Los Feliz real estate is already in high demand with a low inventory of homes to go around, but things are about to get even more exciting for three big reasons:
"Hipster Thermo-Dynamics" - Hipsters traveling into Northeast L.A. and further East are being faced with longer commutes. Some are turning back West.
The Real Estate “Celebration Dip” - Neighborhoods with record-breaking sales are having difficulties sustaining those kinds of prices as they continue to push and create new neighborhood standards.
The “Flight” from Beverly Hills - There are certain homeowners starting a “flight” from the city limits of Beverly Hills, and they’re leaving in all directions—one of those directions being back East towards historic neighborhoods like Los Feliz.
This is bigger than just knowing the inventory and sales trends of one specific neighborhood; this is large-scale, market-driven Real Estate Meteorology.
Let’s get started:
Reason 1: Hipster Thermo-Dynamics
The reason why Hipsters originally left their natural habitats to plant roots in Northeast L.A. was simple: Cheap Real Estate Prices. However, the benefits of saving money came with their own cost, which is a longer commute to work and nightlife. This is called an “Opportunity Cost”. You get one thing, but have to give up another.
If we stretch the savings of real estate prices by lengthening the distance across Los Angeles, we run into another economic concept, “The Law of Diminishing Returns”. This is why Rancho Cucamonga is not a hipster destination; it’s too far from their vinyl record stores and vintage furniture shops. This brings us to what I call the “Flannel Ambivalence”, which has split the Hipsters into three groups:
Most will continue further east into El Sereno looking for cheap real estate prices.
Others will stay in Northeast L.A. (Highland Park, Eagle Rock, etc.)
Then there are some turning back West closer to their original “Hipster Hubs” (i.e. – Sunset Triangle).
For those in Group 3 who have reached their “Diminishing Returns” and are turning back West, they're looking for cheaper alternatives to the original hipster epicenter in Silver Lake.
The reason why Hipsters originally left their natural habitats to plant roots in Northeast L.A. was simple: Cheap Real Estate Prices.
For example, one of those alternatives is Franklin Hills in the southeast portion of Los Feliz. On average, this neighborhood is a few hundred thousand dollars cheaper compared to the hills in Silver Lake.
Going forward, we will use Franklin Hills as our “Case Study Neighborhood”.
Reason 2: The Real Estate “Celebration Dip”
Look at the most popular neighborhood in Northeast L.A. right now (Eagle Rock), and you will hear agents say that the market has “softened” with fewer homes selling over asking price, longer days on market, etc.
The same thing happened in our case study neighborhood, Franklin Hills in Los Feliz. They broke records when average quarterly sales prices went over the $1 million mark in early 2014, but couldn’t sustain those kinds of prices until later in 2015.
When Franklin Hills finally gained traction a few months ago, they had an incredible Fall Season with even more record-breaking sales. I compare this phenomenon to a football team that over-celebrates in the end zone after a touchdown and can’t find their rhythm again.
It’s a very common economic concept that has to do with supply and demand, and it happens when neighborhoods reach new milestones and keep pushing upwards. Franklin Hills just finished their “celebration dip”. Eagle Rock is currently having one. Highland Park will most likely see one in the next 12 months, and Silver Lake’s dip went unnoticed because theirs happened during the real estate bubble. What does this mean for Franklin Hills in Los Feliz?
The neighborhood has created a new real estate "pricing paradigm".
Some have been waiting for values to rise, so they can “break even” and sell.
Others will take their equity and move “north of the Boulevard”.
And more are moving east to Silver Lake and further into Northeast L.A. to capitalize on their cooling-off period right now before those prices take off again.
The Celebration Dip is a very common economic concept that has to do with supply and demand, and it happens when neighborhoods reach new milestones and keep pushing upwards.
Reason 3: The “Flight” from Beverly Hills
I am seeing a trend of residents in Beverly Hills leaving the city in all directions:
West to Santa Monica, Brentwood, the Palisades, etc.
South into the beach communities
North to the Hollywood Hills
East to historic neighborhoods like Los Feliz & Hancock Park
With all the new development in Beverly Hills, the city is going through a giant transformation. Every few days, when I read through my agent-to-agent “real estate needs”, there is always some developer looking for a property with a good view, and no preference in price, size, style, or quality of home. This is because they’re going to bulldoze the property and build some Scarface-sized “giga-mansion”. The long-time residents aren’t too thrilled about this new trend, but interestingly, prices are not decreasing. In fact, the city of Beverly Hills had quite a year. From January to December of 2015, the average list price doubled.
That’s right, doubled. Nevertheless, many homeowners have been cashing in on this appreciation, and getting out “while the getting is good”.
Beverly Hills residents live in this city for a few reasons: exclusivity, status, and the beautiful landscape. Obviously, with all the new development and new residents, exclusivity is moot. And, with all the new ultra-modern giga-mansions going up, it doesn’t really appeal to the romantics.
From January to December of 2015, the average list price in Beverly Hills doubled. That’s right, doubled.
Do you know where there is an abundance of those types of old historic neighborhoods? Los Feliz, of course!
Neighborhoods like Los Feliz and Hancock Park are “Classic Hollywood” neighborhoods, and they scream affluence and sophistication. And, I don’t have to tell you, they’re full of historic and notable architectural masterpieces, so for the homeowners who are into this sort of thing, Los Feliz is an obvious choice.
As you can see, the Hipster Thermo-Dynamics are pushing buyers back West past the Sunset Triangle. Developers are pushing long-time Beverly Hills residents East towards Old Hollywood. And neighborhoods like Franklin Hills are coming out of their Celebration Dip stronger than ever and poised for a big year.
Timing the Real Estate Market
These three events have created the perfect storm to buy and sell property—especially during these late winter / early spring months. You might ask, “Isn’t right now a bad time to move?”
Short answer: No.
Actually, for neighborhoods like Los Feliz, late winter / early spring is the BEST time to buy and sell. Here’s why: There are half the amount of active listings in the winter, and the same number of closed transactions. In other words, it doesn’t matter how many properties are for sale or what the "inventory" (supply) looks like. This has been true year after year in Los Feliz. When serious buyers meet serious sellers with great homes for sale, we get fireworks.It’s Time To Get Excited about Los Feliz Real Estate
This trend has many moving pieces, so it’s much more complex than your average migration pattern. And in my opinion, its effects on the Los Feliz real estate market (more specifically, Franklin Hills) have not gotten enough attention. Sales prices are up by 45% in Los Feliz over the last four years, and even higher in Franklin Hills. Market velocity is picking up steam with more houses selling year after year.
This is great news for Sellers who have been waiting to cash in on their equity, and also perfect timing for Buyers to get into the neighborhood and ride the wave themselves. 2016 is going to be a sensational year filled with opportunities for both Buyers and Sellers. Ask me how.
This is more advanced than just knowing the inventory; this is large-scale market-driven Real Estate Meteorology.