The 2026 Los Angeles Housing Market: Why a Reset Could Be Coming

Is the Los Angeles housing market heading for a crash, another boom, or something in between? According to Redfin’s 2026 housing market predictions, the year could mark the beginning of what the company calls the Great Housing Reset, a gradual shift toward slower price growth, modestly improving affordability, and a more strategic real estate market.

In this video, Scott Himmelstein of the Scott Himmelstein Group breaks down Redfin’s forecast and explains what the predictions could mean for Los Angeles buyers, sellers, homeowners, and renters.

With more than 21 years of real estate experience, Scott offers his perspective on mortgage rates, home prices, inventory, rental trends, changing household dynamics, and the growing role of artificial intelligence in real estate.

1. Mortgage Rates May Remain Around 6%

One of the biggest factors influencing the housing market is the cost of borrowing. Redfin’s forecast projects that 30-year fixed mortgage rates will average approximately 6.3% in 2026, remaining well above the historically low rates many buyers experienced during the pandemic.

For Los Angeles buyers hoping to purchase a home, this means waiting for mortgage rates to return to the 3% or 4% range may not be a practical strategy.

However, buyers may still have options. As Scott explains in the video, strategies such as paying mortgage points, negotiating seller credits, or exploring a temporary rate buydown could help qualified buyers reduce their initial borrowing costs.

The right approach depends on your financial situation, how long you plan to own the property, and the terms available through your lender.

Scott’s main takeaway is that mortgage rates are only one part of the equation. Home prices, available inventory, competition, and negotiation opportunities can also influence the overall cost of buying a home in Los Angeles.

2. Housing Affordability May Improve Gradually

Redfin projects that national home prices will rise by approximately 1% in 2026, with wages expected to grow faster than home prices. Combined with mortgage rates that are projected to average below their 2025 level, this could help ease some affordability pressures.

However, a slower pace of price growth does not mean homes will suddenly become affordable for everyone.

In Los Angeles, buyers must consider the full cost of homeownership, including property taxes, homeowners insurance, maintenance, and repairs. California insurance costs and availability can also create additional challenges for some homeowners.

For buyers, the important distinction is between affordability improving and affordability becoming easy. Even if monthly housing costs rise more slowly, purchasing a home may still require careful budgeting and realistic expectations.

Before making an offer, buyers should evaluate the total monthly payment and leave room in their budgets for expenses beyond the mortgage.

3. Home Sales Could Rise Without Another Buying Frenzy

Redfin forecasts that existing-home sales will increase by approximately 3% in 2026. That points to modest growth rather than a return to the intense competition seen in the 2020 through 2022 housing market.

One factor Scott highlights is the mortgage-rate lock-in effect. Homeowners who secured mortgage rates around 2% or 3% may be reluctant to sell and take on a new loan at a higher rate.

This can limit the number of homes coming onto the market, even when buyers are looking for more options.

Scott also notes that Los Angeles homeowners may be more likely to sell when a significant life change requires it, such as a job relocation, a change in family circumstances, or an estate-related situation.

For buyers, limited inventory can mean that desirable properties still attract competition. For sellers, it means market conditions alone do not guarantee a quick sale or a particular price.

Both sides benefit from understanding the local market rather than relying only on national headlines.

4. Rent Prices May Continue to Rise

Redfin predicts that rents nationwide will increase by approximately 2% to 3% by the end of 2026, roughly in line with inflation.

The forecast points to two important factors: more households choosing to rent because buying remains expensive, and a slowdown in apartment construction following the building surge of 2021 and 2022.

Scott believes these trends could influence rental demand in Los Angeles, where high home prices and borrowing costs can make renting the more practical option for some households.

For renters, rising rents can make it harder to save for a down payment. For homeowners, rental income may help offset housing expenses, although landlords must account for maintenance, vacancies, insurance, and other ownership costs.

Anyone deciding whether to continue renting or purchase a property should compare the actual costs of both options, including how long they plan to stay in the area.

5. High Housing Costs Are Changing How Families Live

Housing affordability affects more than buying and selling decisions. It can also change how people organize their households.

Scott discusses several patterns becoming more common as housing costs put pressure on household budgets:

• Adult children moving back in with their parents.
• Parents moving into homes with their adult children.
• Friends or relatives combining resources to purchase a property.
• Homeowners renting out spare rooms to help cover mortgage payments.
• Young adults delaying major life decisions because of financial constraints.

Multi-generational living can allow families to share expenses and pool resources instead of maintaining separate households. For some families in Los Angeles, it may be a practical response to the high cost of housing.

These arrangements also require planning. Buyers considering a shared purchase should discuss ownership percentages, ongoing expenses, responsibilities, and what happens if one person wants to sell or move out.

The best housing solution is not necessarily the largest home or the most expensive neighborhood. It is the arrangement that supports a household’s financial circumstances and long-term needs.

6. Different Housing Markets May Experience Different Conditions

Redfin’s forecast also highlights differences between markets across the country. Some areas in the Midwest and Northeast may attract attention because of comparatively lower home prices, while markets such as Austin, Nashville, and Miami have faced pressures following periods of rapid growth.

Scott argues that Los Angeles operates under different conditions, including geographic constraints and persistent housing demand. In his view, these factors can contribute to a market that behaves differently from places with substantial new construction and more available land.

However, Los Angeles is not one uniform housing market. Conditions can vary by neighborhood, property type, price range, and the needs of local buyers.

A home in one area may attract strong interest while another property takes longer to sell. Buyers and sellers should therefore pay attention to comparable local sales, current competition, property condition, and pricing rather than assuming every part of the region will follow the same trend.

7. AI Is Changing How People Search for Homes

Artificial intelligence is becoming another part of the real estate experience. As Scott discusses, technology can help buyers narrow their options based on budget, lifestyle, commute, location, and personal preferences.

These tools can make the early stages of a home search more efficient by helping people organize information and explore possible neighborhoods.

But finding potential properties is only one part of buying a home. Buyers must still evaluate the property’s condition, understand potential risks, assess the terms of a transaction, and negotiate effectively.

Scott believes human guidance remains important, particularly in a complex market such as Los Angeles. An AI tool can help organize information, but it should not replace professional judgment, property inspections, legal advice where needed, or a buyer’s own financial evaluation.

Technology may change how people search for homes, but making a sound real estate decision still requires careful review of the details.

What the 2026 Housing Reset Could Mean for You

Redfin’s forecast does not point to a sudden return to the pandemic-era buying frenzy. Instead, it describes a housing market that may gradually adjust through modest price increases, relatively elevated mortgage rates, limited affordability, and incremental growth in sales.

For Los Angeles buyers, that means preparing a realistic budget, understanding financing options, and comparing properties carefully.

For sellers, it means setting a price based on local market evidence, presenting the home well, and having a clear strategy for attracting qualified buyers.

For homeowners, it means reviewing long-term costs and considering how changes in household needs may affect future housing decisions.

No forecast can predict every market shift, and national projections do not determine what will happen to an individual property. The most useful approach is to understand the broader outlook while making decisions based on your specific goals and local conditions.

Watch the Video

Watch Scott Himmelstein of the Scott Himmelstein Group break down Redfin’s 2026 housing market predictions and explain how these trends could affect buyers, sellers, homeowners, and renters in Los Angeles.

Have questions about your next real estate move? Reach out to Scott to discuss your situation and develop a strategy that fits your goals.