While most know it as the entertainment capital of the world, Los Angeles attracts residents and has weathered economic downturns thanks to its diverse economy.
Health care and social assistance, professional and business services, government and leisure and hospitality are among the top employment sectors that contributed to the largest county GDP in the U.S. in 2023.
But LA’s biggest employment sector — trade, transportation and utilities — could be rattled by the imposition of new tariffs by the Trump administration. The Port of Los Angeles is expecting a 10% decline in volume for the second half of 2025, with the effect on jobs unknown.
That only adds to a level of economic uncertainty that has impacted the rental market in LA County.
“Tenants seem to be more cautious for a mix of economic reasons,” Andre Gerasimov, vice president of Moss & Company Property Management, in the Sherman Oaks neighborhood, wrote in an email, ahead of the April tariffs announcements. “Many renters are feeling financially stretched, even if base rents are relatively stable. Inflation-driven cost-of-living pressure certainly plays a big part.”
Some renters have relocated to more affordable neighborhoods like the San Fernando Valley, or seek lower rents within commutable distance in Riverside or San Bernardino, said Gerasimov.
“When residents do leave, it’s often to more affordable states like Texas, Arizona and Nevada,” he said. “Remote work since the pandemic have amplified this trend, especially for renters who aren’t tied to in-person jobs.”
Cost of living is the main reason some single-family homeowners are leaving the region, Anne Russell, 2025 President of the Greater Los Angeles Realtors, wrote in an email.
But LA’s single-family housing market remains somewhat competitive, according to Redfin, and well above the norm for pre-pandemic levels, though fewer homes are receiving multiple offers.
“If you were to show today’s market stats of 34 median days on market, an average sales-to-list price ratio of 100% and a median sale price of $900,000 for a single family home to someone in January 2020, they wouldn’t believe you,” said Russell. “However, in context, this is more of a balanced market than we have seen in some time.”
Although best known as the combined Los Angeles-Orange County region, as defined by the Census Bureau, the Los Angeles-Long Beach-Anaheim metropolitan statistical area includes 88 cities in Los Angeles County, 34 cities in Orange County and a mix of unincorporated communities.
Using information from the U.S. News Housing Market Index, we’ve compiled the data you need for a better understanding of the Los Angeles-Long Beach-Anaheim MSA real estate market in 2024 and into 2025.
[READ: The Hottest U.S. Housing Markets]
How the Los Angeles-Long Beach-Anaheim Housing Market Changed in 2024
Single-family home construction is continuing at a steady pace, though subdued compared to high-growth periods of the past.
Annually, 12,072 single-family housing permits were approved in the Los Angeles-Long Beach-Anaheim MSA in 2024, just 4% above the year prior. In December 2024, 1,039 permits were approved, up 7% year over year. Those growing numbers appear to be holding. As of March 2025, the most recent data point available, 1,005 permits were approved, a 21% increase year over year.
While permits are trending upward slightly compared to 10 years ago, home construction is far from the levels seen in the mid-1990s and early 2000s, when monthly permit approvals often hit 1,500 and higher. Comparatively, the highest number of single-family permits approved in 2024 was just over 1,200 in May. On the bright side, single-family permits rarely dipped below 900, when in recent years there were months of 600 to 700 permit approvals, or a dip down to 400 in April 2020.
“Housing construction of any time has not come close to meeting demand in Los Angeles County in recent years,” Russell said. “All you need to do is take one glance at the headlines to see that the region is still in a housing crisis driven by high prices and lack of supply. We need to be increasing supply of all types — and at all price points — to make sure that the market is meeting the needs of LA County residents.”
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As for the multifamily sector, 15,174 permits were issued in 2024, a decline of more than 12% from 2023. There was more volatility in multifamily permit issuances, starting the year with 999 in January and dipping to under 800 in April before rising to 1,700 permits in May, settling around 1,000 or so, and peaking at 2,000 permits in November. So far in 2025, that pattern of decline continues. In March, 868 multifamily permits were approved, a 28% drop year over year.
Historically, while 2024 saw less volatility than years past, the number of multifamily permit approvals trended lower than 10 years ago, when permit approvals for multifamily homes sometimes exceeded 3,500 a month. However, there were markedly more multifamily permit approvals in 2024 and recent years compared to the 1990s, when permits fluctuated from about 115 to 1,200 a month.
“The county has historically disproportionally prioritized single-family homes, and we are paying the price for that focus now,” said Russell. “It is very expensive to build multifamily units in today’s environment with the construction cost per unit rising above $500,000 in recent years. The county needs to streamline the permitting and building processes to ensure that we have enough housing for our residents, or we risk seeing an outflow from the county to other areas of the state — or out of state.”
But building more multifamily units won’t solve LA’s housing problems alone as landlords are facing intense pressure from multiple fronts, said Gerasimov, including high insurance premiums following the January fires and rising utility, wages and material costs that are straining operational budgets. At the same time, rent caps across the city of Los Angeles are limiting landlords’ ability to offset soaring operating expenses or offset low vacancy in some submarkets, he says.
“For many owners, expense growth is outpacing revenue, compressing margins and creating long-term sustainability concerns,” he says.
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Los Angeles-Orange County Housing Supply and Demand
As of January 2025, there was just over 4 months of housing supply in the Los Angeles-Long Beach-Anaheim MSA — the highest in nearly five years. This was an improved start to the year compared to 2024, which started with 3.23 months of supply and dipped twice in the spring and end of the year to 2.6 and 2.8 months respectively. A balanced market is considered four to six months of inventory, and so Los Angeles appears to tilt slightly to favor sellers, but not overwhelmingly so. However, by March supply dropped to just under 3 months, an increase of just over a week year over year.
“Despite challenges from high list prices and interest rates, buyers are seeing some relief in the form of more homes on the market,” said Russell, who also noted, “There is real price sensitivity among buyers, so sellers should be prioritizing pricing their homes accurately while buyers need to have their best offer prepared and ready to go.”
Housing Supply
2.9 mo | +0.3 YoY
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[Read: The Guide to Escalation Clauses in Real Estate.]
The vacancy rate in the rental market grew sharply over the course of 2024. While rental vacancy was 3.4% in January 2024, it jumped to 5.9% in September 2024, according to the HMI, up 1.7% from a year ago. By March 2025, the vacancy rate rose to 3.9%, just slightly above March 2025.
Gerasimov said occupancy rates had improved in early 2025, but noted “concessions remain common, especially in lease-ups and competitive submarkets such as Koreatown, Hollywood and downtown LA,” where landlords are offering 1 or 2 months of free rent due to economic uncertainty and affordability issues.
Rental Vacancy
3.90% | -0.6% YoY
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[Is The Rental Market Finally Cooling?]
Looking at mortgage applications
, the Mortgage Bankers Association reported its seasonally adjusted market composite index decreased 3.9% the week ending May 30, compared with the week prior, indicating a drop in mortgage loan application volume for new mortgages. Both the seasonally adjusted Purchase Index — which accounts for seasonal variations — and the unadjusted Purchase Index decreased, indicating a downward slide in mortgage applications for home purchases. The former dropped 4% from one week earlier, while the latter fell 15% compared with the previous week and was 18% higher than the same week one year ago.
Consumer sentiment as measured by the University of Michigan’s Survey of Consumers was measured at 57 on a 100-point scale in March, down 22.4 points year-over-year.
Consumer Sentiment
57 | -22.4 YoY
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Foreclosure Trends
With relatively low unemployment levels and most homeowners with mortgages benefiting from the low rates offered in 2021 and part of 2022, both foreclosures and delinquencies tracked by Black Knight remain at very low levels in Los Angeles. As of March 2025, just 0.2% of homes in Los Angeles were in foreclosure versus 0.4% for the nation. Delinquencies in March remained virtually unchanged year over year at 2% while they rose a slight 0.2% nationwide.
Median Home Price in Los Angeles-Orange County
As of April, the LA market’s median home price was $905,000 according to the HMI, up 0.6% year over year but rising from January when it dropped to $885,000, and hinting at Russell’s comment on buyer price sensitivity. The median priced home in Los Angeles is 110% higher than the national median home price of $431,000, which still rose 2.6% year over year.
Median Price
$925k | +5.5% YoY
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The median rent in the Los Angeles area is $2,750, a $45 per-month decrease from the same month in 2024, based on Zillow data. That’s 31% higher than the national average.
Despite some households feeling the pinch from inflation and high cost of living in California, the U.S. Census Bureau reported a 782,000 gain in the number of households to 132.22 million in Los Angeles-Long Beach-Anaheim MSA as of December 2024. Los Angeles remains the most populous county in the country, though it does not place among the top 10 for growth, according to the U.S. Census.
Construction costs remain an obstacle to building more single and multifamily homes. While construction costs have dropped 0.3% as of December 2024, at 189.6 on the Census Bureau’s Cost Index, they remain well above the 150 threshold crossed in April 2021 as post-pandemic inflation began to take hold.
“While permit activity appears to remain relatively strong, actual development seems to be slowing due to high construction costs, financing challenges, and regulatory hurdles,” said Gerasimov. “We’ve seen a moderation in new deliveries in the past year, and this trend appears to continue in 2025. Many of the new projects simply don’t pencil out in the proposal/planning stages. Developers are targeting submarkets more amenable to density, like Koreatown and Downtown LA, but even these areas are feeling the strain of elevated interest rates and tightening capital markets.”
Higher interest rates than seen in the early 2020s are also making homebuyers price sensitive. As of June 5, 2025, the average 30-year, fixed-rate mortgage interest rate was 6.85% — a 2% drop from a year ago.
Unemployment Trends in Los Angeles-Orange County
The feeling of economic uncertainty is understandable when looking at the economy in the Los Angeles-Long Beach-Anaheim MSA. In March 2025, non-farm employment grew year-over-year by 2,000 to 6.25 million jobs. The local unemployment rate for March grew 0.2 percentage points year-over-year to 5.1%, higher than the U.S. average of 4.2%.
Due in part to the region’s relatively anemic new construction, construction jobs shrank by 4,400 year-over-year through March to 57,900.
Business costs in Los Angeles are almost 20 percent higher than the national average, said Russell, citing the the LA Economic Development Corporation’s Metro Business Cost Index, which includes labor costs that are 13 percent higher than the national average.
Employment
6.26m | +2k YoY
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Unemployment
5.10%| +0.2% YoY
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Builder Confidence in Los Angeles-Orange County
Reflecting that anemic growth, builder confidence on a scale of 0-100 for the West Census Region from the NAHB/Wells Fargo Housing Market Index dropped 11 points year-over-year to 34 in March. Still, it’s notably lower than the national index level of 39, suggesting additional challenges for local builders.
“One bright spot in housing construction has been the growth in accessory dwelling units (ADUs),” said Russell, who cited 18,000 ADUS as having been built in the last five years according to county data.
“Recent changes to local and state laws have streamlined the process to permit and build an ADU and we are reaping the dividends now. They are the most cost-effective form of housing we can currently build, and offer a multitude of benefits including helping homeowners make extra income,” she said, adding, “In the wake of the wildfires, we anticipate seeing a further increase in the construction of ADUs as homeowners build them to help offset the costs of rebuilding, and to have somewhere to live while the main structure on the property gets rebuilt.”
Builder Sentiment
34 | -11 YoY
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For nonresidential construction activity, the Architecture Billings Index provides another economic indicator with a lead time of approximately nine to 12 months, with 43 marking the split between increases or decreases in billings. In March, the index for the West Census region dropped 4.6 points year-over-year to 43 while the national index fell 0.5 points to 44.1.
Architectural Billings
43 | -4.6 YoY
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Los Angeles-Orange County Real Estate Market Predictions
High home prices, cost of living and added inflationary pressure have made it more difficult for some to afford the Los Angeles-Long Beach-Anaheim MSA, but those who can afford to stay are choosing to do so.
Steve Frankel, a real estate agent with Coldwell Banker Realty based in Beverly Hills, California, has seen a number of clients who were able to afford home purchases on the West side of Los Angeles, in Beverly Hills, Brentwood and Santa Monica, while they still await insurance payments to repair and/or sell their damaged or destroyed homes from the wildfires that affected the Pacific Palisades and Altadena in January.
“Unfortunately, (and so sadly) many families’ homes burnt down and they need to move quickly. So, large homes with a high bedroom count have been selling briskly,” Frankel wrote in an email.
In total, more than 16,000 homes and other structures were destroyed.
The U.S. News Housing Market Index forecasts approximately 2,200 single-home permits from June through August in addition to 3,700 permits approved for multifamily homes for the Los Angeles-Long Beach-Anaheim MSA. The HMI has typically predicted a lower number of single-family permits and continues to do so, but is trending upward. As for multifamily permits, the HMI is sticking to an average of more than 1,000 permit approvals a month with a mostly flat trendline.
“Even with all these challenges and the fluctuations in the stock market, I am extremely bullish on Los Angeles real estate,” said Frankel, noting in his 30-year career he’s seen glitches in the housing market, but it remains strong because “people want to be in LA; they want that lifestyle.”
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Los Angeles-Orange County Housing Market Forecast originally appeared on usnews.com
Correction 04/06/23: A previous version of this story reported incorrect December unemployment numbers. It also misstated the national builder confidence level for March.
Update 06/06/25: This story was published at an earlier date and has been updated with new information.
