Years of Pain in L.A.’s Rental Market

If you’re a renter in 2020, you may be paying more per month than you would if you owned your own home or condo. According to a new study from listing service RentCafe, the average rent in Los Angeles has ballooned to $2,527, a whopping 65% increase since 2010. That’s significantly higher than the national average rent increase of 36% over the same period.
Over the last 10 years, the number of U.S. renters surpassed 100 million for the first time, growing from 99.4 million in 2010 to 108.5 million in 2018. Renters now make up 34% of the U.S. population, up a full percentage point from a 2010. That number is nearly double in L.A., where renters make up 60% of the population. That ranks our city as the 19th-highest among the country’s 260 largest cities. Glendale has California’s highest concentration of renters at 67%.
Although sweeping controls are now in place to cap rent increases at 5%, the already-astronomical monthlies are making landlords richer, and renters less solvent. New Year, new plan: Think about purchasing. There are a lot of options for financing out there (including low down payments and low interest rates) that could put you ahead of a perceived affordability gap.

The weather outside ain’t frightful

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This has been a year for the record books in real estate (L.A.’s median home price hit an all-time high)–and a record-breaking 12 months of giving at L.A. Luxe Group. Throughout 2019 (and for over a decade), a donation from every sale went to an L.A.-based animal welfare organization.
I’ll get back to the upcoming listings, current success stories, and open house alerts next time.
Wishing you peace and joy this holiday season, and a prosperous 2020!

October Surprise

October saw another rise in Los Angeles’ median home value, up from September (which was up from August) to $696,900. L.A.’s home values have gone up 2.3% over the past year, and the somewhat-accurate website Zillow is predicting they will rise 2.5% in 2020. The median list price-per-square-foot in L.A. was $543 in October, which was higher than the SoCal average of $440. The median price of homes listed in L.A. in October was $849,900, while the median price of homes sold last month city-wide was $710,400. L.A.’s median rent in October was a record-breaking median of $3,607, which is higher than the SoCal’s $3,200.
Zillow also quantified (from public records) the percent of delinquent mortgages in Los Angeles, which was 0.7% in October, which was lower than the national value of 1.1%. Delinquency is triggered when 3 or more mortgage payments are missed.
The percent of L.A. homeowners “underwater” on their homes was 4.3% in October, which is higher than SoCal’s 4.1%. Zillow cited the primary reason was cash-out refinancing, where homeowners wiped-out their home’s equity and pocketed the profits.

The Rating Game

Mortgage rates have gone mostly down since the beginning of 2019 for multiple reasons: Trade tensions with China, a perception that the economy is slowing, and persistently low inflation. The Federal Reserve cut short-term interest rates by a quarter of a percentage point in July and again in September.
While lower short-term interest rates don’t immediately affect long-term mortgage rates, they do compel longer-term rates to fall over time, which is what we are starting to feel here and now in the 4th quarter—making it a great time to either lock a rate as a buyer or sell a house to a qualified buyer who can afford a little more.
The latest rates are knocking on “4’s” door again (hey, I had a mortgage at 13% in 1985, so don’t be greedy), with the 30-year fixed at 3.875% for purchases up to $726,525 and 4% for loans up to $3,000,000. A 15-year fixed rate of 3.5% applies up to $726,525, which is also a great product to use when re-fi’ing an existing loan at a higher rate and/or longer term.

Millennials Get Rich Quick

There are 618,000 millennial millionaires in the U.S. and their wealth is only expected to grow. According to a report in Barrons, Generation M’s 1% is expected to be five times wealthier in the next decade than they are now. Some of their wealth accumulation can be attributed to what’s been dubbed the “Great Wealth Transfer,” where nearly $68 trillion in assets are flowing—or are expected to flow—to younger generations, mostly from rich baby boomer relatives.
In addition to inheriting money, the report suggests that there is a significant tech influence to the rise of millennial wealth. Some of the top zip codes for millennial millionaires are in Silicon Valley, including Cupertino, home to Apple.
Other data in the report shows that most are employed by corporations, with only 15% working for themselves. Statistics show the millennial millionaires owning 2.8 properties, slightly higher than the 2.4 properties average boomer millionaires possess. They also have larger real estate portfolios than boomers; $1.4 million compared to $919,000.


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