This Real Estate Market in Los Angeles and Beverly Hills, CA Is the Strongest of Our Lifetime
This Real Estate Market in Los Angeles and Beverly Hills, CA Is the Strongest of Our Lifetime | Christophe Choo at Coldwell Banker Global Luxury is Your Local Real Estate Expert
When examining the current housing market in Los Angeles and Beverly Hills, CA, one cannot ignore its exceptional strength. In fact, it may be the most robust housing market we have ever seen. Let's explore two fundamental factors that support this claim.
- The Current Mortgage Rate on Existing Mortgages To begin, let's consider the rates on existing mortgages. According to the Federal Housing Finance Agency (FHFA), in the fourth quarter of the previous year, over 80% of existing mortgages had rates below 5%. This is a significant statistic. Even more noteworthy, more than 50% of mortgages had rates below 4%.
Amidst media discussions about a potential foreclosure crisis or rising homeowner defaults, it's important to understand that homeowners with such favorable mortgage rates will do everything in their power to retain their homes. This is because they cannot find another house or even an apartment to rent at a similar cost. Their current mortgage payments are highly affordable. Even downsizing could result in higher costs due to today's higher mortgage rates.
This reality provides a solid foundation for the housing market. The presence of numerous homeowners with low mortgage rates helps prevent a flood of foreclosures, reminiscent of the 2008 crisis.
- The Amount of Homeowner Equity Secondly, Americans currently possess substantial home equity. According to the Census and ATTOM, approximately 68% of homeowners have either paid off their mortgages or hold at least 50% equity.
In the industry, this is referred to as being "equity rich." This is a significant factor because if we reflect on the circumstances of 2008, some individuals had to make the difficult decision to abandon their homes due to owing more on the property than its worth.
However, the current situation differs greatly as homeowners have accumulated considerable equity in just the past few years. When homeowners have significant equity, it mitigates the likelihood of distressed properties flooding the market, similar to what occurred during the crash. This abundance of equity contributes to an incredibly sturdy foundation for today's housing market.
In Conclusion The housing market we find ourselves in today is undeniably one of the most foundationally strong markets we have ever experienced. Homeowners are determined to retain their current mortgage rates, and they possess a substantial amount of equity. These factors set the present circumstances apart from those of 2008, highlighting the fundamental differences between the two periods.