Everyone knows buying a house in Los Angeles is expensive, but the numbers just released by Zillow are likely still jaw-dropping to many.
In a report released Tuesday, Zillow estimated the total value of the housing market in the L.A. metro area — the sum of Zillow’s estimates for every home — is up $202 billion in the last year alone.
The area’s total value, $3.7 trillion, has seen a rapid increase since the start of the COVID-19 pandemic in 2020, rising 38% over the past three years, Zillow said.
In August 2023 alone, the median price in Los Angeles County was up 4.2%, according to the California Association of Realtors.
“While a small chunk of this growth can be attributed to a 1.3% rise in the average value of a US home over the past year, the powerhouse behind this surge has been new construction,” Zillow senior economist Orphe Divounguy explained. “Builders have chipped away at the housing deficit as a steady flow of new homes have hit the market this spring and summer.”
That deficit is a result of households growing faster than the nation’s housing stock.
While about 6.3 million units were created between 2015 and 2021, 7.1 million new households were created in that period, according to Divounguy.
While builders have pivoted to “higher-density homes wherever possible to work around increased costs and bring desperately needed units to the market,” Divounguy said, the solution is one that’s sometimes controversial in California.
“Obstacles remain to new construction in many parts of the country,” he added. “Measures that allow for more density and increase buildable land would help.”