With a reputation for exclusivity, luxury, and some of the most beautiful real estate in the world, Beverly Hills real estate has continually attracted a large number of fans and new inhabitants year after year. After all, what’s all the commotion about? In this article, I’d like to discuss the numerous aspects of Beverly Hills real estate that attract the world’s richest and most distinguished homeowners, and why they keep coming back. Also, I will share whether Beverly Hills real estate is going to crash or if it is just a myth!
A brief overview of Beverly Hills real estate
Beverly Hills, located in Los Angeles, is a haven for the affluent and famous and is considered one of the most glamorous towns globally. It has a total population of 33,792 people and is divided into seven distinct neighborhoods. White-collar employment accounts for 95.19% of the city’s total workforce, much higher than the national average.
More persons in this city are employed in the media than in 90% of the cities in the United States, earning it the nickname “the city of artists.” This is what gives the world-famous Beverly Hills in California its distinctive flavor.
A high-rise apartment building is the most popular kind of housing in Beverly Hills, accounting for about half of the city’s total housing units. Furthermore, single-family detached houses, duplexes, residences that have been converted into flats, and other small apartment complexes may be found in the area. The most common trait you will notice across the city is that virtually all downtowns and neighborhoods have facilities within walking distance, and there is a noticeably great deal of street activity to be seen there.
Even though the majority of people in Beverly Hills choose modest units in high-rise apartments, you will still find a mix of owner-occupied and rental properties in the area.
Possible reasons if Beverly Hills real estate crashes
There is always the possibility of losing money while purchasing a property in Southern California. Particularly in high-cost locations such as the majority of Los Angeles, West Hollywood, and Beverly Hills, among others.
The risk is higher when prices are as inflated as they seem to be today, coupled with a housing scarcity, historically low borrowing rates, and what looks to be a purchasing frenzy. The Los Angeles property market is unlikely to implode unless someone uncovers some undiscovered acreage on which tens of thousands of houses may be constructed (magically and rapidly). Still, until that happens, there is little reason to anticipate it to do so.
“The fact that the Los Angeles property market is collapsing and that you have been misled into making an imprudent house purchase is not necessarily the same thing,” says a skilled Beverly Hills realtor. Prices may begin to soften, or you may find yourself lured into overpaying for a property. Alternatively, you may have purchased your ideal house only to discover that your desired job is in a different area, forcing you to relocate.
Soaring Coronavirus cases
The only other thing that might potentially bring the Los Angeles home market to a grinding halt would be a wave of foreclosures caused by the Coronavirus outbreak. Price drops may occur if, for whatever reason, everyone is forced to sell their property at the same time.
Even this would barely make a dent in the frenzy surrounding house purchase. I don’t see this as a plausible scenario given the government assistance being provided to protect us from experiencing another severe recession. Instead of being forced to qualify for their mortgages based on income during the financial crisis, most homeowners now have a higher equity cushion than the typical homeowner had when the real estate market collapsed during the Great Recession in 2008.
Buying a Beverly Hills house based on the current market conditions
Should I buy a house in Beverly Hills based on the current market conditions? The answer is a Yes! Let me tell you why:
- Excessive waiting
Depending on how long you have been waiting (months or years), you may have lost 5, 10, or even 25% of your equity due to your inaction. A property purchased two years ago is on average 20% more costly now. Buyer paralysis – or, as it is more often called these days, the ‘wait-and-watch’ syndrome – is one of the most common reasons why prospective house buyers do not take the plunge and purchase a property.
There are various reasons why individuals would rather not live in their ideal house than be on the fence about it. The most crucial of them is unfavorable market messages sent via a plethora of communication platforms.
When it comes to Beverly Hills real estate, it is critical to take advantage of the finest offer available at the time; otherwise, prices may continue to rise, and no one will be interested in purchasing that specific property. Besides financial constraints, there are a number of additional reasons why individuals who want to purchase a house do not do so. For example, they may have been disoriented as a result of competing aims and may be approaching the whole subject of house ownership from the perspective of an investor.
Because they cannot afford residences larger than a particular size, they want to save until they are able to put a substantial down payment on a larger home. In many cases, a better awareness of the intricacies of the Beverly Hills real estate market – and the different alternatives available to them – may help them move closer to realizing their dreams of owning a property in the city.
- Real estate market trends
The real estate markets fluctuate up and down in the housing market, and the only time it truly counts is when it comes to short-term investment. If you intend to live in the house for at least four years, you should be able to purchase it at any time. It took three years or so during the Great Recession of 2007–10 before a significant resurgence in the economy occurred.
When it came to Beverly Hills real estate prices in November 2020, the median listing price of a property was $5.3 million, representing a 34.7% annual increase. According to the data, the median listing price per square foot was $1.3K. The median price of a property sold was $4.3 million.
- Beverly Hills is a market for a specific niche
The indices of employment and income are two of the essential economic indicators. Home sales are often correlated to the health of an economy, and they increase and decrease in tandem with economic activity. As economies slacken, the availability of money tends to become more and more constrained as well. The job market in Los Angeles is what distinguishes it from other cities.
Want to work in the entertainment industry? Make a move to Los Angeles. Interested in working for a production firm or in the fashion industry? Come to Los Angeles. If the rent is too expensive, consider starting with a rented apartment or a single-family house with a group of friends. In terms of housing prices, income, and employment, these factors indicate whether or not individuals can afford present and future rises in these prices.
In addition, the weather in this area is so pleasant that the majority of families prefer to relocate to this area. This is because the region receives a lot of sunlight most of the time, with the exception of a few drops of rain occasionally. This does not interfere with living a lavish lifestyle while still having enough time for leisure activities.
The facilities available in Beverly Hills and California are among the best in the world. In the immediate surroundings, you will find well-known dining establishments as well as excellent entertainment places. In addition, the health, education, and security sectors are thriving in this area, and inhabitants feel more secure when going across the neighborhood.
A physical asset consisting of real estate and the ground on which it is situated, although immovable, is subject to the forces of supply and demand just like any other asset. Because of this, the price of a house, much like the price of stocks and bonds, is highly influenced by the law of supply and demand. Prices tend to rise as demand increases and decline as supply increases. When it comes to California and Beverly Hills, not only do ordinary people want to live there, but they want celebrities, which is a major factor in the region’s skyrocketing real estate costs.
Finally, they are not vertical cities in the same way that cities such as Miami, Chicago, or New York are. In a nutshell, a vertical city is a whole human settlement encased inside a large skyscraper structure. Vertical cities offer a great solution to the issues of overpopulation and overcrowding in urban areas. The availability of living and working space is increased due to sky-high development, which helps mitigate the effects of overcrowding. Given that Beverly Hills and California have less pollution, it is no surprise that property values continue to rise.
- Current demand and supply scenario in the market
Consider the present market and ask yourself, “Is there sufficient supply at the price point or product you are considering fulfilling a demand for?” Assuming the answer is no (ask questions such as whether there are enough rentals for renters in your price range. Is there sufficient housing supply in your price range to meet demand?), then you should make a purchase. If there is an adequate or excessive supply, you should refrain from doing so.
Aside from that, I realize we are jaded, but southern California is sheltered when compared to most urban areas. In 1998, I purchased a duplex in Minneapolis for $165,000, and it is now worth around $450,000 as of 2019. Not too shabby! In 1998, I could have purchased a property in Venice Beach for $250,000, and now, on average, the same home is worth $1.6 million. This does not occur because of the differences in the nature of other marketplaces.
Knowing about prior difficulties that have arisen will assist you in identifying issues that may arise in the future. Know your past troubles and how they come about. This is where the use of a property history report may be beneficial. In the event that you’re ready to go forward now that you’ve obtained your property history, you may proceed with the loan application procedure. If you start trying to time the market, you will almost certainly miss out on all the current real estate inventory. Do not abandon your present in order to reach a future that is insecure.
- Incorporating write-offs
Remember that real estate may generate income in a variety of ways. When the economy is in a downturn, an owner may still gain money from the aforementioned principal reduction and significant write-offs and depreciation (for investments), which can result in significant additional revenue in their pocket. When you take into account appreciation, depreciation, principal reduction, and tax write-offs, a property that seems to earn 5% in cash returns on leases may, in reality, earn more than 13% after accounting for these factors.
- Interest rates are important in real estate
Our country’s level of living dictates that interest rates below 6% are deemed cheap (the average over 200 years hovers around 5.5%). It seems that no matter what the market is doing, it makes sense to leverage an asset like a home by borrowing at a low rate of 3% while earning 5-10% in appreciation or write-offs, among other things. Never forget that even the smallest change in mortgage rates may make an enormous impact on your overall financial situation.
While 0.66 percentage points lower than the average market rate may not seem like a significant difference, on a $1,000,000 loan, a rate that is 0.66 percentage points lower than the average market rate might result in savings of more than $100,000. check out Holmby Hills real estate
What should I do then? (Buy, sell, or wait?)
Everything is dependent on your hold strategy. Even if you are selling in a short period (2 years or less), it may be worthwhile to wait and time your sale, particularly if you have a fantastic spot to put your money right now. If you own a piece of real estate, now is the time to sell. The advantages outlined above are just too valuable to be put off any longer.
I always encourage what Will Rogers said: “Don’t wait to purchase real estate; acquire real estate and wait.” To summarize: When purchasing or selling a house, it is possible to lose money. If you want to prevent this, use the services of a reputable real estate agent such as Erik Brown.
My team of pros and I are constantly on the lookout for opportunities to provide our clients with the greatest prices that the Beverly Hills market offers.
I welcome you to join us anytime; as local realtors, we’d love to assist you with all your area questions and goals. If interested in learning more about buying, selling, or investing in a home in Beverly Hills or Los Angeles, we would love to be your one-stop shop. From schools to homes, we are here for you.
Connect anytime at:
Instagram, LinkedIn, and Facebook: @theerikbrown