When it comes to extravagant housing, traditional mortgage rules don’t apply
Paying for an average home is a rough process — a hefty down payment can wipe out savings, the paperwork feels endless and the mortgage often lasts decades.
In the upper echelons of the Southland residential real estate lender payday loans New Hampshire market, financing isn’t much easier — it just involves more eager-to-please private bankers, vast reserves of cash and massive, multimillion-dollar loans.
Los Angeles is the fifth most important center of wealth in the world, based on the current and projected population of well-heeled residents, the value of property investments and connectivity to other global hubs, according to the most recent wealth report from British consultancy Knight Frank. Only London, New York, Hong Kong and Shanghai rank higher.
Prices in the city’s luxury residential market ballooned 5.3% from 2015 to 2016 — the largest increase in the U.S. behind Seattle’s 9.7% upswing, according to the report.
Nationwide, the median price for a luxury home at the end of July was $1.6 million, according to the Institute for Luxury Home Marketing. In Los Angeles, it’s nearly $4.1 million.
Most high-end buyers in Southern California are locally based, although many hail from abroad.
“The buyer of the $10-million-plus property comes from everywhere,” said Stan Smith, managing director of Teles Properties, a Beverly Hills-based luxury real estate brokerage. “Aside from the occasional headline-grabbing uber-celebrity, most purchasers are people you’ve never heard of.”
In this market, cash is king. So far this year in Los Angeles County, excluding Beverly Hills and West Los Angeles, 35% of homes priced $2 million or higher were purchased using all cash, according to Multiple Listing Service data provided by the California Assn. of Realtors.
But when rich home buyers don’t have the liquidity to purchase their homes outright, many turn to massive mortgages known as jumbo loans. Continue reading “When it comes to extravagant housing, traditional mortgage rules don’t apply”