Until recently, Los Angeles was the blazing center of a hot national real estate market. Demand was high, inventory low, and tales of feeding frenzies with escalating cash offers from multiple buyers were common.

But things cooled down earlier this year. Nationally, home prices peaked in April, after two years of double-digit gains spurred by ultra-low interest rates. Inflation hit a 40-year high in June. The Federal Reserve raised interest rates, lenders followed suit and mortgage rates hit a 20-year high in October. The luxury home market was hit particularly hard, plummeting 28% nationally year-over-year in the third quarter.

Business manager Eric Fulton of Fulton Management says the impact has been noticeable with his clients, who range from top stars such as Chris Hemsworth and Channing Tatum to up-and-coming digital influencers.

Previously, “we had anywhere from 10 to 20 refinances or purchases going on at any one time,” says Fulton. “Now it’s really down to a slow dribble.”

But there’s no reason to panic, according to Josh Flagg, a top Beverly Hills Realtor and star of the Bravo reality series “Million Dollar Listing Los Angeles.” “The market was on fire and I think it’s just cooled off,” says Flagg. “This isn’t like the crash of 2008. People are just a little bit more gun-shy today and not willing to pull the trigger as fast.”

Instead of a dozen potential buyers one-upping each other in a bidding war, it’s now more common to get three or four, putting the brakes on the steep price climb seen in recent years and keeping houses on the market longer.

“Before we had people trying to close within a short amount of time, saying, ‘I don’t want to do a termite inspection, I don’t want this, I don’t want that,’ ” says business manager Jack Sinoryan of Manhattan West. “It was a sellers’ market and I think we’re going the other way where, in the next few months, the buyers will have more power in those transactions.”

Today’s higher interest rates mean bigger monthly mortgage payments for buyers, but, at the same time, they’ve caused prices to level off, helping mitigate the net impact.

Steve Shapiro of Summit Business recommends that his clients take a lower adjustable interest rate loan, then refinance or seek a rate modification when interest is lower. “The bottom line is that the average client does not live in the new homes that they purchase for more than seven years on average, so an adjustable rate is optimum,” says Shapiro.

Wealthy entertainment industry figures also have other advantages, like special relationships with their banks. “The banks want to keep or manage their money, so they’re getting rates that are better than the average consumer,” says David Solomon, a real estate agent with Douglas Elliman Brentwood who has sold more than a billion dollars in Los Angeles real estate.

According to real estate agent Linda May of the Beverly Hills firm Linda May Properties, prior to the spike in interest rates, upscale buyers would often pay cash for a property, then finance so they could put the money back into investments that could potentially earn much more than the 3% in interest they were paying on the mortgage.

During the pandemic, many in the entertainment industry were left with time on their hands or, at least, more alone time, inspiring them to reevaluate their lifestyles and their finances. This led more than a few to cash in on the equity accrued in their California homes and move to a low-or no-personal income tax state such as Tennessee, Texas, Nevada and Florida, where they could get exponentially more bang for their buck, or simply buy a second home.

Business manager Tony Peyrot of Dunn, Pariser & Peyrot cautions that those looking to reap the tax advantages better make sure they can prove their home in that low- or no-income-tax state is truly their primary residence, lest they attract unwanted attention from tax collectors.

“You can’t just have a big house here in the Westside [of L.A.] and then go buy a condo in Vegas or Nashville,” says Peyrot. “You’ve got to really go all in, because where you spend your time is one of the big determining factors of your state residency. They look at where your doctors are, where you bank and where you eat. And with credit card and debit card statements, it’s pretty easy to track that stuff.”

In New York, many fled the congestion of the city during the pandemic and bought homes in more bucolic upscale areas including the Hamptons, where they could ride out the lockdown isolating with their loved ones. “They were concerned about getting sick and they wanted to be where there was space,” says New York-based business manager Anthony Bonsignore of Altman Greenfield Selvaggi.

But with the pandemic receding, some of those buyers are regretting their choices. “Now, people who somewhat overpaid for properties want to get back to the city,” Bonsignore adds.

That spelled trouble for landlords. After sky-high demand for rentals in the summers of 2020 and 2021, property owners in the Hamptons were already having trouble finding renters by early 2022, as travel restrictions finally eased, causing the median rental price in the area to fall by 26% in the first quarter.

When it comes to investments in office buildings, the picture is bleaker in the long term. People always need a place to live, but as the shift to work from home and hybrid work schedules continues post-lockdown, the demand for office space looks to decrease substantially, especially once leases that were signed pre-pandemic run out.

“I think rents are stable in the top areas on the Westside, like Santa Monica, Beverly Hills and Century City, but I think we’re in a bit of a bubble in Southern California,” says business manager Steve Levitt of Sobul, Primes & Schenkel. “With some clients who own properties in places like Arizona and other states, we’re seeing much more concern about vacancy and price impact.”

Multi-family properties including apartment complexes tend to be better bets. Christopher Curry of Forward Business Management had a client who sold five California properties that were earning $40,000 a year and used the proceeds to buy 130 units in Texas that are now bringing in about $850,000 a year.

“I have a network of real estate people across the country, and I when I meet a new one, I say, ‘find an attorney and a property manager that you like and then show me properties that have cap rates above, depending on the market, 5 [%] or 6%,’ ” Curry says.

In many cases, wealth advisers put their clients in real estate syndicates with pools of investors buying large properties that have a steady cash flow, ranging

from apartment buildings and mobile home parks to mini-malls and storage facilities.

“We look at data from multiple decades, and we have to assume that in time things are going to trend the same way, so we continue to go upward, even if right now we’re in a little bit of a correction phase,” says business manager Jordan Josephs of SingerLewak.

The consensus: Whether the property is commercial or residential, it’s best to see real estate as a long-term play, and if you’re buying a home in California, it’s hard to lose if you hold on to it for more than a few years. Plus, when it comes to the more desirable areas of Southern California, including Beverly Hills, Bel-Air and Malibu, there is a cachet that transcends market trends, particularly if you’re a billionaire from another country looking to buy a second or third mansion or a beachfront pied-à-terre.

“The weather’s beautiful,” says May. “I think it’s a place where everyone wants to be, if not full-time, then part-time.”

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