Global fashion houses have displaced Rodeo Drive’s mom-and-pop retailers. The local food scene has achieved international reputation. Double-digit million-dollar compounds now dwarf
one-time million-dollar mansions.

Still, I love this place. There’s nowhere else on earth like it. Especially when it comes to our geography, coastal climate, envious lifestyle, beautiful people, stylish cars, and ever-increasing
home values.

Fact is, the average value of a luxury home in the Los Angeles area has risen for 10 consecutive quarters. And values set all-time highs in each of the first three quarters of 2004. Overall, Los Angeles home values jumped 13.2% from the second quarter of 2003 to the second quarter of 2004 and 27.2% from the third quarter of 2003—the largest year-over-year increase recorded by the Index for the Los Angeles area. The average luxury home in Los Angeles is now valued at a record $1.95 million—up $417,000 from a year ago.

Beyond Los Angeles
By contrast, after years of posting breathtaking price increases, several of the nation’s biggest home markets are witnessing trouble. Double-digit annual gains are stalling. Homes are remaining on the market longer. Home prices in some areas are actually falling.

Nationwide, home price appreciation has moderated significantly, according to Office of Federal Housing Enterprise Oversight, the government agency that tracks home cost trends. Its conclusions are based on data from Freddie Mac and Fannie Mae, the nation’s two biggest sources of mortgage capital.

According to the California Association of Realtors (CAR), the median price of an existing home in California in November 2004 increased 23.1 percent and sales increased 4 percent compared with the same period a year ago. The median price of a home in California continued its upward march, increasing by double-digits for the 36th month in a row to $473,260. The CAR reported in mid- January that after four consecutive record years, California home sales are expected to drop slightly but remain close to record levels in 2005.

David Lereah, the association’s chief economist, said, “No one expects home sales to set a record every year, with some ebb and flow normal as market conditions and needs shift. Even so, home sales will stay well above what was considered to be a healthy level
in the late 1990s. The population has grown, household formation is strong and demographics tell us this trend will continue. In addition, a similar mix of economic conditions is expected in the U.S. for the foreseeable future.”

2005 Westside Forecast
As we enter 2005, the Los Angeles Westside market is hotter than ever. Inventory is in short supply and demand is high. There’s now an influx of foreign buyers because of the strong Euro. Despite the extraordinary year-over-year gain, Los Angeles real estate is not overvalued because of the quality of life and strength of the region’s economy. Indeed, the market is
certainly as strong as we’ve seen it. There is far more wealth than there is an availability of luxury homes. The availability of cheap money and the lack of alternative investments are also fueling the luxury home market. In short: it’s still the hottest market we’ve seen in the last three decades.

Don’t you just love this Westside Story?

About the Author
Mark Cohen is president of Beverly Hills-based Cohen Financial Group––rated the “#1 Mortgage Broker in California” for eight years in a row by Mortgage Originator Magazine and “Best of LA” by Los Angeles Magazine. Learn more at www.cohenfinancialgroup.com. You may reach Mark at (310) 777-5401.

back