Los Angeles Real Estate Outlook 2026 and the Gatsby Advantage

As we close 2025 and look ahead to 2026, we’re seeing some investors sitting on the sidelines due to interest rates that remain over 6%. Meanwhile, those who invest with Gatsby are still enjoying strong returns by combining unique local opportunities with tactical shifts.

So what is Gatsby doing to maximize return potential despite today’s interest rates? And why is Gatsby so excited about the upcoming market conditions?

Come peek behind the curtain to see Gatsby’s 2026 real estate investment strategy and find out why we believe this could be one of the most promising periods in recent years to invest in Los Angeles real estate. 

Let’s start by explaining where the market is today and where trending data shows the market is headed in the next year, as well as the opportunities those conditions create.

Los Angeles is currently in a buyer’s market. There are more sellers than buyers (partly due to the interest rates, but also because of the high price points in LA). This is a rare opportunity that typically comes around only once a decade. With fewer buyers, there is less competition, which means buyers have more leverage in negotiations. 

Because of this temporary slowdown, buyers can acquire properties at more favorable prices under more favorable terms. 

At Gatsby, we’ve been able to negotiate deals that simply weren’t possible a few years ago. Over the last few months, we’ve purchased land at 10-20% below market value, creating built-in equity from day one. “Buying right” positions us to sell at peak pricing when conditions swing back to a seller’s market.

But we take this a step further. Rather than buying existing properties and waiting for the market to do the work of growing the value through appreciation, we force appreciation by adding value. We build new structures from the ground up, transforming underutilized land into high-quality housing in desirable neighborhoods. This hands-on approach allows us to control costs, maximize equity, build to local demand, and deliver stronger returns regardless of where we are in the real estate cycle. 

Los Angeles has always been in high demand thanks to the year-round sunshine, career opportunities, and regional amenities. It’s also long been a city of renters, with only around 37% of Angelinos owning their homes. And the rental demand is projected to climb over the coming years as a result of investment in city infrastructure, new job creation, and intentional multi-family development.   

With major global events such as the FIFA World Cup in 2026, the Super Bowl in 2027, and the Olympic Games in 2028, Los Angeles is poised for renewed economic growth and unprecedented international visibility. These events are already driving billions of dollars in infrastructure upgrades and revitalization projects across the city. From expanded public transit and airport modernization to housing incentives and beautification efforts, Los Angeles is actively preparing to welcome the world. These initiatives will not only enhance the city’s livability and appearance but also strengthen property values in key neighborhoods.

These investments are also creating new job opportunities in key sectors like construction, hospitality, transportation, and logistics. With job growth comes population growth. And a growing population requires more housing. 

Even while there are comparatively fewer homebuyers in today’s market, the demand for housing in LA has remained extremely high, often fueled by renters. And while the rental demand is expected to rise, it’s important to remember that we’re already at a deficit because of the perpetual housing shortage. 

Recognizing the need for more housing (particularly more affordable housing options), city leadership is prioritizing housing development and urban renewal to enhance the safety, cleanliness, and livability of our communities. With recent zoning law changes, it is now possible to develop small, unobtrusive multi-family buildings on certain lots that were formerly zoned for single-family. This creates an incredible opportunity for developers of small, multi-family structures. And Gatsby is fully invested in this unique opportunity.

Our properties perform especially well because they align with what the Los Angeles market needs most: larger, modern homes ideal for shared living and family occupancy. These layouts offer tenants affordability and flexibility while creating strong, stable income potential for investors. 

Gatsby’s investment approach for 2026 is guided by conservative financing and strategic flexibility.

First, we focus on projects priced below the city’s mansion tax threshold, which protects investors from added costs and ensures a wider pool of buyers when we’re ready to sell the completed project. This gives us a valuable competitive advantage.

Our build-to-rent strategy also gives us flexibility. We develop each property from the ground up, adding value through construction, then hold the property for passive income. Then we sell the stabilized asset at a premium when market conditions are ideal. 

This model positions investors to benefit from both short-term equity gains and long-term appreciation while keeping risk carefully managed through disciplined project selection. Plus, by holding the asset as a rental for over 12 months, the proceeds from the eventual sale qualify for the lower long-term capital gains rates, further protecting investors’ profit margins.    

As one of Los Angeles’s most active developers of small multi-family properties, Gatsby benefits from economies of scale and established industry relationships. Our long-standing partnerships with contractors, architects, brokers, and lenders allow us to secure better pricing and rates, maintain quality, and keep projects on schedule. By building in volume, we are able to negotiate better material and labor costs, which contribute to stronger margins and increased project efficiency. 

As the largest developer of “double duplex” projects in Los Angeles, Gatsby plays a key role in setting market comparables. In many cases, our only sales comps are other projects we developed. Corning this niche market allows us more control over the financial outcomes of our projects. 

Our established reputation in the market also gives us access to the best opportunities. Because we move quickly and reliably on new opportunities, we are often the first call when off-market deals arise. This allows us to secure prime assets before they are even brought to market. 

By building efficiently and strategically, we deliver modern, high-demand housing that meets the needs of today’s renters and generates strong returns for our investors. 

History has shown that Gatsby performs strongest during times of uncertainty. During previous market disruptions, such as the COVID-19 pandemic, our disciplined strategy allowed us to continue building, and every deal we acquired during that period sold with strong demand and competitive bidding. 

We believe that the projects we are acquiring and developing today, priced below the mansion tax threshold and positioned for flexibility, are ideally situated to benefit from this transformation and perform exceptionally well in the next market cycle. 

Gatsby offers multiple ways to invest (including investing as an individual, entity, or even through a retirement account) to meet your needs.

If you are an accredited investor, looking for a simple entry point into the LA real estate market, join our real estate syndication projects. With our syndication model, you are able to invest anywhere from $25k-$250k into each deal and co-own the property with other investors. Gatsby manages each step, while you can track everything via the transparent online dashboard. You can even diversify across multiple projects and build a fully passive portfolio.

For investors who are looking to put larger capital to work or are interested in sole ownership, explore our built-for-you model. You get the same service and experience as the syndicated offerings, but without sharing equity with other investors. You own 100% of the project. Once construction is complete, ownership and management fully transition to you, enabling you to generate passive rental income and benefit from long-term appreciation as the sole owner.

Don’t let today’s interest rates keep you from the many benefits of real estate investing. Today’s market conditions are creating unique opportunities in the LA area for those who recognize them and take action.   

Explore our current investment offerings or speak with a member of the Gatsby team to learn more.