Los Angeles County, known for its sky-high housing prices, is expected to see a significant increase in taxable property values this year. According to L.A. County Assessor Jeff Prang, the county’s property value is projected to rise by 4.75 percent in 2024 compared to the previous year, pushing the net total value above the $2 trillion mark for the first time in history.
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Steady Growth Despite Challenges
The forecast, released by Prang to the county’s Board of Supervisors on Wednesday, predicts the expected growth rate for the county’s annual assessment roll, which serves as an inventory for all taxable property. This projection is crucial for local governments, as they rely on it as a basis for their budget proposals.
Prang acknowledged the difficulties faced by the local and national economies in recent years, stating, “It has been a challenging few years as the local and national economies respond to a variety of factors, whether it be residential or commercial. Our analysis indicates that property values will grow for the 14th consecutive year, which is good news for property owners and local governments because they rely on property taxes to pay for vital public services. However, sales volume declined significantly in 2023 and commercial properties, especially Downtown Los Angeles, have experienced huge declines in value.“
Multifamily Real Estate and Commercial Properties Face Hurdles
Despite average apartment rents reaching all-time highs in L.A. County, multifamily real estate, along with most other asset classes, has seen a significant decrease in trades after the first quarter of this year. This decline can be attributed to higher interest rates and inflation. Additionally, the city of L.A.’s Measure ULA, which imposes an additional transfer tax, has further discouraged investment activity.
Commercial properties, particularly those in Downtown Los Angeles, have experienced substantial declines in value. This trend highlights the challenges faced by the commercial real estate sector in the current economic climate.
Single-Family Homes Remain, Strong Contributors,
On a more positive note, single-family homes continue to be a strong contributor to the county’s property value growth. The median price for homes in L.A. County remained at an all-time high, with the average home valued at approximately $900,000, according to Prang’s report.
Property sales are expected to be the largest contributors to the assessment roll revenue, generating more than $51 billion. This substantial figure underscores the importance of the residential real estate market in driving the county’s overall property value growth.
New Construction and Special Use Properties Add Value
Prang’s forecast also anticipates an increase of $6 billion in new construction revenue this year. Major projects, such as the Intuit Dome, the future home of the L.A. Clippers, are expected to provide “significant value” to the assessment roll.
Furthermore, special use property types, including major construction projects like SoFi Stadium and YouTube Theater, are expected to contribute a healthy chunk of value, estimated at around $400 million.
Decline-in-Value Reductions Impact Assessment Roll
While the overall outlook for property value growth in L.A. County is positive, the forecast does note that decline-in-value reductions will take away some $2 billion from the assessment roll this time around. These reductions reflect the challenges faced by certain segments of the real estate market, particularly commercial properties and those in specific areas like Downtown Los Angeles.
Record-Breaking Assessment Roll Expected
Despite the challenges and declines in some sectors, the 2024 assessment of property values in Los Angeles County is expected to break records. The projected 4.75% increase over the previous year will push the total value above the $2 trillion threshold for the first time in LA County’s history.
This milestone marks the 14th consecutive year of growth in overall property value in the county, demonstrating the resilience and long-term strength of the L.A. County real estate market.
Median Home Prices Remain High
One of the key factors contributing to the record-breaking assessment roll is the sustained strength of the median sales price for homes in the county. Prang’s office noted that the median sales price reached a high of $900,000, indicating a robust demand for residential properties despite the challenges faced by other sectors of the real estate market.
Property Transfers Drive Tax Roll Growth
Property transfers are expected to be the largest contributor to the tax roll, adding more than $51 billion to the county’s coffers. This substantial figure highlights the importance of property sales in driving the overall growth of the assessment roll and, consequently, the property tax revenue that local governments rely on to fund essential public services.
Finalized Assessment Roll and Tax Revenue
Last year’s assessment roll came in at $1.997 trillion, falling just short of the $2 trillion mark. This year, the roll is estimated to reach $2.09 trillion, which would translate into more than $20 billion in property tax dollars for the county.
The 2024 assessment roll is expected to be finalized in July, with assessments based on property values as of January 1, 2024. The finalized roll will provide a clear picture of the county’s property value growth and the resulting tax revenue that will be available to support local government services and initiatives.
Conclusion
The projected 4.75% increase in property value for Los Angeles County in 2024 is a testament to the resilience and long-term strength of the local real estate market. Despite the challenges faced by certain sectors, particularly commercial properties and those in Downtown Los Angeles, the county is set to break the $2 trillion mark in total assessed value for the first time in its history.
This milestone, driven largely by the sustained strength of single-family homes and the significant contributions of property transfers and new construction, will provide a much-needed boost to local government coffers. The resulting property tax revenue will help fund vital public services and support the county’s ongoing economic recovery and growth.
As Los Angeles County moves forward, navigating the complexities of the post-pandemic economy, the record-breaking assessment roll serves as a reminder of the enduring value and importance of the region’s real estate market. For business owners and landlords looking to make the most of these opportunities in the commercial real estate sector, now is the time to act.
Mike Tolj, a seasoned professional with over 18 years of experience in commercial real estate, specializes in representing business owners and landlords for both leasing and sales. His swift and efficient approach to deal-making, combined with his unwavering dedication to client satisfaction, makes him the go-to expert for those looking to fulfill their real estate ambitions.
If you’re a business owner or landlord in Los Angeles County, don’t hesitate to schedule a consultation with Mike Tolj today and take the first step towards achieving your commercial real estate goals.
