually work: If mortgage rates fall to 5.5% or lower, we can expect demand to increase
An economic downturn: An economic downturn would likely slow the market significantly
Policy Changes: Changes to zoning laws or tax incentives could help improve affordability
Major events: The 2028 Olympics could bring an influx of demand (and possibly make things worse)

The Bottom Line
The L.A. Market is Not Going to Crash — It’s Just Taking a Breath
For buyers who have been patiently waiting on the sidelines, 2026 brings a commodity that we haven’t seen in years: Actual negotiating power and time to think.
You’re not going to find amazing deals or get rich off of flipping houses. However, if you need a place to live, have stable employment and can afford the monthly payments, 2026 may be your chance to act before the market starts heating up again in the Spring.
The question is not if L.A. real estate is a good investment in the long run — it usually is. The question is if you are buying for the correct reasons, in the right neighborhood and at the right price. Make sure to do your research, know your budget, and don’t let FOMO rush you into a bad decision.
Welcome to the most balanced L.A. Housing Market we’ve seen in Years. It’s Not Perfect, but it’s a Start.