Well, it really matters what part of LA you are looking at. In the valley, in Granada Hills (what I like to call the Beverly Hills of the Valley), you can find a nice 5 bedroom house, large with a pool for around $500k. Average price of homes in the valley are well below $400k total. Most of these homes are built in the 80s and 90s, but some of the higher end homes are built after the 94 earthquake so you have more modern choices. Most people buying above $700k are putting large amounts in down payment, that's why they can afford home loans.
If you want to speak with a qualified loan officer about your loan needs, I can recommend Bridgette at WestCom Lending (818) 335-0283 / firstname.lastname@example.org
All in all, location is key in finding a home that is for you. Maybe try searching a slight further commute to work to have the luxury home you want. Any questions, feel free to contact me.
8700 Reseda Blvd., Suite 213-B
Northridge, California 91324
(818) 967-9626 mobile
(818) 979-0226 fax