Crazy Rich Buyers and Sellers

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While millions of Los Angeles residents struggle to pay for basic needs like food and housing, a handful of wealthy home buyers are making the urban area one of the world’s most desirable real estate destinations according to a report out this week from Knight Frank.
The data collected shows the L.A. area is one of 17 “ultra-prime” residential markets worldwide, where homes regularly sell for eight-figure amounts. Not all that long ago, a sale that costly could have broken local records, but home sales–even above $25 million–have become routine in recent years. According to the report, 51 L.A. homes have sold for at least that much since 2015, with 18 of those selling in 2017 and 2018.
Where are L.A.’s priciest homes selling? Not surprisingly, the 90210 zip code claimed the highest share of sales analyzed in the report, with 20 qualifying transactions since 2015. Close behind was 90077, which covers Bel Air (18 homes there sold for more than $25 million).
L.A. was one of five American real estate markets included on the list. The others were New York City, Malibu, Palm Beach, and Aspen. Notably absent: San Francisco. The top two international cities were London and Hong Kong.

Rates Plunge as the Shutdown Drags On

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It was a happier new year as mortgage rates plunged earlier this month. The precipitous drop sparked a 23.5% spike in mortgage applications after an unusually weak holiday season. CNBC reported that interest rates spiraled to their lowest levels since April 2018, which resulted in a refinancing boom.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 4.74%, from 4.84%, with points increasing to 0.47 from 0.42 (including the origination fee) for loans with a 20% down payment. The rate is 22 basis points lower than 1 month ago.
In a separate report out this week, the Nat’l Assoc. of Realtors claimed just over 10% of Realtors surveyed said the shutdown was having an impact on their businesses. Some reported government employees pulling out of purchase offers and others being denied loans due to loss of income.

2018 Real Estate Market Wrap-up

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Regionally, SoCal’s home sales fell at the end of 2018, deepening a retreat from a sustained housing market that placed home ownership out of reach for many. In a report out this week from CoreLogic, the 12% drop in year-end sales from a year earlier was the 4th consecutive monthly decline for the 6-county region. However, housing experts aren’t ready to declare a boom is going bust: The falloff in sales so far this year is still less pronounced than in 2014. And 2018’s regional median price still rose slightly—3.5% from end of 2017, to $522,750.
The report likens end of 2018 to what happened in 2014: Back then, the 6-county region’s housing market cooled following a surge in mortgage rates and a run of double-digit price appreciation. The regional sales decline then was deeper and more pronounced then than it is now, with sales falling for a consecutive 14 months between October 2013 and November 2014. The worst 4-month decline also averaged out to 13%, compared to 12% today. Home values didn’t tank during that last slowdown. The report showed price appreciation slowed—and then accelerated at the end of 2015, eventually leading to 2016’s sky-high prices.
In L.A. County specifically, the end-of-year median climbed 5.8% to $600,000, hitting another all-time record. And although 5.2% more homes were on the market end of 2018 over end of 2017, an overall lack of inventory in highly-desirable neighborhoods was still in keeping with a “seller’s market”—albeit to a lesser degree than 2016-2017.

The weather outside ain’t frightful

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Below are 10 years of “winterizations;” re-imaginings, if you will, of a few of the homes we’ve listed–and sometimes represented the buy side, too. Some pictures were designed as printed greeting cards; others were used to celebrate digitally. You’ll also see unretouched originals. 2018′s “holiday house” is a dazzling Mediterranean once owned by author Aldous Huxley, and was sold in 5 days for $4,300,000 ($1,058 per-square-foot).
This has been a year for the record books in real estate–and a record-breaking 12 months of giving at L.A. Luxe Group. Throughout 2018 (and for over a decade), a donation from every sale went to an L.A.-based animal welfare organization–which is why beloved, adopted creatures sometimes squeezed their way into (or dominated) the Photoshopped images. Look for a pug, Blank (his name is a long story), in the example from 2013 used for this introduction.
We wish you peace and joy this holiday season, and a prosperous 2019!

Millennials Slouch Toward Home Ownership

Long presumed to have less interest in the non-stop consumption of goods that underpins the American economy, millennials might not be different after all, according to a new study out this month from the Federal Reserve. Their spending habits are a lot like the generations that came before them—they just have less money at this point in their lives, the Fed found. The group (born between 1981 and 1997) has fallen behind because many of them came of age during the financial crisis.
The Fed’s findings are grounded in an analysis of spending, income, debt, net worth, and demographic factors among different generations. And although millennials spend freely on luxury cars and clothing, housing and food (avocado toast wasn’t specifically tracked) are 2 areas where millennials have spent less than previous generations, with the younger cohort paying more for education.
Millennials are at somewhat of a full-stop when it comes to saving for a home, with most swimming in student loan and credit card debt. Consequently, their prospects for buying a home—and having a 20% down payment to do so—are next to impossible, unless parents or grandparents contribute some hard-earned cash to their home buying efforts.
At least now relatives know what to get their millennial family members for Christmas.


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