The Historic Development of Downtown LA- At a Glance

 

1928: Braly Building- The Beginning

Throughout the rise and development of Downtown Los Angeles, many have been able to witness the dynamic transformation of the rich; geographical diversification that has occurred over the last few decades. Most of which that came to pass in the form of towering edifices, swallowing whole some of the busiest streets of Los Angeles, dating all the way back to the 1900's. 

 

The Braly Building - Also known as the Continental Building was the first high-rise building in LA. Standing at 13-stories high, at 408 Spring St, in the Historic Core of Los Angeles, The Braley remained the tallest for three years. Shortly after the building was completed, The LA City Council enacted a 150 ft. height restriction on future buildings that remained until the 1950's.

The Braly Building - Also known as the Continental Building was the first high-rise building in LA. Standing at 13-stories high, at 408 Spring St, in the Historic Core of Los Angeles, The Braley remained the tallest for three years. Shortly after the building was completed, The LA City Council enacted a 150 ft. height restriction on future buildings that remained until the 1950's.

It all began in 1903, before the start of World War II. The Braly Building (the Los Angeles's first high-rise) was erected. For the next two decades, the tallest buildings would only be 13 or 14 stories (due to restrictions that were put in place after the completion of the Braly during the Golden Age). In 1928 City Hall was completed and was considered to be LA's first skyscraper holding the title of the city's tallest building for 36 years. 

Fast-forward 100 years and we arrive at the colossal- Wilshire Grand Center. Built and completed in June 2017, the skyscraper that is located in the Financial District, is currently the tallest building west of the Mississippi River. Outside of New York and Chicago, the Wilshire Grand Center building would be the 9th tallest building in the United States, and some would even refer to it as the "Times Square of the West." In light of such a significant benchmark, Commercial Cafe (A Commercial Real Estate Blog) has put together a video of the evolution of Downtown LA, "from the very first skyscraper, to its latest." 

 

In advance of its official opening on June 23, the 73-story Wilshire Grand showed off the full potential of its LED-adorned crown yesterday evening. The video, captured by architectural photographer Hunter Kerhart, shows numerous graphics floating up the tower's spine and around its rooftop sail.

Real Estate May Be A Time Bomb

Summary

  • Relative to history, housing remains affordable but consumers remain squeezed and incomes are falling.
  • Housing demand is weak but supply is low causing price to remain remarkably stable for now.
  • Rising interest rates dramatically impact housing affordability; and rates have been rising.
  • I believe the consumer will continue to get weaker as incomes continue to fall causing the housing market to take a down turn over the next year.

Where We Stand

After bottoming in 2009, home prices showed strong growth through 2013, and has since cooled off slightly. Over the last 2 years, home price growth has been remarkably flat due to an interesting tug of war between supply and demand.

Focusing on the growth rate of housing as opposed to the nominal price of housing is important. For example, if home prices are growing at 10% year over year and then falls to 5% growth year over year, home prices are still going up, although at a slower pace. Although prices are still moving upwards. Measuring housing in this fashion often allows you to front run real estate moves because the growth rate has to fall before becoming negative and waiting until the growth rate is negative (or home prices falling in nominal terms) is often to late. Studying the change in growth rate allows you to stay ahead of the curve.

Currently the growth in home prices has been very flat at around ~5% year over year. Since the growth rate is flat, this provides little insight into the direction of the next move in the real estate market. It is now even more important to understand what is causing home price growth to remain so stable.

Supply is very low, putting upward pressure on prices, while demand is weak putting downward pressure on prices; the result being home price growth that has been flat for almost 2 years.