Is it getting better out there?

A few friends have asked me this over the last couple of months: "So... is it getting better out there?"

Everyone means something a little different when they ask, but generally the heart of the question is: are homes getting more affordable? Secondarily, with persistent news of a wavering economy, AI taking jobs, etc.: should we be expecting a crash?

The short answer.

Affordability in LA County is a little better than it was a year ago and nowhere close to where it used to be. In the second quarter of 2026, 17% of LA County households could afford the median-priced single-family home, which was around $879,000. A year earlier that number was 15%. Back in 2019 it was 29%.

As for a crash, most economists don't expect one, and the California Association of Realtors forecasts the state's median price rising 0.8% this year and 1.4% next year.

Why is everyone expecting a crash?

2008 is a lingering and real fear. By early 2009, Case-Shiller had LA home prices down about 40% from their peak in 2006.

But what caused the 2008 drop is very different from what is happening today. 2008 was driven by a wave of foreclosures, with millions of people who owed more than their homes were worth because lenders were providing loans to folks who couldn’t afford them. Economists point out that today's homeowners mostly have real equity, lending is a lot more conservative, and foreclosures, while rising a bit, are still low by historical standards. Prices fall hard when a lot of people are forced to sell at once. The numbers we’re seeing today aren’t pointing that way.

What are we seeing today?

Over the past year, LA prices have been roughly flat (depending on the neighborhood). Redfin had the city's median sale price down 1.7% from a year earlier in February. What has moved, however, is interest rates, and those are pushing monthly mortgage payments steadily upward.

Home prices are driven by supply and demand. If fewer people can afford the monthly payment on a home, presumably prices are going to start to fall a bit. However, Los Angeles is an extremely desirable destination for non-resident investors; folks who want a second or third home, or a rental property, in one of the world’s most popular cities. So, even if locally household income is not supporting demand for home prices, out-of-state investors still influence demand.

What I tell my clients.

There may be a correction happening — prices softening a bit as the economy is adjusting. But, if ownership is your goal, the earlier you can get in, the better.

Affordability has been trending down since 2012, with a few ups and downs along the way. It fell from 29% to 17% in just seven years. Even if home prices continue to soften, they are not likely to get cut in half. Of course, nobody knows for certain, so I ask my clients three questions:

Can you afford the payment today?
Do you want to live in this house?
Are you planning to stay long enough to ride out whatever the market does?

If the answer to all three is yes, then focus on what you can afford and take advantage of a market where fewer buyers are competing. If the answer is no, and you can’t afford the payment today, waiting to see what happens isn’t a very sound approach. Reach out and schedule a session with me. I will work with you to chart a long-term course toward ownership.

If ownership is your goal, I am determined to find a way to make it happen for you, even if it’s years down the line.