‘Crazy’ real estate deal ends with cap rate increase
Los Angeles real estate agents say they’re shocked to learn the city’s cap rate will rise by 3.5 percent next year.
The cap rate is the maximum allowable increase per person, regardless of age.
For the average family of three, the cap rate would be $1,095.
The increase will take effect in 2019, meaning that many agents who previously were in a cap-rate zone will see a higher rate.
For some agents, the increase will mean an additional $1.25 per sale, and for others, it will be more.
The LA Real Estate Commission is currently studying the increase, and said they have no plans to change it.
The agency has been studying the cap-rates for several years and is “evaluating options to mitigate this increase and improve its accuracy,” a spokesperson told CNNMoney.
The rate increase was expected in the wake of an agreement between the city and real estate developers to cap the maximum number of homes that can be built in the city by 25 percent in 2019.
Under the deal, the city has committed to cap-rating 875 new units by 2026.
Los Angeles, with a population of almost 13 million, has one of the nation’s most expensive real estate markets, according to Zillow.
It also has one the nation.
The price of a home can be as high as $1 million in New York, with prices in some areas as high $1 billion, according for Zillows home value calculator.