Hello August

My colleagues Roger Vincent and Andrea Chang have reported in the last few days that even the humble condominium, which once was sort of like a starter house on training wheels, is going for astronomical sums.

Vincent reports that in Beverly Hills, developers of a 17-unit complex hope a single condo can bring about $40 million. That’s a bit steep for me, but I don’t want to rule it out because the features include a butler’s pantry, a full bar in the entertainment room and a 2,500-square-foot terrace.

Chang, meanwhile, wrote about the swanky party thrown for top-gun real estate agents to celebrate the listing of $50-million condo in West Hollywood. That would be a record in the county for condos, but in L.A., such records don’t last long. Chang reported that a $75-million condo was about to hit the market.

For the little soiree, by the way, each attendee was assigned a personal concierge in case there was some sort of crisis, such as maybe a temporary caviar blini shortage, an empty champagne glass or an overdone filet mignon with heirloom truffle.

In 2015, agent Jeff Hyland made that point while giving me a driving tour of his Beverly Hills terrain, where homes listed for more than $100 million are not uncommon. Property taxes support government services, Hyland argued, and everyone benefits. On that outing, Hyland took me to a property he had just sold for $35 million.

“It was in absolutely magnificent condition,” said Hyland, but the new owner didn’t like the layout. So he took a wrecking ball to the house to make way for a rebuild.

We do have it all, don’t we? A $35-million tear-down in the middle of a tent city.

Regarding the expected property taxes on that $50-million condo, I called L.A. County Assessor Jeffrey Prang, who helped me crunch the numbers. The buyer is going to have an annual tab of $580,000, give or take.

Of that, about 40% ($200,000) would go to K-12 schools and community colleges. About 24% ($120,000) would go to L.A. County for various services. Roughly 15% ($75,000) would go to West Hollywood, and the remaining 21% to various public agencies and special districts.

That’s a lot of money, and it has to be paid annually. But as USC professor Ed Kleinbard argued in my column on the $35-million tear-down, real estate is a big factor in wealth inequality, and the government subsidizes home ownership through various tax credits and deductions.

And there’s so much wealth in the top tiers in L.A., prices keep rising for everyone, even though the market has cooled a bit lately. Prang says the assessed value of commercial and residential property in L.A. County rose by a record $122 billion last year, to $1.89 trillion. That can be good if you’re ready to cash out, but not so good if you’re struggling to buy your first house or cover the rent.

In November, voters in the city of Los Angeles will see a ballot measure that would increase the real estate transfer tax on homes and commercial properties that sell for $5 million or more, and Santa Monica has a proposal to bump the tax on sales above $8 million.

Backers of the L.A. measure — supported by dozens of housing, homeless services and labor groups — say it would generate $875 million a year for homelessness prevention and affordable housing, with the operation managed by a citizen-led committee.

Keep your eye on this one, because the real estate industry is girding for battle, arguing that the tax bump will stall sales and drive high rollers out of Los Angeles proper and into nearby locales.

It’s hard to imagine such a hardship, but those who do bail out won’t have to travel far, if they’re willing to live in a condo.

They better move fast, though, because the prices keep rising.

Now, with mortgage interest rates on the rise, home sales are down, inventory is up and the prospect of home value declines is around the corner.

In June, the Southern California median home price fell 1.3% from May, despite the fact it usually increases between those two months.

Compared with a year earlier, the median was still up 10.5%, according to real estate firm DQNews. That’s a big increase but far smaller than the 16.7% seen as recently as April.

So what does this all mean for me?

First, let’s start with buyers. The primary reason for the housing slowdown is that mortgage rates have soared this year, from the low 3% range to the mid-5% range, where they are today.

This has made the monthly cost of a home much higher and reduced the size of loans that borrowers can get, while pricing some buyers out of the market altogether.

If you are a buyer, you probably won’t get approved for what you would have just a few months ago and may no longer be able to buy a home at all.

If you can still afford a home, there are some silver linings.

More options

With fewer people out home shopping, properties are staying on the market longer and giving the buyers who remain more options.

During the four weeks that ended July 10, nearly 19% more homes were for sale in the Inland Empire than in the same period a year earlier, according to real estate brokerage Redfin.

In Los Angeles and Orange counties, Redfin data show the number of listings is still less than year-ago levels but has climbed steadily in recent months as mortgage rates have risen.

This means if you are out shopping, you not only will have more homes to choose from than a few months ago but also will probably have to fight less to buy one.

The combination of fewer buyers and more inventory has made bidding wars less common, so you may have an easier time bidding around the list price.

In fact, you may not have to bid at list price at all.

Redfin data indicate that 29.6% of all homes on the market in the Los Angeles metro area had price cuts in June. That’s more than double the 12.6% rate of June 2021.

What will happen with home values?

Some analysts say overall home values aren’t likely to decline but the rate of home price appreciation will slow. That is, prices will keep rising, but they’ll climb less than they have in the last two years.

To make this case, these analysts say that despite the recent increase in supply and drop-off in demand, there’s still an overall shortage of housing and large numbers of people who still can and want to buy a home.

Other analysts predict that home values will fall in 2023, but few if any experts predict declines like those seen during the Great Recession.

In large part, that’s because the sizable declines last time around were driven by foreclosures. Now, lending standards are far tighter and experts say many homeowners don’t want to sell for less than their neighbor did a few months ago unless they are forced to do so.

Mother Tongue’s menu focuses on dishes with anti-inflammatory or cognitive benefits that fit a myriad of dietary restrictions. Keto abiders may opt for the salmon with white miso sauce, and plant-based eaters can order the shiitake mushroom lamb. That said, they also fully embrace those in the mood for a cheat meal: “We’ve made sure our burger is going to be one of the best,” Schoepe says.