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.

Rents Go Through the Roof

For the 2nd year running, Westwood is California’s most expensive place to rent an apartment. In the posh neighborhood’s 90024 zip, renters pay an average of $4,944/mo., according to a new study from RentCafe, a listing service for apartments and homes. That’s a 4.1% leap compared with 2018. Westwood rent ranks 4th in the country behind 3 areas in Manhattan. Westwood is pricier than everywhere in the Bay Area. It’s also nearly $50 higher per-month than the second-priciest spot in CA: West Hollywood’s 90048 zip, where the average is $4,896/mo.
In addition to Westwood’s increasing rents, other areas in L.A. showed single-digit increases over last year like Culver City’s 90232 zip at $4,118/mo., Marina del Rey’s 90292 at $3,804, Santa Monica’s 90401 at $3,787, and Playa Vista’s 90094 at $3,735.
With these numbers in mind, renters should be considering today’s record-low mortgage interest rates—and FHA home loans of up to 94% of a purchase price—and make the effort to get out from under ever-increasing monthlies that are making corporations and “Aunt Sylvia” a fortune off of rental income.


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