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Friday, Jun 2, 2023

Despite Pandemic, LA County Real Estate Prices Rise for 11th Consecutive Year

L.A.’s already pricey real estate market is getting pricier.
Los Angeles County’s 2021 Assessment Roll, which looks at all taxable property in the county as of Jan. 1, grew by $62.9 billion to $1.76 trillion — that’s the 11th consecutive annual increase.

“We were all a little bit pleasantly startled to find out that the Assessment Roll, despite the pandemic, would grow during a pandemic-induced recession,” L.A. County Assessor Jeff Prang said.

Real property sales added $44.9 billion to the roll, while a Prop. 13 mandated consumer price index adjustment added $16.4 billion, and new construction added $8.8 billion.

The total evaluation of the roll amounts to $17 billion in property tax dollars. The money, Prang said, will be used for public education, first responders, public health and other services.

“It’s a positive, forward movement, which means that local government and schools will have growth in property tax revenues which will ensure jobs and services and things people rely on during a pandemic,” Prang said.

Some declines

Not all measures grew during the most recent period, though. There was a reduction of $5.5 billion in business personal property, a category that includes machinery, boats and aircraft.
“That’s largely because a lot of restaurants paying property taxes on their cooking equipment were exempt,” Prang said. “Since it was not being used, they were being granted a reduction in assessed value.”

Prang said some asset types, like hospitality, suffered, while “residential properties went through the roof.”

He said the assessed value of single-family homes increased an average of 22%.
UCLA Ziman Center Director Stuart Gabriel said he has seen an increase in desire for homes, especially in suburban areas.

“With the pandemic and post-pandemic, there’s been a remarkable evolution in what we call within metro area or intra metropolitan locational preferences,” he said. “A rough way of characterizing this is that the suburbs were out of favor pre-pandemic and came in favor post-pandemic.”

“We’ve seen very significant upward movement in demand,” he added.
John Loper, an associate professor at USC’s Price School of Public Policy, said that trend is also bearing out among renters.

“If you look at rents, the suburban areas are doing much better in the rental markets than the urban areas,” he said.

Loper added that during the Covid-19 pandemic, more millennials decided to purchase homes as well.

Industrial gains

Besides residential, Prang said, industrial assets also fared well.

“Another area which benefited was warehouse, industrial space with a lot of companies moving to telework and to a mail-based operation, they needed warehousing space in order to process the shipment of goods,” he said.

Meanwhile the value of refineries decreased as fewer people were driving.
Prang said that so far this year, things have remained “relatively stable” as far as home sales go, but there is some uncertainty still on the commercial side, especially with the new delta variant of the coronavirus.

“We’re going to need a little bit more time before we can forecast what will happen in the next year,” Prang said. “While things seem to be moving at a relatively optimistic direction at this point, there’s so much uncertainty, and the residential market is overheated.”

He does, however, expect to see an increase in commercial businesses filing decline-in-value applications.

Prang is also proactively looking at properties like hotels to see if they have declined in value and will consider offering some tax relief if they have.

Hannah Madans Welk
Hannah Madans Welk
Hannah Madans Welk is a managing editor at the Los Angeles Business Journal and the San Fernando Valley Business Journal. She previously covered real estate for the Los Angeles Business Journal. She has done work with publications including The Orange County Register, The Real Deal and doityourself.com.

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