Los Angeles home prices fell 2.2% over the past year, with the median home now selling for $1.0 million after 62 days on market (Redfin, 2025). This marks the first sustained decline since the pandemic and reflects a broader correction across California's coastal markets. Mortgage rates between 6.5% and 7.5% have pushed monthly payments for a median-priced home above $5,900, an 82% increase from January 2020 (Borges Real Estate Team, 2025). Nearly half of homes now sell below asking price as inventory rises at the fastest pace in over a decade.

The correction creates opportunities for disciplined investors. Properties under $800,000 face strong demand with limited supply, while luxury homes above $3 million show Expected Market Times exceeding 200 days (Koochak, 2025). Tax strategies are even more essential in this low-growth environment. Cost segregation and 1031 exchanges can improve returns when price appreciation stalls. Buyers should underwrite deals assuming no appreciation for 24 months and focus on positive cash flow from day one. We will likely see another 2% to 4% price decline before stabilizing. The adjustment reflects normalization after years of excess. Strong employment, diverse industries, and long-term supply constraints provide a floor beneath prices. For investors willing to be patient, 2025 offers the first genuine buying opportunity since 2019. []

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References

Borges Real Estate Team. (2025, October 12). What is the current state of the Los Angeles real estate market? (October 2025 seller's guide). https://www.lametrohomefinder.com/blog/la-real-estate-market-october-2025-seller

Koochak, H. (2025). Los Angeles housing market update, slow start to 2025 with rising inventory. https://hamidkoochak.com/blog/los-angeles-housing-report-17

Redfin. (2025). Los Angeles housing market: House prices & trends. https://www.redfin.com/city/11203/CA/Los-Angeles/housing-market

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