What is it About Los Angeles That Makes it a Dream Homeland for all Property Enthusiasts?

According to a survey by the Association For International Real Estate Investors (AFIRE),“Los Angeles, Paris and Boston are the top three global cities where investors would like to increase their investment exposure.” For the Los Angeles property market, the last year hasrecorded some of the biggest sales in the past decade with multiple record breaking deals, thehighest being a $150 million home sold to Fox Media heir Lachlan Murdoch.

Since the global economy began to recover in 2012, the Los Angeles property market has seen eight consecutive years of growth. During the first quarter of that year the median home value in LA was $394,000. Since then it has seen an 87.3% increase to $723,783 in 2020.While the world struggles to cope with the pandemic, the LA property market is leading the economic recovery.

LA has a thriving economy in large part due to the entertainment industry. Over the last few years of the social media influencer era, the demand for housing, more specifically luxuryhousing has been on the rise. While it may seem that a fall is imminent after such a steady rise,there is no slump in sight for the near future. Global real estate group Knight Frank reports LAas being one of just 17 “ultra-prime” residential markets worldwide. An ultra-prime market isdefined as one where at least 3 homes of above $25 million have been sold each year for the past three years. Since 2015, LA has seen the sale of 51 such properties.

Schroders’ Global Cities Index finds LA to be the top investment market for the fourth consecutive year on economic, environmental and educational grounds. “Los Angeles simply has the scale, growth and skill base that makes it a global hub and the center of one of the most important industries—entertainment,” Hugo Machin, Co-head of the Global Cities at Schroders, states in an article on GlobeSt.com. So what is it that makes Los Angeles so desirable for property enthusiasts?

A 2018 report finds California to have the world’s 5th largest economy. This means that unemployment will be low and the demand for homes will be ever increasing. There is also an abundance of tenants, with a price-to-rent ratio of 17.23 and median rent of $3,500. Renting is thought to be a more affordable option than buying due to ever increasing prices living in LA aswell as the homes themselves. Apart from usual rent income, Airbnb nightly rates are also high for the area and give a good return on investment. The one year forecast for median homevalue is set at a high +4.3%, while +2.7% is the current 1-Year appreciation rate. So even if you aren’t looking to live in your LA property any time soon, the odds of getting a substantial return on your investment are in your favour. LA is also thought to be a neutral market. This means that it is favorable to both buyers and sellers.

Due to an increasing demand, there is currently a dearth of inventory. Even so, with only a projected growth of the region’s economy and with its driving force— the entertainment industry— thriving even in times of worldwide economic collapse, LA remains a dream home land for property enthusiasts.