Is Now a Good Time to Buy a House in Los Angeles? 2026 Market Analysis

The Short Answer

For buyers who are financially ready and planning to stay 5+ years, 2026 offers some advantages that did not exist in prior years: more inventory, less frantic competition, and modest price stabilization. However, affordability remains challenging with median prices near $900,000 and mortgage rates in the low-6% range. The right time to buy depends less on market timing and more on your personal financial situation, job stability, and long-term goals.

$895K

Median Price

LA County Jan 2026

6.3%

Avg Mortgage Rate

30-yr fixed forecast

62 Days

Days on Market

Up from 52 last year

1-4%

Price Forecast

Expected 2026 growth

LA Housing Market Snapshot: January 2026

The Los Angeles housing market enters 2026 in what analysts are calling "The Great Housing Reset" - not a crash, but a gradual normalization after years of extreme seller advantage. Here's where we stand:

Current Market Conditions

Median Home Price

$895,000

+0.6% YoY

Price Per Sq Ft

$615

-2.8% YoY

Days on Market

62 days

Up from 52

Average Offers

3 per home

Moderately competitive

Market Score

54/100

Somewhat competitive

The market has shifted from the frenzy of 2021-2022 to something more balanced. Homes are taking longer to sell, giving buyers more time to consider their options. Price growth has moderated significantly - a welcome change for affordability, though prices remain historically high.

Arguments For and Against Buying Now

There are legitimate reasons on both sides. Here's an honest look:

Reasons to Buy in 2026

• ✓ More inventory than recent years - more choices
• ✓ Less competition - homes averaging 3 offers vs. 10+
• ✓ More negotiating room with sellers
• ✓ Time to do proper inspections and due diligence
• ✓ Price growth slowing - less FOMO pressure
• ✓ Can refinance later if rates drop
• ✓ Building equity instead of paying rent

Reasons to Wait

• ✗ Rates still elevated vs. pandemic lows
• ✗ Affordability remains historically challenging
• ✗ Need ~$221K income to qualify for mid-tier home
• ✗ Monthly payments 62% higher than renting
• ✗ Insurance costs rising significantly
• ✗ Economic uncertainty persists
• ✗ Rates may drop further in 2027

The Affordability Reality Check

Before diving into market timing, here's what the numbers actually look like in LA right now:

What It Takes to Buy in LA (January 2026)

$221,000

Income needed for mid-tier home

$5,500+

Monthly payment (mid-tier)

$179,000

20% down on median home

These numbers are daunting. They're also why the market has cooled - fewer buyers can compete at these levels. For those who can, that actually means less competition. But there's no shame in deciding this isn't the right time. Renting and investing the difference is a legitimate financial strategy, especially if you're not certain about staying in LA long-term.

When Buying Makes Sense vs. When to Wait

✓ Buying May Make Sense If...

You have stable income, a solid down payment, and plan to stay at least 5-7 years. You're comfortable with current rates and can refinance later if they drop.

Your monthly payment fits comfortably in budget. You're tired of rent increases. You've found a home that meets your needs.

⌛ Waiting May Make Sense If...

You're still building your down payment, your job situation is uncertain, or you might relocate within 3-5 years.

Your credit score needs improvement. You'd be stretching on monthly payments. You're feeling pressure to "get in" rather than genuine readiness.

Time in Market vs. Timing the Market

5 YEARS Minimum hold time recommended to offset transaction costs and build meaningful equity

HISTORY LA home values have consistently trended upward over decades, even after temporary dips

REFINANCE If rates drop to 5% range later, you can refinance - you're not locked into today's rate forever

Still figuring things out? That's normal. If questions come up as you're researching, feel free to reach out: (213) 262-5092. No agenda - just answers.

Neighborhood Price Snapshot

LA is not one market - it's dozens of micro-markets. Prices and competition vary dramatically by area:

Pasadena

$1.1M+

Stable to +3%

Strong schools, character homes

Glendale

$1.0M+

Stable to +2%

Family-friendly, good value

Silver Lake

$1.3M+

+1% to +3%

Trendy, competitive

Highland Park

$900K+

Stable

Up-and-coming, diverse

Santa Monica

$2.0M+

+3% to +5%

Premium, limited inventory

Long Beach

$750K+

+1% to +2%

More affordable entry point

Curious about a specific area? Each neighborhood has its own pace and pricing. If you want to know what's actually happening in a particular zip code, just ask: (213) 262-5092

Tools That Might Help

If you're in research mode, these resources can help you run your own numbers:

→ Mortgage Calculator → Search Current Listings → Neighborhood Guides

What's Expected for the Rest of 2026

Based on current forecasts from CAR, Redfin, and other analysts:

2026 Market Outlook

RATES Expected to stay in low-6% range (6.1-6.3%), with occasional dips below 6%

PRICES Modest growth of 1-4% expected - slower than inflation, improving real affordability

INVENTORY Gradual increase as some locked-in homeowners decide to move

COMPETITION Continuing shift toward balanced market - good for buyers

Frequently Asked Questions

Q Will LA home prices drop in 2026?

A significant price drop is unlikely. Most forecasts project 1-4% appreciation. Limited inventory, strong demand, and lack of distressed sales support prices. However, price growth is slowing, which gradually improves affordability relative to income growth.

Q Should I wait for mortgage rates to drop?

Rates are expected to stay in the low-6% range through 2026. If you wait for significantly lower rates, you may face more competition and higher prices. Many buyers choose to buy now and refinance later if rates drop substantially. But waiting is also reasonable if you're not ready.

Q How much do I need to make to buy in LA?

For a mid-tier California home, you currently need approximately $221,000 in annual household income to qualify for a mortgage. For a bottom-tier home, approximately $136,000 is needed - still about 33% higher than median household income.

Q Is it better to rent or buy in LA right now?

Monthly mortgage payments for a purchased home average 62% higher than renting a comparable property. Buying builds equity and provides stability against rent increases, but renting and investing the difference can also be a sound strategy. The math favors buying if you plan to stay 5+ years and can comfortably afford payments.

Q Are there still bidding wars in LA?

Yes, but they're less intense. Desirable homes in prime areas still receive multiple offers (average of 3), but it's nothing like the 15-20 offer situations of 2021. Well-priced homes sell; overpriced homes sit. Buyers have more leverage than in recent years.

Q What about the "rate lock-in" effect?

About 80% of California homeowners have mortgage rates under 5%. Many are reluctant to sell and give up their low rate, which limits inventory. This supports prices but also means less competition for available homes, as fewer move-up buyers are in the market.

A Final Thought

There's no universally "right" time to buy a home. The best time is when your finances are solid, your life is stable enough to commit to a location, and you've found a place that genuinely works for you - not when a market report or a real estate agent says so.

If that time is now, great. If it's a year from now, or five years from now, that's fine too. The LA market will still be here.

If you do have questions at any point: (213) 262-5092 or send a message

JB

Justin Borges

Justin Borges is Team Leader of The Borges Real Estate Team at eXp Realty. With over 13 years of experience and more than $200 million in career sales across Los Angeles, Justin helps buyers navigate the complexities of LA's competitive housing market with data-driven insights and local expertise.

$200M+ Sold 13+ Years Experience DRE #01940318

Disclaimer: This article provides general market information and should not be considered financial advice. Real estate markets change rapidly, and individual circumstances vary. Data sources include Redfin, California Association of Realtors, Property Focus, and LAO as of January 2026. Consult with a financial advisor and get pre-approved to understand your specific situation. Contact The Borges Real Estate Team at (213) 262-5092 | 680 E Colorado Blvd Suite 180, Pasadena, CA 91101.