LOS ANGELES — Spectrum News first introduced Meah Burstein, 26, and Lenard Gorokhov, 28, in July. The couple, who were newly engaged were living in Burstein’s parents’ guest house and had decided to forgo a big wedding in order to save up to buy their first home.
What You Need To Know
- In 2021 competition increased within the LA real estate market
- The 30-year fixed rate mortgage averages fell and are still comparatively low
- More millennials are entering the housing market looking to buy single family homes
- Experts expect house prices to stay high, mortgage rates to remain low and the real estate market to remain challenging
However, this past summer and throughout the pandemic, California’s real estate market became exceptionally challenging to navigate due to price increases, low mortgage rates and competition.
Burstein, a tech recruiter and Gorokhov an attorney, had been renting an apartment in downtown LA up until the pandemic when they changed their plans.
“We could have been staying there for another year, but because COVID hit we saw more of a need for space. I was always going to work from home. It made more sense for us to have two work from home spaces,” Burstein said.
Their stay in the guesthouse was meant to last a few months but it turned into a yearlong search.
“It’s been a really difficult experience. From my understanding, it is more difficult than it has ever been in LA. We’re holding out hope that things slow down,” Gorokhov said in July.
The couple worked with realtor Kevin Stewart and found they were often competing with many others, in part because so many young people entered the housing market.
“I know in California and in a lot of big markets, there are a lot of young professionals who are making good money. They are getting smarter and want to capitalize on the market, and not throw money away on rent,” Stewart said.
In January of 2021, 30-year fixed rate mortgages in the U.S. were at 2.65%, a historic low. Now, in December, they are at 3.05%.
Professor Richard Green, director of the USC Lusk Center for Real Estate said those rates make buying a home an enticing prospect.
“We’ve had bad inflation numbers for the past few months. We’ve had the FED announcing the other day they are going to raise rates, but if we look at history, this is the lowest 10-year rates have ever been,” he said.
The rates coupled with the pandemic and more millennials entering the market has created a squeeze that Green said, may continue into the New Year.
“Unless there is a big spike in interest rates or unless omicron shuts everything down and sends us all back in doors, there’s not enough housing and there continues to be price pressure.”
In addition, while prices, particularly in California, remain high, Eric Sussman, adjunct accounting and real estate professor at the University of California Los Angeles, said social, political and pandemic related events influence the market.
“When you have setbacks in the virus, setbacks with Biden’s legislation, it dampens mood and that impacts people’s psychology and housing demand,” Professor Sussman said.
Despite the new variant and a change in moral, Professor Sussman said housing in California, particularly Los Angeles, is always a highly sought-after commodity, and that likely will not change.
“The 10-year treasury still remains below 1.5% and mortgage rates haven’t moved. ... It is good supply and demand, interest rates will not move all that much — don’t think housing prices will fall,” he said.
It means patience is key when It comes to house hunting in Los Angeles, something Burstein and Gorokhov learned first-hand throughout their year of searching, but in October, they found the perfect fit, almost a year exactly since they had moved into the guest house. The couple said there were moments where they almost lost hope.
“I was shocked. I knew it was a difficult endeavor, but I thought ‘I can do my research, I know how it works.’ Now we just have to find a home, but it was much harder than I thought,” Gorokhov said.
The couple found that other buyers were offering entirely cash, something they were not able to do.
“Maxing out our budget and still not getting the house did feel defeating,” Burstein said.
However, they said with each setback they learned more about housing, real estate and the fickle California climate. It made moving into their house even more rewarding.
“It’s very clear what our future will look like. We will be here for at least 10-15 years," Burstein said. "That security is reassuring and even today, waking up, I still can’t believe this is my house."