Intergenerational Wealth. 💰👨‍👨‍👦‍👦

Brock's newsletter | May 30, 2025

Intergenerational Wealth.

After 15 years of increases, the real estate market might finally be leveling off. As of April, the annual price increase in Southern California was barely 1%, down considerably from the almost 10% increase the year before.

This is not to say we are in a balanced market. In fact, what we're seeing in the market is quite inconsistent.

Many homes are sitting. Average days on the market are up, and buyers are much more discerning. They want longer time periods for inspections, more inspections, and to avoid perceived problem homes on undesirable streets.

On the other hand, there are still bidding wars on what Lori calls the “bread and butter houses.” For anything move-in ready, well-located, well-appointed with at least 3 bedrooms and 2 bathrooms, that are properly (i.e., under) priced, it's still COVID-era bidding wars and record setting sales. Especially if it's pretty.

Recently, there were over 20 offers on a redone Atwater Village pool home walking distance to Proof Bakery, for example. Probably half the offers were all-cash, which is always annoying for buyers trying to compete with old-fashioned bank loans.

The high-end is also having a moment, and apparently Silver Lake now is part of that high-end pool. There were multiple offers on a 4-acre estate in Silver Lake, highest sale ever in the area listed for around $10 million. And the 3-bedroom Barbara Bestor-designed Silver Lake home on Redcliff listed for $7 million? In escrow.

We are often asked, “Who is buying all these houses with all this cash?” Celebrities? New Yorkers? Foreigners?

Sometimes, sure.

But more often than not, it's family money.

Picture a couple, one or both of whom have parents who bought real estate or invested in XYZ business/stock/fund decades ago. Maybe some savings too. Rarely a high-paying job here. It's not what they earn, it's what they own.

And no one is waiting for them to die to get theirs, btw. What we are taught about family wealth is wrong - we often think cash getting passed down from generation to generation, like Grandma's china.

The reality is more complex and allows “now money” for their heirs. Wealth is better understood as a nebulous pool (a trust), drawn from in various ways. Grandkids' private school. Startup capital for Junior's business. Family vacations are 100% hosted by the grandparents.

And, in our business, we see a lot of families helping their kids buy houses, usually in some tax-advantaged way. No judgement here. It's extremely hard to get into a market like LA where a starter home costs minimum $1.5 million (with 20% down and closing costs, you're looking at over $300,000 down and $9,000/mo).

These days, you hear even middle-class Joes speaking about creating “intergenerational wealth.”

And why not? There seems to be a gnawing sense that our kids will all have a real rough time (if their starter home payment wasn't sufficient evidence for this suspicion…), and the more of a leg up we can give them, the better. It's not about leaving a giant pile of money for them; it's about being there to help set a foundation for life, from the first house onward…

And the secret is out. Over a lifetime, the real estate values go up, and most people's only inheritable asset at the end of their lives is their home (as I've said, all the money gets spent).

This is probably another reason we are going on year three of the slowest home sales in 30 years. Everyone's keeping the house for the kids so that when they die, their child inherits the house tax-free and even keeps their old property tax rate if they've had good advice from their CPA (Google “Step-Up In Basis”).