The pandemic economy pushed Southern California's competitive housing market into overdrive, producing many more million-plus-dollar homes. khouriandrew and jflem94 report:
Take a look at what $1 million buys in six L.A. neighborhoods.
Facing 15 other counterbidders, Zopf, 35, and Foster, 32, came back with $1.15 million, including a clause to raise to $1.175 million if their bid was matched. In early September 2006, if a buyer got the 6.47% average mortgage rate and put 20% down on a $1-million house, they would have a monthly mortgage payment of $6,266 a month, including property tax and insurance, according to a Redfin payment calculator.In 2018, when interest rates were 4.54%, the same $1-million house, with the same down payment, would cost $5,298 a month.
“If there is a limited supply of housing and there are all these high earners, housing increasingly becomes like a luxury good,” said Redfin chief economist Daryl Fairweather. “People with deep pockets can keep bidding the prices up.” Zopf, co-founder of the healthcare company Wellth, said he received a windfall from a New York startup he invested in that recently sold to Pandora. Combined with the couple’s income, they saved just enough to afford a $120,000, or 10%, down payment on a 30-year loan with a 3.5% interest rate.
Mamasig, a 37-year-old real estate asset manager, said she bought the house for $360,000 in 2015. The equity funded their entire 30% down payment on a $1-million house in Torrance.Without such a sizable sum, Mamasig said, getting into a $1-million house would have required getting “cheaper cars, or you know, [doing] other things to move the finances around.”Making the market more competitive and eating into crucial supply are investors, who buy houses to rent out or to renovate and sell off.
Most buyers, though, are still people looking to call a house a home. In a recurring Southern California trend, many find they must head east to achieve that dream, driving up prices in neighborhoods more affordable to them. As wealthier, often white, people move into Latino and Black neighborhoods that are predominantly low- and middle-income, longtime residents face displacement. New businesses price out local shops.
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