I remember the first time I thought, “Geez, real estate is sure getting expensive.”
It was 2004, and I was trying to buy a multi-unit in Silver Lake to live in since I was in my twenties and couldn’t afford a house.
Prices for fourplexes had just passed $400,000, and my mentor Leslie couldn’t believe it - “$100,000 a unit, wow.” It was the first time I had heard a price expressed “per unit”, which I thought was cool, and it stuck with me.
Yes, those prices seem ludicrous now, but before you think, wow, real estate investing was a breeze back then, remember that one-bedroom apartments in the area were renting for $650/mo, and two-bedroom apartments went for $900/mo.
So with mortgage rates at 6% or so, nothing cashflowed. Like today.
But did I know then that fourplexes in Silver Lake would be worth well over $2mil twenty years later? I don't know. I don't think I thought about it.
I certainly think more about the future now. Having kids really stretches your time horizons.
So I'm doing my annual goals and trying to make some forecasts for the next few decades - polishing up my crystal ball. But that might be the wrong exercise.
Jeff Bezos famously said that instead of asking "What's going to change in the next 10 years?", we should be asking "What's not going to change in the next 10 years?".
And you don't need a crystal ball for that - what's not going to change is that houses are not getting cheaper.
First, there is zero new housing getting built in L.A. The city wants to build 450,000 more homes in the next five years to meet housing demand and reduce prices.
Yet the LA City Planning Commission just voted unanimously to maintain the current single-family zoning. Yes. The biggest city in the USA outside of NYC, and 72% of it is still zoned for single-family homes.
