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Only 17% Of LA Households Earn Enough To Buy A Home. It’s no secret that buying a home in the Los Angeles area is expensive. But a new report shows that homeownership is only getting further out of reach for most buyers, with just 17% of L.A. County households earning enough to afford a median-priced home. The California Association of Realtors released its “2022 Affordability Report” last Wednesday. The real estate trade association determined that local households needed to earn at least $192,800 per year in order to afford L.A. County’s 2022 median home price of $849,410. Those figures assumed buyers had enough money on hand for a 20% down payment ($170,000). According to the report, about 25% of white households and 22% of Asian households in L.A. County could afford a median-priced home. Only 10% of Latino households and 9% of Black households earned enough to qualify. Home prices in the L.A. area have declined slightly over the past year, but interest rates have gone up, causing monthly mortgage, tax and insurance payments to soar to around $4,820, according to the report. Because of this increase, the share of L.A. County households that could afford to buy a home declined from about one-in-five in 2021 to one-in-six in 2022. Demographers have pointed to unaffordable housing as a key driver in L.A. County’s declining population. But more importantly, it makes it harder and harder for investors to sell houses. Bottom line: Investors should be investing out-of-state.
California’s $300 Million Home Loans Are Already Exhausted. California lawmakers marketed its new loan program for first-time home buyers as a “Dream For All.” But just 11 days after applications opened, the initial pot of money is tapped out, sucked dry by eager house hunters. It turns out the “dream” was only for a lucky few thousand borrowers (a disproportionate number of them white, non-Latino and living in the Sacramento area). The Dream for All program was paused on April 6, less than two weeks after the California Housing Finance Agency said it would make the program available to lenders. About $288 million in initial funding will be provided to only 2,564 homebuyers, according to an internal document obtained by CalMatters. The complicated program involves the state paying the upfront costs for buying a home (namely, the down payment) in exchange for a share in the home’’s value when it is sold, refinanced or transferred. If the home appreciates in value, those gains to the state would then be used to fund the next borrowers. The program was meant, in part, to help address California’s ethnic and racial wealth gap, with Black and Latino families not having the required down payment. According to the initial characteristics, roughly two-thirds of the beneficiaries went to those making less than $125,000. The average loan was a little more than $112,000. But those figures also show that the program was disproportionately used by white homebuyers. Demographic data in the document obtained by CalMatters showed that 65% of initial buyers identified as white, 18% as Asian, 4% as Black, 1% as Native Hawaiian or Other Pacific Islander and 1% American Indian or Alaska Native. Ethnically, 62% of homebuyers identified as not Hispanic or Latino while about 34% did. Geographically, the funds weren’t spread out evenly across the state either. Sacramento County, home to the state capital, received 11% of the program’s funds, despite making up just 4% of the state population. Los Angeles County, in contrast, received 9% of the money, despite being home to a quarter of all Californians. Eric Johnson, an agency spokesman, confirmed on Monday that the program would be paused until more funding could be allocated by the state legislature.
Private Investors Buy More Commercial Real Estate Than Institutions. As economic turmoil has roiled financial markets and institutions retreat from real estate, wealthy individuals have become the dominant buying class. Private investors were the most active buyers for worldwide commercial real estate last year, purchasing $455B in properties, or 41% of the global investment total, according to a Knight Frank Global Wealth Report. For the first time on record, private buyers' share of the market eclipsed those of institutional investors, which bought a total of $440B last year (a 28% decline in their investment activity in 2021), the Knight Frank report found. Private wealth from the U.S. in particular is projected to be the most active of those investors this year as well. Private buying activity fell just 8% from last year, by comparison. The hunt for value is evident in which asset classes investors put money into. Private buyers bought $62.5B of retail properties last year, 9% more than in 2021, and $30.6B of hotels, a 17% increase. Offices were the second-most-active asset class, with $84.1B of purchases, a 4% dip from 2021. Private investors spent $194.9B on apartment properties last year, a 13% decline from 2021. Private buyers' newfound perch atop the investment pecking order reflects the aftermath of the Federal Reserve's interest rate hikes, which have changed the risk calculus for investing. All-cash buyers were increasingly the last bidder standing for properties at the end of last year, as lending dried up.
Private Home Designed by Thomas Jefferson On Virginia Farm. Thomas Jefferson was a pretty amazing person. In between writing the Declaration of Independence, serving as Secretary of State under George Washington, Vice President under John Adams, and then serving as the third President of the United States, his favorite hobby was architecture. His passion (besides wine) was designing and building homes. Jefferson’s dream for a new American architectural style was based on the classical ideals of ancient Greece and Rome, when democracy flourished. And in fact, as President, Jefferson modified the White House to add typical Palladian elements, including the two lateral wings and the pronaos (the porch that rests on columns, at both the north and the south entrances). The last designed residence attributed to Jefferson is known as Edgemont, a Palladian mansion in the foothills of the Blue Ridge Mountains, near Charlottesville, Virginia. Surrounded by 572 acres of rolling Virginia farmland, with the Hardware River running through the lush fields, the estate is available for sale for $19 million. The mansion was built in 1796. There are three bedrooms and 3.5 bathrooms within 4,836 sq ft. The ingeniously efficient layout of Edgemont’s interiors is quintessentially Jeffersonian. The two-level structure appears to be a single-story home from the front, another Jeffersonian device. The main entry is on the upper floor and opens into a reception hall with walls covered by a sweeping mural of a hunting scene. Beautifully maintained and carefully updated for the 21st century, surely Jefferson would be happy Edgement is doing so well all these 226 years later. The $19 million price tag, however, might shock him.
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