Los Angeles County was soon full of paper towns. In 1887, investors bought $200 million worth of real estate and laid out 400,000 house lots in Los Angeles County. In a few months, the same acre was selling for $5,000. When the boom began, an acre of land in the new town of Gladstone cost $500, KCET reports. “ Not one in a hundred of the purchasers had seen the townsite, and not one in a thousand expected to occupy the land.” Guinn said of the day Azuza’s developers began selling lots in 1887. “Two hundred and eighty thousand dollars’ worth of lots were sold the first day,” LA Historian J.M. Speculators began buying lots hoping to flip them. Prices began to skyrocket and developers laid out new towns to cash in on the expected flood of new migrants. Predictably, a massive real-estate boom followed the Santa Fe’s arrival in Los Angeles. The developers’ hope was that tens of thousands of Midwesterners would realize all they all they needed to migrate to Southern California was a train ticket. That meant sunny Los Angeles was now a few days’ train ride from the snowy Midwest. All that changed in 1886 when developers and speculators began hyping the Santa Fe Railway’s planned arrival in LA in 1887.Ĭompletion of the Santa Fe would create a direct rail connection between Los Angeles and Chicago. Strangely, Los Angeles was a little-known backwater until the 1880s. The Great Los Angeles Real Estate Bubble 1887 Some noteworthy historical real estate bubble include: Frighteningly, there have been many real estate bubbles in history and they have all ended badly. ![]() To see how the Southern California bubble ends, we need to study past housing bubbles. Hence, Southern California and America are in a real estate bubble. Hence, ordinary people cannot afford a home in LA. The Median home price in LA county was $768,458 on 13 April 2022, up 16% from 2020. The Los Angeles Daily News estimates Los Angeles County house payments grew by 12% between 20. Ordinary people who need housing are always the losers in a housing bubble. The number of investor home purchases in San Bernardino and Riverside counties grew by 49% between summer 2020 and December 2021. Speculative investment in some areas is higher. For example, The Orange County Register estimates the median price Southern California investors paid for a home in December 2021 was $898,000.įrighteningly, the level of investment in Orange County housing grew by 32% between summer 2020 and December 2021. Such speculation is dangerous because investors will pay a far higher price for homes than ordinary people. To explain, a high-level of real-estate investors shows speculation is driving the real estate market. The Orange County Register estimates investors comprised 51% of Southern California home buyers in December 2021. Some of the Bubble Watch features are frightening. The feature exists because the real estate bubble is the economic story in the Southland. We need to study historical housing bubbles because the real estate bubble is the biggest economic story in America today.įor example, Southern California newspapers now run a Bubble Watch feature.
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