The median home listed in Los Angeles will soon cost more than $1 million — up 30% in 5 years
The Los Angeles housing market, which is already known for its soaring prices, is expected to climb even further, as recent data from Zillow suggests that the median home listing in the city will soon surpass $1 million.
As of June 30th, the median home price stood at $975,333, marking a significant increase of over 30% compared to five years ago. Six other cities in California have already crossed the million-dollar threshold, including San Jose, Santa Maria, Santa Cruz, Salinas, and San Francisco.
Both Santa Cruz and San Diego experienced major market growth, with median listing prices soaring by more than 40% over the past five years. This increase far outpaces the national inflation rate of 21% during the same period, as reported by the U.S. Bureau of Labor Statistics.
“This million-dollar median, although somewhat arbitrary, is truly astonishing,” remarked Michael Lens, a professor of urban planning and public policy at UCLA. “Homeownership has traditionally been a primary method of wealth-building in this country, but this figure sharply highlights the barriers to entry in the housing market and the challenges of securing stable housing and long-term wealth.”
The skyrocketing prices not only affect potential homeowners but also impact the rental market. Lens explained, “Rents and home prices tend to move in tandem due to issues of scarcity and high demand. If selling a home is so lucrative, homeowners will be less likely to rent it out or will demand exorbitant rental rates, given the alternative of selling a million-dollar property.”
Lens stressed that the solution for both homebuyers and renters lies in increasing the housing supply. While government programs exist to support first-time homebuyers, they are not sufficient to assist individuals purchasing million-dollar homes, such as nurses, for instance.
In June 2023, California’s Zillow Home Value Index reached $743,361, the second-highest among all states. This value is nearly five times the estimated median home value in West Virginia, which stood at $155,773, the lowest in the country.
It’s important to note that the Home Value Index reflects the typical value for homes in the 35th to 65th percentile within a given region, and is distinct from the actual listed price of homes.
According to the Federal Reserve Bank of St. Louis, the median home listing price in California increased by 36.3% to $777,000 in June, rising from $570,000 in June 2018.
The rising housing prices in California present a complex challenge that necessitates comprehensive solutions to ensure housing affordability and accessibility for all residents.
According to a Times analysis, all of the top 10 major metropolitan areas in America for median listing price in June were located in California. Hawaii was the only exception with a higher median home value of $837,324. Several cities in Southern California, such as San Diego, Oxnard, and San Luis Obispo, have median list prices of over $900,000 and have experienced more than 30% growth in the past five years.
Lens highlighted various measures taken by the state to increase housing stock, but remarked that they would not suffice. In his proposed solutions, he suggested eliminating single-family zoning and implementing upzoning in those neighborhoods. He also recommended removing onerous parking requirements and abolishing rules regarding minimum setbacks and floor-to-area ratio. According to Lens, the state should address the many zoning regulations that contribute to the high cost of construction and place blanket bans on certain housing types.
“We are currently not moving quickly enough to meet the demands for the necessary housing,” Lens remarked.