One year in the real estate market
LOS ANGELES – Spectrum News first featured Meah Burstein, 26, and Lenard Gorokhov, 28, in July. The couple, who had just gotten engaged, lived in Burstein’s parents’ guesthouse and decided to forgo a big wedding in order to save money to buy their first home.
What would you like to know
- In 2021, competition intensified in the LA real estate market
- 30-year fixed rate mortgage averages have fallen and are still relatively low
- More millennials are entering the housing market and looking to buy single family homes
- Experts expect house prices to stay high, mortgage rates to stay low and the housing market to remain tough
However, over the past summer and throughout the pandemic, the California real estate market has become exceptionally difficult to navigate due to price increases, low mortgage rates and competition.
Burstein, a tech recruiter and Gorokhov, a lawyer, had rented an apartment in downtown LA until the pandemic when they changed their plans.
âWe could have stayed there for another year, but because COVID hit we saw a greater need for space. I always went to work from home. It made more sense for us to have two home workspaces, âsaid Burstein.
Their stay in the guesthouse was to last a few months, but it turned into a year-long search.
âIt was a really difficult experience. From what I understand, it’s harder than it’s ever been in LA. We remain hopeful things will slow down, âGorokhov said in July.
The couple worked with real estate agent Kevin Stewart and found they were often in competition with many others, in part because so many young people entered the housing market.
âI know in California and in many big markets there are a lot of young professionals making a lot of money. They are getting smarter and want to capitalize on the market, and not waste money on rent, âsaid Stewart.
In January 2021, 30 years old fixed rate mortgages in the United States was 2.65%, an all-time low. Now, in December, they are at 3.05%.
Professor Richard Green, director of the USC Lusk Center for Real Estate, said these rates make buying a home an attractive prospect.
âWe have had bad inflation numbers over the past few months. The Fed announced the other day that it was going to raise rates, but if we look at history, these are the lowest 10-year rates ever, âhe said.
The rates coupled with the pandemic and the arrival of new millennials on the market have created a squeeze that Green believes could continue until the New Years.
“Unless there is a sharp hike in interest rates or unless omicron shuts everything down and kicks us all out, there is not enough housing and the pressure on price continues to exist. “
Additionally, as prices, particularly in California, remain high, Eric Sussman, assistant professor of accounting and real estate at the University of California, Los Angeles, said social, political and pandemic events influence the market.
âWhen you have setbacks in the virus, setbacks with Biden’s legislation, it dulls the mood and it impacts the psychology of people and the demand for housing,â Professor Sussman said.
Despite the new twist and a change in morale, Professor Sussman said housing in California, especially Los Angeles, is still a hot commodity, and that is unlikely to change.
âThe 10-year cash flow is still below 1.5% and mortgage rates have not budged. â¦ Supply and demand are good, interest rates won’t move that much – don’t think house prices are going to go down, âhe said.
This means that patience is key when it comes to hunting for a house in Los Angeles, something Burstein and Gorokhov learned firsthand throughout their year of research, but in October they found the perfect solution, almost exactly a year since they moved into the guest house. The couple said there were times when they almost gave up hope.
âI was shocked. I knew it was a tough business, but I thought, ‘I can do my research, I know how it works.’ Now we just have to find a house, but it was a lot more difficult than I thought, âGorokhov said.
The couple discovered that other buyers were offering entirely in cash, which they weren’t able to do.
âMaximizing our budget and still not getting the house felt like we were defeated,â Burstein said.
However, they said with each setback they learn more about California’s housing, real estate and temperamental climate. This made the move into their home even more rewarding.
âIt’s very clear what our future will look like. We will be here for at least 10 to 15 years, “said Burstein.” This security is reassuring and even today when I wake up I still can’t believe this is my home. “