Residential Appreciation Rates in Los Angeles Over Time
By Michelle Clardie on 11/26/2023.
Reviewed by Josefin Gatsby
At the end of 1990, the sales price for the average single-family home in Los Angeles County was just $212,885. By the end of 2022, the average sales price was up to $799,670. Data from the California Association of REALTORS (CAR) shows just how much property owners in Los Angeles have benefitted from residential appreciation rates over time.
In this article, we’re taking a look back at the last 30+ years of home value changes in Los Angeles. Plus, we’ll show you how to maximize your appreciation rates over time!
Year-Over-Year Sales Prices in Los Angeles
The sales price trend line for single-family homes in LA County tells a story…
You can see the steep increase in home values in the early 2000s, spurred by the dot-com economy and loose mortgage lending requirements. Then there’s the dramatic drop from the housing market collapse, followed by a steady recovery. Then, in 2020, prices shot up again as economic concerns about the COVID pandemic prompted historically low mortgage interest rates. And now, we’re experiencing a slight market correction, bringing home prices back to more sustainable ranges.
Appreciation is never linear; there are always jumps and dips as properties grow in value over time.
Consider the appreciation rates by year in Los Angeles County. Median sales prices from the end of 1990 to the end of 2022 indicate an appreciation rate of 275.69%. That averages to an 8.62% increase per year over the last 32 years. But property owners certainly haven’t seen a stable appreciation of 8.62% every year. In fact, in 2008, LA homeowners saw a historic decline of 37.09% (spoiler alert: property values bounced back as they always do).
The appreciation rates look erratic when viewed year-by-year:
The dramatic drop from the housing market collapse may be the first thing you notice when looking at the graph of appreciation rates in Los Angeles over time. But then you’ll notice how much more common it is to see years with positive appreciation rates. And how often we see impressively high appreciation rates in LA. In 8 of the last 32 years, appreciation has exceeded 15%. That’s right; annual appreciation has exceeded 15% a quarter of the time over the last three decades.
For homeowners and investors, Los Angeles represents impressive returns. And this is before you even factor in the growing rental rates in LA, which contribute to passive income opportunities for rental property owners.
How to Increase Your Appreciation Rates
The appreciation rates in this article represent “market appreciation” (the increase in property values created by general economic conditions). This is automatic in that you don’t have to do anything special to benefit from this growth.
But if you’re looking to get a head start on appreciation for your assets, consider forced appreciation. Forced appreciation is when you increase a property’s worth by adding value to it. There are a number of strategies for forcing appreciation, including:
Renovate the property. Updating and upgrading a home is the most traditional method of adding value to real estate.
Building an accessory dwelling unit (ADU). An ADU is a private, secondary living space added to a property, like a guest house or in-law suite. This addition adds instant value by increasing usable square footage and even providing a rental income opportunity.
Adding high-demand, low-maintenance amenities to rental properties. Rooftop decks, extra parking, and in-unit washer/dryers can increase demand for your rental units, allowing you to increase the rental rates without renovating the units.
The Bottom Line
The appreciation rates in Los Angeles over time present a compelling narrative of growth, challenges, and resilience.
Despite occasional fluctuations, the overall trend reflects sustainable growth of just under 9% per year. And, if you’re looking to beat the trend on your local assets, you can force appreciation by manually adding value to your properties.
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