On Los Angeles’ West Side, Homeowners Trade Up by Renovating
In high-cost neighborhoods of Los Angeles’ West Side, where the price tag for a so-called starter home is well over $1 million, a growing renovation trend is transforming the housing stock.
Instead of moving, homeowners looking to expand are opting to knock down and rebuild or significantly remodel their existing homes, replacing modest Craftsman and bungalow-style houses with new multimillion dollar homes with modern silhouettes — or the ubiquitous white-and-black farmhouse.
“Owners usually make a few turns before they get to their ultimate house,” said Tami Pardee, founder and chief executive of Pardee Properties, a brokerage focused on L.A.’s West Side. “But that turn from a two-bedroom, one-bath to a three-bed, two-bath, they’re really not moving like that right now. They’re trying to remodel.”
A number factors make this tear-down-and-remodel strategy more appealing to homeowners than buying a new home. Some homeowners simply like their neighborhoods and there isn’t available move-up inventory nearby. For many, purchasing a new home could trigger higher taxes and a higher mortgage rate. Current mortgage data provided by Pardee shows roughly 308,000 homeowners in the city had a mortgage rate below 3 percent.
The big buying frenzy in 2021 and 2022 might have eaten up a sizable portion of entry-level inventory, surmised Joel Berner, Realtor.com’s senior economist. Data shows Americans are moving less and fewer homes are for sale. Nationally, he said, there’s been a trend away from flipped homes, which are spending more time on the market, and more on fixer-uppers. People want to do their own projects.
The volume of these projects in Los Angeles has grown in recent years. According to permitting data from Los Angeles’ Department of Building and Safety, the pace of major remodels of single-family homes in the city has more than doubled from pre-pandemic levels; 177 such permits were issued in 2019, steadily climbing to 476 in 2025. Much of this has been concentrated in areas like Mar Vista, with a hefty stock of decades-old, then-inexpensive, 1,000-square-foot ranch homes, now sitting on very expensive lots.
The process has even been operationalized. Thomas James Homes, a custom home rebuilder active across many pricey West Coast markets, offers its own in-house design, labor and procurement teams for homeowners seeking to rebuild on their existing lot. It’s become very popular, with roughly 30 such projects underway in Los Angeles right now. They’re seeing the same process play out in markets like Seattle, San Francisco and Phoenix.
In effect, this shift has made these neighborhoods even more expensive to move into, eliminating entry-level home stock. The percentage of total annual home sales in Los Angeles under $1.4 million has dropped from 72 percent in 2019 to 61 percent in 2025.
“I don’t really know if the entry-level home exists,” said Joshua Baum, founding principal of Hilgard Economics.
