Seriously though, why? Interested rates are 2.5% and when inflation creeps up to 5%, you'll be paying off your mortgage at 50 cents on the dollar.
The upside to this high market? Lowest ever interest rates.
Remember, cash is leverage. Use it to downpay and finance two in places like DTLA, where bidding wars are not currently happening.
We're half way through the year, pandemic still going, stocks are up, real estate is still buoyant, cost of goods increasing every day. These are chaotic and unstable things going on, but one fact remains, which is that people need places to live. And as the job market continues to pick up, people are moving around, upsizing, downsizing, and changing their surroundings.
So the big questions:
1. Is there a bubble? - YES. Of course this is a bubble. Multiple offers. Love letters to sellers. As-is. All cash.
2. Will there be a crash? - PROBABLY. But most likely, it will be a small correction rather than a crash, and it might be a miniscule. WHEN? Likely in 2-3 years. Once all the buyers who accelerated their buying timelines have gone, those who come out to sell will find that there's less demand out there. This will result in some price corrections. But again, I don't see it being big enough to matter in a place like LA.
3. Hold or sell? - Hold if you've got 5-8 years to hold on. Sell if you're needing to unleash in the next 1-2 years.
4. Buy or wait? - If you have a downpayment, buy. Inflation is killing your savings and interest rates are so low, it's practically free money. Only wait if you don't have enough down or you're not prequalified. Otherwise, diversify your investments with stocks, a property, and maybe some crypto if you're risk tolerant.
As LA begins a return to "normalcy," DTLA is beginning to reinvent itself again. I'm calling this DTLA 2.0.
Quietly working away during a pandemic, the newly kitted out Apple Store in the old Tower Theatre is finally a reality. Years of restoration and planning have resulted in one of the most interesting Apple Flagship stores in the world! https://www.ladowntowner.com/articles/2021/6/24/revive-amp-revue-the-apple-tower-theater
Other happenings in the neighborhood:
1. Metro Connector near the Higgins and Douglas buildings are making progress for public transportation
2. Proper Hotel to debut its DTLA location within the next 2 weeks (We already have one in Santa Monica https://www.properhotel.com/santa-monica/ )
3. The State Historic Park is hosting a slew of summer events, including concerts
4. The Broad museum opened back up and already booked weeks ahead
5. Restaurants are going crazy, look at all the outdoor dining going on!
6. WeWork offices all over the neighborhood are picking back up as people who work from home are needing a new atmosphere from time to time--it's not always easy to work in a loft when you've got cats and dogs walking in front of monitors and Fedex knocking on your door every 2 hours!
7. Buildings are wrapping up remodels
8. Filming is back in full force as every other street becomes a film or commercial set
9. Farmers Markets are back on
10. Investment activity is picking up as good ROI units are selling
11. USC, FIDM, SciArc, Loyola are all back in session in the Fall!
12. DCBID begins its DTLA IS OPEN campaign http://www.ladowntownnews.com/news/bid-begins-dtla-is-open-campaign/article_f9172fdc-d0a2-11eb-8be3-dff2749b0d5e.html
13. Comic Con, Lakers, Clippers, etc are all back!
You always have to be cautious in unprecedented times, but there's no doubt been signs of some recovery in LA and especially DTLA.
Single family homes are still super hot, with no signs of slowdown in 2021. Low inventory is fueling high prices because we're at that point again where owners are holding on since they can't buy any cheaper even if they sell and gain nice equity profits. Plus too many buyers and low interest rates. https://www.redfin.com/news/
The single family/suburban boom is also now lifting prices of for DTLA again from 2020's setback. Here in DTLA, we're seeing an influx of savvy east coasters and bay area buyers who are seeing the value in prime buildings, Mills Act properties, and the growing number of companies coming back to the office in DTLA. https://www.eastbaytimes.com/
And Bitcoin may become a regular currency for paying rents! https://www.yahoo.com/entertainment/first-tesla-now-rent-california-205817713.html
While recovery is slowly happening, many small businesses all over especially DTLA, have suffered not only due to the the lockdowns but due to last year's protests. Help support by opting to dine at the smaller establishments, buy gifts from places like the Flower Mart and the Fashion District or Row DTLA.
Some of my faves:
1. Grand Central Market (Historic Core)
https://www.grandcentralmarket.com/.
2. Flower Mart (Fashion District)
http://originallaflowermarket.com/
3. Raw Materials Art Supplies (Fashion District)
https://fashiondistrict.org/go/raw-materials-art-supplies
4. Birdies (South Park)
http://birdiesla.com/
5. Badmaash (Historic Core)
https://www.badmaashla.com/
6. Factory Kitchen (Arts District)
https://thefactorykitchen.com/
7. Throw Clay Pottery & Studio (South Park)
https://www.throwclayla.com/classes-1
8. Howlin Rays (Chinatown)
https://howlinrays.com/
9. Bohemian Crystal Beads Factory (Fashion District)
https://beadsfactory.com/bohemian-crystal-rhinestone.html
10. Maccheroni Republic (Historic Core)
https://maccheronirepublic.com/
11. Marugame Monzo (Little Tokyo)
https://marugamemonzola.com/
12. Broken Mouth (Fashion District)
https://www.eatbrokenmouth.com/
13. Le Box Blanc (South Park)
https://www.leboxblanc.com/
14. Redbird (Historic Core)
https://redbird.la/
15. Dylan Lex (@Row DTLA - Produce District)
https://rowdtla.com/collective/dylanlex
16. Frame Pizzeria (South Park)
https://www.framepizzeria.com/
17. 10e (Financial District)
http://www.10erestaurant.com/
18. Sonoratown (Fashion District)
https://www.sonoratown.com/about.html
19. Prank (South Park)
https://prankbar.com/
20. Dylan Lex (@Row DTLA - Produce District)
https://rowdtla.com/collective/dylanlex
While most dense urban centers took a backseat to the suburbs during COVID, there's been signs of people moving back to city centers, particularly in DTLA. Whenever there's a shake up and prices get depressed, those with long term holding plans always come out of the woodwork and buy.
Investors, city dwellers from NYC, SF, Chicago, Seattle, and other metro areas have been moving into DTLA according to recent sales and leases from other DTLA realtors. There's been a noticeable number of people from out of state moving to DTLA due it's dense city environment and of course the weather. With outdoor dining returning, and indoor dining at minimal capacity, the ability to walk outside in winter to 70-degree sunshine, a slew of activities within 1-2 hours of anywhere (skiing, hiking, lakes, wineries, mountains, beaches), there's a lot going for DTLA.
Sales activity has increased about 8-10% this year from last, and prices have ticked up about 3% from last year. DTLA is still down overall about 7% in prices from pre-COVID times.
Leases are up now too, with more people feeling safer in general and rather than moving out of a walkable area, there are lots of people who are moving within DTLA and trying out new buildings and neighborhoods.
Entering Spring and Summer, the hope is that with more people vaccinated, the worst is behind us and can move forward to heal, resume business activities, and do our part to help keep the smallest businesses afloat.
The suburbs are going crazy with multiple offers and way over-bids. A recent 2 bed 2 bath Mt. Washington house went from $995k to a final sale price of $1.485M. The activity in DTLA has been mellow since the middle of 2020, and now it's starting to pick up. Buyers who are still hardcore about walkability and centrality are taking advantage of the lack of bidding wars in an area that is still exciting, and where there's development happening in the background. And the best kept secret: The highest concentration of Mills Act Buildings and residences in all of LA.
Recent Sales in DTLA of unique properties:
Textile Lofts #405 - Cutest light-filled corner unit in the fashion district. Parking, storage unit, and Mills Act! https://www.themls.com/mlslistingphoto/listing/slideshow/#/20-585120
Textile Lofts #404 - Cutest light-filled corner unit in the fashion district. Parking, storage unit, and Mills Act! https://www.themls.com/mlslistingphoto/listing/slideshow/#/20-585120
Flower Street Lofts #312 - Craziest price/sf in South Park. Includes 2 parking spaces. Amazing deal. https://www.themls.com/mlslistingphoto/listing/slideshow/#/AR20193757MR
Rowan Lofts #102 - Sexy 2-story, 2 bath loft with rare outdoor space, one of only a dozen! And Mills Act! https://www.themls.com/mlslistingphoto/listing/slideshow/#/20-610336
Recently in escrow:
Barker Block Lofts #502 - Someone got a deal on 1330sf! https://www.themls.com/mlslistingphoto/listing/slideshow/#/19-524406
Higgins Loft #1001 - Penthouse loft, these are almost never on sale. Private rooftop patio. Mills Act too. https://www.themls.com/mlslistingphoto/listing/slideshow/#/21-682076
Available for sale:
1100 Wilshire #1705 & 1706 - Rarely on the market, only 5 of these with a terrace in the entire building! https://www.themls.com/mlslistingphoto/listing/slideshow/#/20-622374
https://www.themls.com/mlslistingphoto/listing/slideshow/#/20-660640
Douglas Loft #4D - Charming, includes rare underground parking space, Mills Act. https://www.themls.com/mlslistingphoto/listing/slideshow/#/21-685716
Molino Loft #113 - Arts District gem with a patio! Nearly 1800sf! https://www.themls.com/mlslistingphoto/listing/slideshow/#/20-635760
Eckardt Loft #707 - Top floor unit in a Mills Act Building! https://www.themls.com/mlslistingphoto/listing/slideshow/#/21-677502
Elleven #1006 - Beautifully maintain loft in a top notch LEED certified building in South Park. https://www.themls.com/mlslistingphoto/listing/slideshow/#/21-682634
Eastern Columbia Loft #1210 - First time on the market, 4-level penthouse in Mills Act gem. https://www.themls.com/mlslistingphoto/listing/slideshow/#/20-652400
Pan American Loft #509 - First time on the market, rare Mill Act penthouse with private rooftop patio. https://www.themls.com/mlslistingphoto/listing/slideshow/#/20-655240
Bartlett Loft #1402 - Another Mills Act loft with a private rooftop patio! https://www.themls.com/mlslistingphoto/listing/slideshow/#/20-595482
LA real estate is very complicated. You have so many types of housing, so many different neighborhoods, so many different hubs of commerce, and so much different geography, all within 30-45 minutes of drive time. This is why there's not a blanket answer that represents exacty what went on, and what's going on in LA RE.
We know commercial real estate was killed last year. What do you expect when governments lock down offices, and companies scramble to begin the work from home phase? While most of the mid-to-small commercial buildings were destroyed, some of the high profile buildings in central locations like Culver City, DTLA, and Burbank, were snapped up for pennies by developers who have grand plans, like updated office space for hybrid office/home workers.
One of the industries that killed it in 2020 was residential real estate--mainly for single family homes. We all know the story, everyone fleeing smaller apartments and condos to buy and rent houses with yards and space to work, exercise, etc. I wonder what will happen once gyms and shops are safe to open up, will people get sick of doing everything at home and venture out? For now, we're still riding the single family home wave and prices are slated to go up another 4% from last year.
Condos took a big first hit when the pandemic started, as people left their high rises for sprawl. However, there's also been an influx of people who don't want a huge house to maintain, don't want to live in sprawling neighborhoods in the valley, who want to be closer to the city centers. These folks are buying condos, and that's helped the slower market.
Relocation companies killing it. Another sign of the times. Relocation companies are busy transplanting people to different cities, and this is propping up the rental market as people "try out" areas. So the rental market should be great in 2021, right? Depends on the stock. If you're a single family residence in a great location, the rental should fly off the shelf. If you're a condo in DTLA, you need to up the game because there's lots of competition. Updated appliances, kitchens, bathrooms, interesting amenities--all things that will help in a slower market.
While the suburbs and inner burbs are performing the best, some savvy buyers are snapping up prime property deals in cities like NYC and DTLA.
Recent sales in DTLA:
