Will mortgage rates go down in 2026?

Forecasts for 2026 indicate a downward trend for mortgage rates, potentially settling near the 6% range. This shift is expected to qualify millions of additional households and could lead to the first decline in typical monthly payments since 2020.

Is 2026 a good year to sell a home in Los Angeles?

Yes, specifically for trade-up sellers. With the lock-in effect fading, more inventory is hitting the market, giving sellers more options for their next purchase while their current L.A. equity remains near historic highs.

How is the 2026 inventory for Los Angeles buyers?

Inventory levels have risen approximately 20% compared to previous years. While still below pre-pandemic levels, the increased supply means L.A. buyers face fewer bidding wars and have more leeway during negotiations.

What is the Next Smart Step for L.A. homeowners in 2026?

The smartest move is to request a custom equity analysis. Knowing your exact buying power allows you to plan a strategic move before the market becomes more crowded as rates hit the 6% threshold.

2026 Real Estate Outlook: What Los Angeles Homeowners and Buyers Need to Know

Q: Are home prices expected to drop in Los Angeles in 2026?

According to the 2026 NAR Outlook, home prices are not expected to see a major decline. Economists forecast a moderate growth rate of 2% to 3%, which aligns with typical inflation. In Los Angeles, this suggests a stable environment where home equity is preserved.

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The 2026 housing market is signaling a period of rebalancing, shifting away from the high-intensity “lock-in” effect of previous years toward a more fluid environment. For those navigating the Los Angeles real estate landscape, this means more inventory choices and a gradual improvement in purchasing power as mortgage rates are projected to moderate.

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As a REALTOR® with Compass in Los Angeles, I’m seeing these national trends mirror our local shifts. While the West continues to lead in market balance due to evolving housing policies, the primary takeaway for 2026 is a “reawakening” of home sales, driven by life-changing events that are finally prompting long-time owners to list.

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Best For: Sellers looking to trade up and buyers who felt sidelined by 2024-2025 rates.
Decision Takeaway: Affordability is trending upward as monthly payments are expected to decline for the first time since 2020.
Key Considerations: Inventory is rising (up 20% year-over-year), reducing the frequency of extreme bidding wars.
Next Smart Step: Audit your current home equity; it remains at historic highs, providing a powerful lever for your next move.

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The “Great Unlocking”: Why More Homes Are Hitting the Market

According to the latest REALTOR® Magazine 2026 Outlook, the “lock-in effect”—where homeowners felt “stuck” in low interest rates—is steadily disappearing. In Los Angeles, we are seeing a similar trend where personal needs (relocation, upsizing, or downsizing) are now outweighing the desire to hold onto a 3% mortgage.

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Moderate Price Growth Benefits Everyone

Economists suggest that home price growth will likely moderate to around 2% to 3% in 2026. This is a “Goldilocks” scenario for the L.A. market:

For Sellers: Your home value is not in danger of a major decline; it is simply stabilizing, preserving your hard-earned equity.
For Buyers: With wage growth expected to outpace home price appreciation, your relative purchasing power is increasing.

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Strategic Advantages for Today’s Demographic Shifts

The 2026 outlook highlights that Baby Boomers remain a dominant force, often utilizing significant housing wealth to make “all-cash” or high-equity trades. This demographic is increasingly looking for homes that offer long-term accessibility and lifestyle perks rather than just square footage.

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Key Takeaways for Your 2026 Strategy:

Leverage Compass Tools: Use our Private Compass Shortlist to see inventory before it hits the wider market—a vital edge as the buyer pool expands.
Monitor the 6% Threshold: A drop in mortgage rates toward the 6% range is expected to qualify millions of additional households nationally.
Flexibility is Currency: Sellers should be prepared for a balanced market where buyers have more leeway to request inspections and repairs.

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Melissa Menard REALTOR® | Compass
Los Angeles & Surrounding Areas
📞 310.729.9726 | DRE# 01858710
📧 melissa@melissamenardhomes.com
🌐 www.MelissaMenardHomes.com

Disclaimer: The information provided in this post is for educational purposes only and does not constitute financial, legal, or investment advice. Market conditions are subject to change. Please consult with a qualified professional regarding your specific real estate needs and local Fair Housing regulations.

FAQ: Navigating the 2026 Los Angeles Market

Are home prices expected to drop in Los Angeles in 2026?
Current trends suggest that home prices may moderate but are not expected to see a major decline. Economists forecast a growth rate of 2% to 3%, keeping the market stable for long-term investment.

Will mortgage rates finally go down this year?
Forecasts for 2026 indicate a move toward lower rates, which can significantly lower monthly payments compared to the peaks of 2023-2024.

Is it still a “Seller’s Market” in L.A.?
The market is moving toward a “balanced” state. While inventory is still below pre-COVID norms, the 20% increase in listings means sellers must be more strategic with pricing.

How does the 2026 outlook affect first-time buyers?
Improving affordability is the headline for 2026. With monthly payments projected to ease, the “floor” of the market is becoming more accessible.

Should I sell now or wait for rates to drop further?
If you are selling to buy, the “lock-in” effect is fading. Waiting may increase your home’s value, but it will also increase competition when you go to purchase.

What is the “Next Smart Step” for a 12-month horizon?
Request a custom equity analysis. Knowing your “buying power” is the first step in planning a successful transition in a rebalancing market.