Los Angeles Home Prices Jumped 32% – Then Suddenly Cooled. Here’s What Changed

Written by:

Alejandra Rodriguez

Date:

15 Apr 2026

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Just a year ago, Los Angeles homes regularly sold for hundreds of thousands of dollars over the asking price, with more than a dozen competing offers. Today, buyers are negotiating for closing cost credits and landing properties well below the list price. The LA housing market has undergone one of its fastest and most dramatic reversals in recent memory, leaving buyers and sellers recalibrating their expectations.

Kevin DaSilva, team leader at eXP Realty | Kevin DaSilva Group in the South Bay and West LA, has tracked the market’s rapid changes firsthand. His team closed 24 sales and 16 leases last year, working with 40 clients. This year, they are on pace for even higher numbers, but DaSilva says the market environment has shifted sharply from just six months ago.

Where the Market Stands

Open houses in Redondo Beach and Manhattan Beach now attract only a handful of visitors, a stark contrast to the packed showings of last spring. Homes that once triggered bidding wars are sitting on the market for three or four weeks. Sellers are offering to pay closing costs — an option that was rare at the market’s peak.

“The market has cooled quite a bit,” DaSilva says. “It’s still strong, but not as strong as it was six months ago.”

Earlier in 2025, coastal LA neighborhoods saw home values spike as much as 32% year-over-year, with Manhattan Beach and Redondo Beach posting their strongest appreciation since 2014. But the rapid gains stalled by late fall. Homes listed in January are now lingering weeks longer than before — a marked change from the two-week average that defined last spring’s competitive market.

What Drove the Surge

Three main forces shaped last year’s boom, and each has since lost momentum.

First, the Palisades and Altadena fires in January 2025 displaced thousands of families, many of whom were from affluent areas. Instead of leaving LA, these buyers moved into South Bay and West LA neighborhoods, creating sudden, urgent demand. At the same time, homeowners who had held off selling or renting jumped into the market, doubling new inventory in February compared to typical years. Despite more listings, demand was so strong that prices climbed rapidly.

“We had listings with 15, 17 offers selling hundreds of thousands over asking,” DaSilva says. By fall, most displaced families had found homes, and the influx of urgent buyers faded. The wave of new demand receded, and competition eased.

Second, mortgage rates, which hovered near 7% for much of the year, began to fall. Rates are now at their lowest level since 2022. While lower rates generally help buyers, they also draw more people off the sidelines, potentially reigniting competition. For now, buyers have a rare window with softer competition and reduced borrowing costs — but that balance could change quickly if rates drop further.

The third factor is the rising cost of homeowners’ insurance in high-fire-risk areas. Premiums have climbed sharply since the 2019 Malibu fires, making homes in neighborhoods like Brentwood less attractive. Some buyers are now steering clear of hillside properties where annual insurance costs can rival a car payment.

How the Pace Has Changed

Last year, buyers in West LA and the South Bay had to act fast. Homes often sold within two weeks, sometimes just days. Buyers routinely waived inspections, made all-cash offers, or wrote personal letters to sway sellers.

Now, buyers are moving more cautiously. DaSilva recently helped a client purchase a Redondo Beach home with the seller covering full closing costs and offering favorable financing at 10% down — a loan structure rarely seen during last year’s frenzy. Another client purchased a property several hundred thousand dollars below the original asking price.

Escrow periods have also lengthened. With fewer cash buyers and more reliance on financing, closings now take 30 to 45 days, compared to the 14-day rushes common last spring.

What Buyers and Sellers Should Know

For Buyers:
This is an opportune moment. Interest rates are down, competition is light, and sellers are motivated. Buyers can negotiate for closing cost credits, request thorough inspections, and avoid waiving contingencies. Homes on the market for more than two weeks are often open to offers below the asking price.

However, this window may close quickly if rates drop further and more buyers return. DaSilva expects the market to tighten within six months as lower rates increase demand.

For Sellers:
Pricing realistically is crucial. Homes that sit for more than three weeks often receive only one offer or none at all. Consider offering closing cost credits or covering minor repairs to attract buyers. Professional staging and high-quality photos have become more important, as buyers are less willing to overlook flaws.

Sellers in high-fire-risk zones should prepare for longer days on market and more resistance to higher prices due to steep insurance costs.

The Takeaway

Los Angeles has shifted from one of the nation’s hottest markets to a more balanced environment in less than a year. Buyers now have negotiating power not seen since 2022, but that advantage could disappear if interest rates continue to fall and competition returns. “Right now might be the time to get the house before prices get too high,” DaSilva says. For both buyers and sellers, decisions made in the coming months are likely to shape outcomes for years to come.

About the Expert: Kevin DaSilva is the team leader at eXp Realty | Kevin DaSilva Group, covering the South Bay and West LA. His team is currently the top-performing small team at eXp in the Los Angeles area. In one West LA neighborhood, he has sold a quarter of all properties in recent years.

This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.