As we approach the end of the year, it feels appropriate to slow the pace and take stock. The past 12 months have been challenging for Los Angeles real estate, particularly for multifamily owners and investors navigating a market defined by fewer transactions, rising costs, regulatory change, and persistent skepticism.

The noise has been hard to ignore. Headlines have focused on stalled development, shifting policy frameworks, and capital sitting on the sidelines. In that environment, pessimism can quickly become the dominant narrative. It is easy to conclude that Los Angeles is broken or permanently impaired.

That conclusion may be premature.

A recent podcast conversation with Rick Caruso offered a refreshingly steady perspective on Los Angeles and why long-term conviction still has a place. Not because it dismissed the city’s challenges, but because it framed them within a longer arc that experienced owners and investors recognize well.

A Market Defined by Cycles, Not Headlines

Los Angeles has gone through difficult chapters before. Prior downturns brought their own versions of uncertainty, from economic recessions to regulatory shifts to periods when capital retreated and sentiment turned sharply negative.

Each time, the city adjusted.

The Los Angeles multifamily market has always been cyclical, but it has also been resilient. Scale, population density, job diversity, and global relevance continue to underpin long-term housing demand, even when near-term conditions are strained.

The current environment feels particularly uncomfortable because multiple pressures are converging at once. Higher interest rates have compressed pricing. Construction costs remain elevated. Policy changes have introduced new layers of complexity into underwriting and exit assumptions. None of these forces are trivial.

Still, experienced market participants understand that discomfort often defines the middle of a cycle, not the end of a market.

Long-Term Conviction Versus Short-Term Sentiment

One of the most compelling aspects of Caruso’s perspective was its tone. It was not promotional or defensive. It acknowledged that Los Angeles is working through a tough period. At the same time, it rejected the idea that the city should be written off.

That distinction matters.

Long-term conviction does not require ignoring reality. It requires context. Cities of Los Angeles’ scale rarely move in straight lines. They absorb shocks, recalibrate, and often reemerge stronger in ways that are difficult to predict while sentiment is at its lowest.

For multifamily owners who have held assets across multiple decades, this pattern is familiar. The periods that test conviction most aggressively are often the ones that create the clearest long-term separation between transient sentiment and durable fundamentals.

What Has Changed and What Has Not

There is no question that the Los Angeles multifamily landscape looks different today than it did several years ago. Transaction velocity has slowed. Development pipelines have thinned. Capital has become more selective.

What has not changed is the structural imbalance between housing supply and demand. Vacancy remains tight in many submarkets. Rent growth has moderated, but the city continues to face long-term housing scarcity driven by geography, entitlement constraints, and sustained population density.

Employment centers, infrastructure investment, cultural gravity, and global capital interest have not disappeared. They have simply been overshadowed by near-term challenges.

For long-term owners, that distinction is important. Markets do not reset because sentiment shifts. They reset when fundamentals erode. In Los Angeles, those fundamentals remain intact, even if they are currently under pressure.

A Reminder Worth Carrying Forward

Ending the year with a measure of optimism does not mean dismissing the realities of today’s market. It means remembering the longer view and the reasons so many experienced owners continue to invest time, capital, and energy in Los Angeles.

The city is complex. The market is demanding. The path forward is rarely linear. But history suggests that Los Angeles has a way of surprising those willing to stay engaged when others are ready to step back.

As we head into 2026, that perspective may be worth revisiting.

For those interested in the full conversation that prompted this reflection, the podcast discussion is available below.