Early homeownership has long been considered part of the American dream. However, in Los Angeles, the children of Hollywood elites are taking homeownership to a whole new level. These “nepo babies” are purchasing starter homes that come with price tags of $3 million to $4 million. This trend is not unique to L.A., as wealthy families around the world are increasingly buying properties for their children at an early age.
For example, Don Henley, the frontman of the Eagles, bought his son Will a $4.3 million eco-friendly home in Mar Vista. Presley Gerber, the son of Cindy Crawford and Rande Gerber, purchased a $3.4 million midcentury home in Beverly Hills. Dr. Phil and Robin McGraw reportedly gave their son Jordan a $10 million mansion in Beverly Hills as a gift.
These nepo babies are on a real estate buying spree in L.A., with some receiving financial help from their famous families, while others use their own money. This trend reflects the increased wealth in the world today and the normalization of buying properties for children at a young age.
Real estate agents explain that wealthy clients see L.A. homes as a secure investment. Families who already own legacy properties or have been successful in real estate want their children to continue owning properties in Los Angeles because it has proven to be a source of excellent investment. During uncertain economic times, real estate is seen as a more stable way to hold onto wealth and generate income through renting or flipping properties.
Related Post
Additionally, transferring wealth from one generation to the next is reaching new heights. As part of the “great wealth transfer,” wealthy, aging baby boomers are passing down approximately $35.8 trillion to their children and grandchildren. This phenomenon, known as giving while living, is becoming more common.
When scions purchase properties, they often opt for homes that are smaller than their parents’ but similar in style. Architecture that is owned by parents is often duplicated in the second generation. For example, if the parents own a Neutra or a Schindler, it’s likely that the children will also look for similar architectural styles.
In some cases, parents buy homes for their children with certain strings attached. The property may be designated as the child’s house, but it gets used by the entire family. These homes become part of the family’s wealth accumulation portfolio. In other instances, families patiently buy properties surrounding their main estate until they can create their own compounds. This allows different generations to have their own space while staying close together.
Buying properties for their children is also a way for mega-rich parents to teach their children about wealth management and real estate investing. The experience of handling a real estate project and seeing the appreciation of certain properties over time helps children gain firsthand experience in the process of investing and managing wealth.
Some children of celebrities also follow in their parents’ footsteps and become real estate agents. They join their parents’ businesses and gain firsthand experience in the industry. This helps them become more financially independent and develop their own real estate portfolios.
Ultimately, for wealthy kids in Los Angeles, purchasing a starter home in the Hollywood Hills can have significant investment benefits. Instead of taking a vacation or receiving an inheritance later in life, buying a property early on can have a more meaningful and impactful effect on their future.
The trend of nepo babies buying high-end properties reflects the changing dynamics of wealth and real estate ownership. As wealth continues to accumulate and families prioritize passing down assets to future generations, the practice of buying homes for children at an early age will likely become even more normalized.
