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The Rich Get Richer

400 richest Americans added $4.5 trillion to their wealth in 2021 (a 40% rise!)

The Covid-19 pandemic upended millions of lives, bringing economic uncertainty to many people throughout the world. But for the ultra-rich, it has been the roaring 20’s, as low interest rates, a rising stock market, and a crypto boom produced massive wealth for the world’s top 1%. What better place to park this new wealth than LA’s most prized properties?

Los Angeles claimed 628 residential transactions above $10 million for a total of $10.6 billion in sales in 2021, whereas Manhattan had half that amount. Tech titans conquered colossal properties, like Marc Andreessen’s $177 million Malibu estate and crypto-king Brian Armstrong’s $133 million modern LA compound .

With that being said, the Wall Street Journal reports that 2021 was the strongest year for home sales since 2006 , as house prices rose 18% compared to 4% and 8% the previous two years. This has given real estate investors reason to celebrate and possibly be wary.

The years leading up to the 2008 housing crisis also saw cheap credit and record home sales, and many are wondering whether the Fed’s decision to raise rates will mark the end of the pandemic-era’s frothy real estate market .

One major difference is that lending standards are much more strict than they were prior to the Great Recession. Furthermore, people are increasingly buying homes they can afford with cash , through their gains in other asset classes, rather than homes they can’t afford through subprime lending.

The American ultra-luxury real estate market is bustling , with a 35% increase in home sales worth over $50 million, and a 300% increase in home sales over $100 million. With the second largest concentration of ultra-high-net-worth individuals in the world, Los Angeles is the perfect home to rub shoulders with the world’s elite celebrities and industry titans.

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