What are your thoughts on gentrification areas still currently underway?
Example:
(I am in a boom city that went up just as much as Austin, but didn’t crash)
They put a Soho House in a otherwise shitty industrial, near ghetto area a few years ago. Because of the proximity to the ghetto it’s still cheaper than other - already gentrified - areas in the city.
Now they’re opening a Hermes store there in 2025, instead of putting it somewhere downtown, or in a mall next to Gucci etc. All the realtors are screaming from the rooftops this is the area to buy. The area still objectively sucks to live in though.
I'm curious how you would assess the fair value of a home, luxury or otherwise, in the wake of a housing boom. Using comps seems to be tricky since the value of a home should be trending downward, no? Interest rates also a factor in affordability. On the other hand, I can't imagine you could make a lowball offer on a house in that situation and not run into the owners emotional attachment.
Luxury real estate is effectively inelastic. People buy with cash and don't have 5 year hold frames they have lifetime hold frames. It's the safest real estate investment in general since you can't make more homes in the prime areas
For the average/median home, would agree, likely a lot of people levered up get laid off and lose their homes. Looking at the top areas, its a different game entirely. Ultra rich people are always rich
I am in an affluent city within South Florida… I am also on the east side of that city. While activity has certainly slowed, the value of dirt and new construction is still getting and asking ATH’s….the value of the dirt has gone up nearly 4x since 2019 and new construction values have gone up nearly 3x. It’s insane. Due to the large amount of development, there is always going to be a healthy amount of inventory. It will never be an area for the foreseeable future with thin inventory and I continue to be surprised that buyers are stepping in. We also have awful public schools, whereas anywhere else in our town has much more robust schools. But that being said, very few of the families in these neighborhoods, if at all, utilize public schools. I am shocked of the resiliency of values. My neighborhood is also quite inferior to other local higher end neighborhoods… For instance, my neighborhood only trades around 1k a SF for new construction where a half a mile south of us new construction is 2-3k+ a foot. In my neighborhood of 400 homes, there are about 15 new homes for sale and another 20+ easily under construction that will hit the market. Seasonality is slow during the summer, will be interesting to see what happens as seasonality turns.
Yeah, I am actually just east of that other development that is more pricey… But, Their neighborhood is much more unique in terms of the amenities and offerings. Objectively, one of the more expensive neighborhoods in the country. They have tons of inventory, it just doesn’t seem to impact pricing. The sellers do not seem to care if listings linger.
This is Ruthless Digital from a different account, great post as always. Based off this, I’d think places like Rancho Santa Fe, La Jolla, & Del Mar in SD will always be great, Newport, Laguna in Orange County as well.
Was wondering what you think about Ranchos Palos Verdes with the recent landslides. @BowTiedBull
What are your thoughts on gentrification areas still currently underway?
Example:
(I am in a boom city that went up just as much as Austin, but didn’t crash)
They put a Soho House in a otherwise shitty industrial, near ghetto area a few years ago. Because of the proximity to the ghetto it’s still cheaper than other - already gentrified - areas in the city.
Now they’re opening a Hermes store there in 2025, instead of putting it somewhere downtown, or in a mall next to Gucci etc. All the realtors are screaming from the rooftops this is the area to buy. The area still objectively sucks to live in though.
Tough to say, just be extremely careful. Last couple years a ton of people levered up big and blew up (Austin biggest example)
If the trend is truly there, then its a different story. Won't know enough about every gentrification area to make a comment
General rule of thumb for me has always been, If every house looks the same / a CB2 catalog it’s not the luxury neighborhood.
Pretty good rule
plenty of empty sand on this beach near my tent
I'm curious how you would assess the fair value of a home, luxury or otherwise, in the wake of a housing boom. Using comps seems to be tricky since the value of a home should be trending downward, no? Interest rates also a factor in affordability. On the other hand, I can't imagine you could make a lowball offer on a house in that situation and not run into the owners emotional attachment.
Luxury real estate is effectively inelastic. People buy with cash and don't have 5 year hold frames they have lifetime hold frames. It's the safest real estate investment in general since you can't make more homes in the prime areas
For the average/median home, would agree, likely a lot of people levered up get laid off and lose their homes. Looking at the top areas, its a different game entirely. Ultra rich people are always rich
I am in an affluent city within South Florida… I am also on the east side of that city. While activity has certainly slowed, the value of dirt and new construction is still getting and asking ATH’s….the value of the dirt has gone up nearly 4x since 2019 and new construction values have gone up nearly 3x. It’s insane. Due to the large amount of development, there is always going to be a healthy amount of inventory. It will never be an area for the foreseeable future with thin inventory and I continue to be surprised that buyers are stepping in. We also have awful public schools, whereas anywhere else in our town has much more robust schools. But that being said, very few of the families in these neighborhoods, if at all, utilize public schools. I am shocked of the resiliency of values. My neighborhood is also quite inferior to other local higher end neighborhoods… For instance, my neighborhood only trades around 1k a SF for new construction where a half a mile south of us new construction is 2-3k+ a foot. In my neighborhood of 400 homes, there are about 15 new homes for sale and another 20+ easily under construction that will hit the market. Seasonality is slow during the summer, will be interesting to see what happens as seasonality turns.
The closer you are to the beach the more insane it becomes
Yeah, I am actually just east of that other development that is more pricey… But, Their neighborhood is much more unique in terms of the amenities and offerings. Objectively, one of the more expensive neighborhoods in the country. They have tons of inventory, it just doesn’t seem to impact pricing. The sellers do not seem to care if listings linger.
What are your thoughts on the eth/btc pair in the next months in case kamala wins?
This is Ruthless Digital from a different account, great post as always. Based off this, I’d think places like Rancho Santa Fe, La Jolla, & Del Mar in SD will always be great, Newport, Laguna in Orange County as well.
Was wondering what you think about Ranchos Palos Verdes with the recent landslides. @BowTiedBull
Don't even know where that is nit places like Laguna beach/La Jolla are practically always going to screen as luxury.