Rising Home Equity in Los Angeles: What Does It Mean for You?
In today's competitive real estate market, home equity has become one of the most valuable financial assets for Los Angeles homeowners. With home prices continuing to rise and inventory remaining tight, understanding how to leverage equity can open doors to new opportunities, from upgrading to a larger home to investing in renovations or launching a business.
Recent data from the National Association of Realtors (NAR) and the Federal Reserve reveal that home appreciation in Los Angeles has significantly increased homeowner wealth. While some markets have seen slight corrections, the long-term outlook remains strong.
What is Home Equity?
Home equity is the difference between what your home is worth and how much you owe on your mortgage.
For example:
If your home is valued at $2,000,000 and your remaining mortgage balance is $1,000,000, your equity is $1,000,000.
As property values increase, your home equity grows, creating an opportunity to tap into your wealth.
Los Angeles Home Price Trends in 2025
Recent market reports show steady appreciation across Los Angeles:
Los Angeles (Overall): Median home price $1.1M, up 12.5% from last year.
Santa Monica: Median home price $1,816,750, down 0.3% from last year.
Brentwood: Median home sold price $2,350,000, up 0.6% from last year.
Home Price Gains: A Long-Term Wealth Builder
Since 2020 Q1, home prices in California have surged 64.6%, significantly outpacing the national average of 57.1%.
For homeowners who have been in their properties for over a decade, appreciation has led to substantial gains. According to the NAR:
“Over the past decade, the typical homeowner has accumulated $201,600 in wealth solely from price appreciation.”
How Homeowners Are Using Their Equity
With home values at record highs, homeowners are finding multiple ways to leverage their equity.
Upgrading to a Larger Home
Many homeowners are using their built-up equity as a down payment on a new property or even purchasing a home in cash.Investing in Home Renovations
With home prices rising, many homeowners are choosing to renovate rather than move. Using home equity to fund improvements can increase property value and enhance quality of life.Starting a Business
Entrepreneurs are leveraging home equity for startup costs, equipment, and business growth, using real estate as a financial springboard.Building Long-Term Wealth
Some homeowners are using their equity to invest in rental properties, generating passive income and securing financial stability.
Jessica Lautz, Deputy Chief Economist at the National Association of Realtors, stated that using home equity for improvements can be advantageous, as such renovations not only help in maintaining the property but can also increase its market value.
"Home equity isn't like bread—it doesn't go stale if left untouched," said Greg McBride, chief financial analyst at Bankrate. He also noted that tapping into home equity is “a far more cost-effective borrowing option compared to personal loans or credit cards.”
The Impact of Los Angeles’ Housing Shortage on Equity
Los Angeles already faced a housing shortage before recent wildfires displaced residents in areas like Altadena, Pasadena, and Pacific Palisades. This has intensified demand, driving up rental prices and further tightening an already constrained market.
As a result, Santa Monica, Mar Vista, and the Westside have seen increased buying activity, particularly in new construction. Despite high interest rates, well-priced homes continue to sell due to strong population growth and limited supply.
New construction remains insufficient to meet demand, largely due to strict regulations, zoning laws, and lengthy approval processes. Since 2008, new housing development has failed to match buyer interest, keeping pressure on inventory.
Many homeowners are sitting on substantial equity, opting to hold onto their properties rather than sell, further restricting supply. With demand outpacing available inventory, there are no immediate signs of price declines—the Los Angeles real estate market remains strong and competitive.
What This Means for You
Whether you're considering selling, reinvesting, or leveraging your home’s equity for financial growth, now is a pivotal time to assess your options. With home values at record highs and housing demand still surging, Los Angeles remains one of the best markets for long-term real estate investment.
If you're wondering how much equity you have in your home and how to maximize its potential, reach out for a personalized market analysis. Your property may be worth more than you think.