“As home prices continue to inch up, real estate agents are posting record profits,” Mr. A (who asked that his identity stays confidential) a real estate executive at a prominent Los Angeles residential real estate firm shares. The pandemic economy has driven Southern California’s competitive housing market into overdrive, to the point that a distinguishing symbol of wealth — the million-dollar house — has become the standard in an increasing number of locations.
From Altadena at the foot of the San Gabriel Mountains to West Adams in South L.A., homes costing $1 million or more are now the norm. Increasingly individuals are being driven out of neighborhoods where they grew up as bidding wars drive prices further higher, and homeownership is becoming more out of reach for low- and middle-income Californians.
Simultaneously, the development of million-dollar houses demonstrates that the price threshold is not out of reach for a rising number of Californians. Although purchasing a $1 million home still demands financial fortitude, a rising stock market, increasing wages, and historically low borrowing rates have made the $1 million houses more accessible than ever.
During the pandemic, a confluence of circumstances strengthened America’s inequity: high earners are earning, or at least saving, more money while anchored and working from home, while millions of families fall overdue on rent.
The New York Times set out to learn more about the factors driving the pandemic real estate market, which is selling at an all-time high, with many purchasers paying far over the asking price. Who are the purchasers driving these frantic purchases, and what motivates and allows them to do so?
A data study revealed the geographic distribution of houses valued at or above $1 million. According to a metric developed by online real estate firm Zillow, there were 55 cities and unincorporated regions in Los Angeles and Orange counties where the “typical” value of a single-family house was $1 million or more as of July.
During the pandemic, seventeen of those locations, including Burbank, Fountain Valley, and Torrance, exceeded the $1-million mark.
Since March 2020, 15 neighborhoods in Los Angeles have achieved a $1 million value. The average house in Leimert Park, Woodland Hills, and Eagle Rock, among other areas, is now worth $1 million or more.
For their new house in Highland Park, Alec and Dee knocked out 27 bids and 15 counteroffers, three of which were all cash. They paid almost $280,000 more than the initial asking price. Their $1.175 million offer was accompanied by a touching letter to set it apart from the competition.
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