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Tracy King's Blog

With over 30 years experience in helping clients buy and sell homes in Northeast Los Angeles, Tracy King has a depth of real estate knowledge that makes her the go-to for both the first-time home buyer and the seasoned real estate investor. When she's not holding open houses or negotiating offers, Tracy enjoys wine tasting, cooking, and...

With over 30 years experience in helping clients buy and sell homes in Northeast Los Angeles, Tracy King has a depth of real estate knowledge that makes her the go-to for both the first-time home buyer and the seasoned real estate investor. When she's not holding open houses or negotiating offers, Tracy enjoys wine tasting, cooking, and planning her next trip to Paris.

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What's Happening with the Real Estate Market During a Pandemic?

First, the numbers. This spreadsheet compares the number of active and sold properties in each zip code, compared to the same time last year, and the average list or sales price. For a PDF version, click here.

market activity chart June

This is very confusing, right? Stay with me here — we are looking at real estate trends and in the light of all that’s gone wrong this year—Coronavirus, civil unrest, job losses, restaurants and bars closing (so you can see where my head’s at), life as we knew it—real estate should be devastated, right?

Well, it’’s not. Sure, there are fewer sales this year than last—after all, we have experienced an incredible loss of jobs and money. Lenders are nervous, people in general are nervous, but true buyers in a certain price range (and it’s generally not the highest range with exceptions) see their chance and are going for it!

We are representing buyers who are up against 10, 39, 40 offers! Some of our buyers have all cash! And they can lose to someone who has more. Once in awhile, we pull off unlikely deals —like we were actually quite a bit lower than the highest offer on one house but we got it because the buyers wrote a great letter and we represented them instead of the out of area unknown agent. The sellers cared about such things. Some do, some don’t. You never know.

If you compare the average sale price of 2020 and 2019, you see that they are higher this year over last year, in every zip code except South Pasadena. This is not the sign of a recession.

What conclusions can we make from all this? You might be thinking that to get the most for your money, you should save on the commission. Not true. You get what you pay for, just like a lawyer or a doctor. 

1. Choose the best agent you can who is experienced and trustworthy (not the same thing as the cheapest or your cousin who just got into real estate) and do what they say! 

2. If you’re a seller, price your house right, and prepare it correctly in line with your price. 

3. If you’re a buyer, the choice of your buyer’s agent can make a difference as well—your cousin from Santa Clarita doesn’t really know this area or how things are done here, and the seller’s agent is more comfortable with someone she knows will get the job done. The possible savings on your cousin’s kicking back some of his commission is not worth what they don’t know and the fact they could be the reason you don’t get the deal. All this is nothing new, but because there are fewer sales than before, you really need to bring your best to the table.

Another conclusion we can come to is that this isn’t bargain-hunting time. And this is the time when sellers who are pricing their homes to sell are succeeding. Sellers who are wishing for a high price are sitting on the market getting stale. And buyers who actually want to buy a house, not “play the market,” can do so.

 

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Northeast LA Area Market Update Through May 2020

I thought it would be interesting (to me and hopefully to you, Gentle Reader) to follow the market month by month, comparing it to last year. 

chart

What does all this mean? Not what it appears to mean on the surface, my friends.  Believe it or not, we are in a very hot market. It’s a smaller market than it was just recently, but homes are selling in multiple offer bidding wars. Yes, really. Looking at the numbers you see drops in the number of houses on the market, sold, and average prices in all 5 of our zip codes. However, Eagle Rock had a higher average sales price in May than it did in April. 

Anecdotally, we are having bidding wars even now, something you wouldn’t be aware of by just looking at the numbers. Unless, of course, you have been a buyer or a buyer’s agent in the last 8 years.

Today it matters even more how good a negotiator the agent is, and how motivated the buyer and seller are.  If you want to sell your house, is it important to you how much you sell it for?  I would guess the answer is yes, duh.  It’s in the strategies of pricing, folks, the same as it’s always been—but now it’s even more important to have your agent on your side, ready to do battle for your price but ready to change that price strategically. It’s super important to be really honest with your agent about what you will and won’t do. And that isn’t based on your wish price. Plus you do have to be sensitive to what similar homes are listing and selling for. And I said “sensitive to” not “enslaved by.” Oh, and you probably want to work with an agent you trust and feel like you can confide in.

You’ll notice a greater variation in numbers in May as opposed to April.  I think that’s largely due to timing during the COVID crisis than a true market. A lot of people are losing or are afraid of losing their jobs who didn’t see that happening in March when we thought/hoped we were only going to be quarantined a couple of weeks.  Even if we see the real estate market contract to the same extent that we’re seeing the employment figures contract which we’re hearing might be 20%, there are still a lot of employed folks who want or need to move. And a lot of houses that need to change hands because of life changes—death, divorce, marriage, having children, having children grow up and move out—the usual things.

So is this a good time to sell or buy? Just like always—yes, if you have a good reason to. And if you’re selling and buying in the same market, you can’t go too wrong. If your house is worth less, so is the house you buy. But it's not a good time for people who clutter up the market with “wish” prices that will never sell. Is it ever?

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Walking Tour of Bungalow Heaven

Bungalow Heaven, in Northeast Pasadena, is bordered roughly by Lake Avenue on the west, Orange Grove Blvd to the south, Hill Ave to the east, and Washington Blvd to the north.  What gives the area its name is about 800 Craftsman-style homes (plus non-conforming structures filling in) built between 1900 and 1930. For pictures, history and descriptions of Bungalow Heaven and the annual tour which happened every year for 30 years (until the pandemic this year), go to BungalowHeaven.org. There is lots of information and photos and even some merch you can order to support them. I ordered their cookie recipe book because it has a signature recipe written by a Bungalow Heaven resident and volunteer that uses real rose petals. Had to have it! And it was delicious - a delicate butter cookie with a faint rose flavor and studded with flecks of color from the rose petals and then rolled in chopped pistachios before it was baked. Yum!  Next I'm going to try the Tangerine Thyme Chocolate Cookies.

My friend, Kendyl, and I met at a house that was in escrow with my team’s buyer (so much character!), and started off on our walking tour. We learned that most of the houses were bungalows with lots of individuality—colors, landscaping, and style—though the main points of similarity were the large porches perfect for sitting on to catch the breezes and the overhanging eaves which defined the original Bungalow style (originally designed to deal with the extreme heat in India). The idea is the longer eaves make breezes more likely to cool the dark interiors.  Thoughtful landscaping helps with deciduous trees providing shade in the hot summer and sun in the winter. The judicious placement of evergreen trees can provide a constant shady presence where needed. Passive solar is not a new invention!

Did you know that in Pasadena with a house address, you can research all kinds of historical data about that house? Or you can search by house style, historic designation, all kinds of information. For Bungalow Heaven and more, go to the Historical Resources Inventory Database, click on Search for Historic Properties and explore!

And did you know that back in the day (1905-1940) you could order a kit from the Sears catalogue to build your own house? Yes, all styles and sizes were available. Visit the Sears archives. They give the history of the program and all sorts of detailed information. What I found almost as interesting as the exterior styles were the floorplans and the costs!  And once you’ve seen the pictures, you’ll see lots of houses in Pasadena that you’ll be sure were kit homes originally. The things we can learn from a walk!

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Social Distanced Walking

Thanks to the Corona virus shelter-in-place rules changing, people are thronging to all the hiking trails and approved walking paths like the Rose Bowl Loop. This has resulted in the very crowded conditions we are trying to avoid and so they might be closed again soon. Since you can get ticketed and fined for defying the rules, you need to read the news just about three times a day to stay on the right path for your walk. How about avoiding all those popular places and checking out some of the roads less travelled? 

Pasadena and Altadena are treasure troves of historic neighborhoods with gorgeous houses that have documented styles, architects, famous owners, and stories that supply conversational material along with eye-candy to add interest to your walk. As the philosopher Kierkegaard said, “If one just keeps walking, everything will be alright.”

You can access maps, addresses, interesting lore and historical facts, walking and driving tours  and more on the www.CityofPasadena.net site. They even have an app for your phone called Historic Pasadena and you can follow the Bungalow Courts, (walking or driving tours), Victorian tours, Mid-Century tours, even a Neon Signs tour (who knew Pasadena still had so many?) and more! 

My walking buddy Kendyl and I were big users of the Rose Bowl loop until it closed and then we walked the length of South Grand from South Pasadena north to the famous Colorado Street Bridge and back until it became crowded. Now we have walked a few of these historic tours plus some neighborhoods in Altadena and have discovered a wealth of interesting sites and secret places (to us, that is) which I’m going to share with you, dear Reader. Hopefully, you will want to add a bit of your own special twists. Please share!

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Northeast LA Market Update

How are you doing? What’s happening with your job? What do you think is going to happen with it post-Corona? 

These questions and more are in the air along with all those droplets we are avoiding. We can only ask, actually, on the phone or on those endless Zoom calls (for those of us who are trying to live with the new normal physical distancing, yet stay in touch).  We all wish we were Mr. Zoom. He is definitely going to profit from this pandemic.

But you are reading this post because it’s about real estate, right? So what’s going on with the housing market? In our little corner of the real estate market, Northeast Los Angeles and surrounding areas, it’s always interesting and seldom like the national or even the California picture.

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Real Estate Must Be Virtual, For Now

Chaos! Every day brings a new interpretation of the current edicts given by all the heads of state—the president, the governor, the mayor, CAR (which is the California Association of Realtors), the police, I’m sure there’s more. As of Thursday, March 26, 2020, basically, we are supposed to stay home except to procure food, health care, to walk, or perform an essential job. Therefore, we Realtors are in a curious Catch-22 situation: we can’t meet buyers or sellers at a property, we can’t order inspections because inspectors aren’t considered essential (but sellers can hire them to find out if they need repairs if they want or need to do),  buyers can get loans and appraisers can do desktop appraisals, escrow companies can work, counties can record sales, movers are considered essential, but if sellers sell and they need to buy another home can they? If you see some inconsistencies in all that, you are correct! 

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Coronavirus and Local Real Estate

So as of today, March 12, 2020, Coronavirus cases are spreading - first there’s one case reported, then 2, then 100, then a thousand. Universities and other schools aren't having live classes. Germy kids get to stay home and only infect family members and caregivers. The NBA has suspended the season. Wow! And mortgage interest rates are so volatile that lenders aren’t publishing them. In fact, some lenders aren’t taking any new or refinance business because they have more than they can handle. 

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Should You Buy a House in 2020?

Should you buy a house in 2020? Of course, this is a question that has a very complicated answer.
Two reasons that the answer is no: prices are high and inventory is low. Yes, interest rates are historically low which makes paying these historically high prices a little more bearable. Low inventory means a couple of things: it's hard to find the home of your dreams at the price you feel you can afford; it's extremely competitive in our market (we had 47 offers on one home in January, and we heard of another house nearby that had over 50 offers and is going $400,000 over the asking price!); also, it means the thought of buying your dream home (or any home) contingent on the sale of your current home is a losing proposition. Would you entertain a contingent sale on your own home? Probably not, because you want to minimize the things that can go wrong with the sale so you can move to the next step in your life without depending on variables you have little or no control over (like the price of the contingent home or the skill of the agent involved).

Despite those issues, I'm in the camp of yes, this is a good year to buy a home. I know what you're thinking - of course the Realtor thinks everyone should by a house right now! But the reason why?
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It Pays to be an Older Homeowner

At last, a reason to be glad you’re older: California Proposition 60/90! If you or your spouse are 55+ and you’ve owned your home awhile, you might find this interesting.

Basically, you can take your property tax with you one time if you purchase a primary home that costs the same or less as your current home! This can be a huge savings, since in California, property tax is calculated on the original purchase price of your home. So, if you paid $325,000 for your home in 2000, sell it in 2019 for $1,250,000, then buy a replacement home within 2 years of its closing date for 1,250,000, you will pay about $5,333.00 per year instead of $15,625.50 per year!

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What a Difference 15 Years Make!

eaglerockhomeforsale

It’s interesting to look back fifteen years and compare 2019 and 2004 because 2004 was a year of big fear and doubt. Many people questioning “will the economy go up? Down? If I buy a house now am I buying at the top of the market?”  Sound familiar? These are the same questions we're hearing from our clients now!

Let's take a look at the numbers, and then I'll dive into my interpretation:
data

Look at things like the $500,000 difference in the South Pasadena List Price/Sales Price this year—that issue would seem to be that the higher end of sales isn’t selling as much as the lower in South Pasadena. Makes sense, right?

Obviously, home sales prices have gone up a lot in 15 years in all these communities. The average number of sales has gone down and the days on market is all over the place. We aren’t seeing the general interpretation by experts on the market that we hear on the news—which is that days on market is increasing everywhere while the sales price is going down.   In these areas, the sales price keeps going higher and higher.  But why are we seeing the number of sales drop? Affordability? Choice? Probably a little of both. Less inventory, that is, far fewer available listings are on the market now than in 2004 and this has been the case since 2012. The higher end of the sales today in most of these zip codes are primarily high-style flips or new construction. That wasn’t the case in 2004 at all. 

Flipping with style really started as a result of the glut of foreclosures and short sales in 2008-2011 and it started in places like Highland Park, where a few flippers bought foreclosures really cheap, fixed them up nicely and stylishly, then resold them at fairly reasonable prices to first-time buyers with some money of their own or with help from their families. Now the flips are the high end of the market.

Altadena is really interesting because the average sales price was almost $100,000 higher there than Eagle Rock in 2004, and the average sales price this year is almost the same as Eagle Rock.  What does this fact mean? More choices in Altadena? We have sold several houses in Altadena this year because our buyers felt they had better choices in their price range—more house, more lot size, and sometimes the basic ability to purchase a home now for what they could afford instead of waiting to save more money or win the lotto or find some windfall somewhere. Eagle Rock has appeal because of its location—close to downtown, close to the studios, easy to get around in town and to get out of town. Also it’s neighborhoody (great community feel), has decent public schools, and is kind of a Mayberry-type suburb of Metro LA. And it’s cheaper than Los Feliz and Silverlake.

There is no clear conclusion to draw from all this, except that prices are still going up with no end in sight in these areas, so waiting for the crash is likely futile for the time being. When will the bubble burst? Maybe not for several years, maybe never. Only time will tell. It's usually luck that allows people to "time" the market. We often tell our clients that the best time to make their move is when they are truly ready!

Want to get regular updates on the local real estate market? Sign up for our semi-weekly newsletter here

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Today's Version of Irrational Exuberance

Remember when Alan Greenspan, former chair of the Federal Reserve, talked about the irrational exuberance in the stock market? You might not, because the quote is from a speech he gave all the way back in 1996! I see some of the same enthusiasm in the pricing of some houses on the market in our dear corner of Northeast Los Angeles. But the exuberance Greenspan referred to had to do with actual business being transacted. In today’s real estate market, I’m seeing irrational exuberance in some list prices, not in actual closed sales.

I’m dedicated to attaining a fair market price for our real estate. But that doesn’t mean that sellers should be listing their homes at overly ambitious prices, because that does nothing to firm up actual sale prices.

Let’s imagine that you are in the market for a home. You are pre-approved for $800,000 and you want a 2 bedroom 1 bath home in Eagle Rock. You look on the computer every day to see if something new has come on. Although you think $800,000 is a lot of money to pay for a small home, it is not easy to find a really good property in the right neighborhood for that price.

One day a property comes on that fits your criteria but it’s listed for $829,000. You wouldn’t even see it on the Internet because your search is limited to properties in the $450,000 to $825,000 range. But let’s say you are out one day and see an open house sign and stop in. Hmm. $829,000? Out of your league, you figure, and you leave.

Another day comes with a new listing for $825,000 that is pretty nice, but not quite big enough. Eh, you let that go because it’s at the top of your range and probably not worth it to you.

Another day you are looking and you see a small but perfect property for $675,000. Wow. You rush to call your agent and hurry over. There are already 5 other prospective buyers there with their agents and the buzz is loud. What’s the plan for multiple offers? How much do we need to offer to be in the running? Can we expect a counter if we offer enough over or are they going to take best and final? Do you think I can get the lender to pre-approve me for $830k? $850k?

Which property do you think might get the highest final sales price?

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What is it like to buy a home in Los Angeles?

What is it like to buy a home in Los Angeles?

We all have to live somewhere—even if it’s under a bridge. Most of us don’t live under bridges, though, and herein lies the story—it’s very hard to be a buyer in today’s market. I know this because I just sold my home (of 18 years), and now I need to buy a new one. Buyers today (me too) hope that the market is changing—in their favor of course. But, as a Realtor, I do understand all sides of this issue--Buyer, Seller, Realtor. 

It's painful to try to buy a house in the Los Angeles area today, unless you have unlimited funds and are willing to spend a lot of them. A surprising number  of folks do have a lot of money, and they all seem to like the same houses I do!

People are paying crazy amounts of money to live here. We have been in an increasing price sales cycle for ten years. People say “It can’t go on,” and yet it does. Even so, the market is very discriminating and the standard of quality or style has really been raised. Homes that you wouldn’t put on your Pinterest Dream Home board just sit there—they even have price reductions! 

Back when I first began my real estate career, people in the business jeered at sellers who felt that their house was worth more because they “used heavy-duty nails,” which was code meaning they had used quality materials in their maintenance and remodeling efforts. The only way to increase value then was to increase square footage. That has never been entirely true, but “style, design, and functionality” has now come into play like never before. High-end finishes do add value these days, and the more stylish, the better.  

Why is that? Because what house buying is about these days is “How does this house make me feel?” or “Does this house have the potential to make me feel the way I want to?” Yes, folks, buying a home today is all about the emotion, not price per square foot or recent comps. If you don’t believe me, fine, but you won’t buy a house in this market, or you are not interested in buying a home you love, or you can love a house because it fits into the average price per square foot.

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The Emotions of Selling Your Home

My home of 18 years is sold! 
 
Putting my own theories to the test, I sold my house recently. I believe that Realtors ought to buy or sell property every few years just to stay in touch with how difficult it is. Difficult? Really? Yes—the home selling process is complex, but the really hard part is the emotion involved. Especially if you’ve enjoyed living in your old place. Good memories flood back (and at the most sensitive times, like when the buyers present you with a laundry list of what they want repaired or credited back.) 
 
“Ingrates! They don’t deserve my home, I’ll cancel the sale!” Nice revenge, but you can’t justcancel. You have to follow the rules that the written contract provides. So they can ask for you tofix things within their inspection period, and you can say no, or you can say yes, or go back tothem with a counter proposal. But you can’t just cancel unless you’ve given them a notice to perform and the deadline has passed. That one sentence is the meat of another whole blogpost, folks, so tune in again soon. 
 
You have to follow the contract and so do they, so you’d better be sure you understand what itsays before you sign it. How long are the contingency periods? What and when do you have todisclose? When do you have to have everything out? Did you agree to leave appliances? Howclean do you have to leave the place? 
 
Another emotion that often occurs is what looks like greed to the outside world, but is actuallykind of like comfort food—something hurts or someone feels sad or overwhelmed and moneyhelps to dull the pain. At least if you have to part with your beloved home, you can afford to dosomething fun with the proceeds. Not always, folks. The market might not agree with your “I justwant some fun” price. But, speaking from experience, you can dream, can’t you? Maybe youcan spend a week in Bora Bora with the money you save by being debt free…
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Home Upsizing, Downsizing Or "Rightsizing"? That Is the Question

Home Upsizing, Downsizing Or "Rightsizing"? That Is the Question

When we consider the important elements of our lives - like buying and selling our homes - the words we use and how we think about it matters.

Helping homebuyers and home sellers buy and sell real estate in NELA for as long as I have, I’ve seen it all. Homes for sale in Mt. Washington, for instance, offer large modern homes as well as tiny bungalows. Homes for sale in Pasadena offer ginormous California Craftsman homes as well as very small ones. Many are buying and selling homes to upsize. They need more space. But we also see many trying to downsize. They require less space.

Rather than thinking “upsize” or “downsize”, for many good reasons, we might ought to consider the modern term “rightsizing”.


Right-sizing is often about our quality of life. Often a much larger home requires a lot more work and effort to maintain. That time could be better used for other endeavors. Time is the last luxury. We are ALL running out of it.

This is one of the 6 points that Leonard Steinberg, Compass' President, itemized in his daily email regarding downsizing, or  rightsizing as he calls it. I'm dealing with a couple of downsizing/rightsizing projects myself, and I know how stressful it can be. My husband and I often ask each other--how did we end up with so much stuff? Then there's my mother, who is 91 and facing the same issue with only my sister and me to help. And I'm 300 miles away! 

But enough about me. I loved Leonard's conclusion:

Scaling down your home often feels like a regressive, negative moment in life, but I see it as the exact opposite. I have bumped into clients months after they made this stressful shift only to find them happier, less stressed and with a new sense of freedom. Remove ego from homeownership and the decisions made are often much wiser.

The wisdom of removing ego from homeownership, and from all kinds of real estate transactions, is so true in so many ways. For instance, your house will not sell for more than a flipped completely done house that's bigger no matter what you think of their taste. It's not about you and how cool you think your house is. It's about buyers and what they think. And they speak with their feet these days.

"Why don't they make an offer?" Sellers ask this all the time. It's because they don't want to offend you, or they don't want to bother, or they've been trained to believe that you really mean your price.

Here's another example: real estate agents who try to dominate a transaction, like "I would never let my buyer get less than half the credit I told him to expect from the seller." What? This agent thought she had some eerie power over the seller and the buyer in this escrow. My seller said "Let's kick this buyer to the curb and go to the next one." We had a great backup buyer and we did exactly that.

We all have some interest in real estate. After all, we all live somewhere, even if it's under a bridge or on our buddy's couch. Let's figure out what we need and let go of at least some of what we want and maybe we will all be a little more content with our lives.

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NELA Real Estate Market: An Affordable Issue with a Special Twist

NELA Real Estate Market: An Affordable Issue with a Special Twist

What we're seeing in the Eagle Rock, Highland Park and Mt. Washington housing market is happening all  around the state.

Interesting things are afoot in the Northeast LA real estate market. Anyone keeping their eye on prices of homes in Glassell Park and Mt. Washington have noticed that prices up from where they were just a year ago. Those watching homes in Highland Park and Eagle Rock are noticing homes staying on the market longer. What does it all mean?

Good question! Here’s the latest news from the top. Leslie Appleton-Young is California Realtors’ Chief Economist and we are lucky to have her help us make sense of a very big subject: the real estate market.


The bottom line is we have been facing a big affordability issue here in our little corner of the Los Angeles real estate market. And it has gone viral state-wide. The average change in California’s year-over-year number of sales has decreased 5.5%. And the average sales price has increased 5.5%. Statewide!

Many of you readers might be muttering “I don’t really care about state-wide, I want to know about here, in good old NELA!" (That’s zip codes 90041, 90042, 90065.)

So here you go, Dear Reader: These are year-over-year, September to September 2017 to 2018 percentages for NELA and they are startling. Number of active listings is a whopping 56.7% more in 2018, while the number of sold is down 13.6% and the number pending is down 5%. Here is the interesting news—the average asking price is 10.2% higher in 2018 and the average sales price is 18.5% higher. So fewer homes are selling, but they sell for more.

What does this mean to you? It seems like this is an affordability issue, but with a special twist. Especially with the uptick in mortgage interest rates on top of still rising prices, who can afford to pay an average sales price of $972,000? And in Eagle Rock alone (90041 zip code) the average sales price was $1,133,000 in September 2018! Average! So what’s the twist? The prices are continuing to rise, that’s what. Ordinarily, too-high prices start coming down when the inventory increases and number of sales drop.

It seems like many Buyers (or think they wanna be buyers) want to just have a crash take us back to 2009 bottom of the Great Recession prices and stay there long enough for them to close escrow on their dream home at a bargain price 40-to-60% below today’s prices. And then spring back to today’s crazy high prices so they can feel like they got the deal they missed back in 2009-2012. But their dream homes wouldn't come on the market in such a case because their owners aren't going to lose all the equity they’ve gained in the last few years. Why not? Because they are not in distress! Homeowners will just sit tight and wait it out because they don’t have crazy loans that are going to adjust to an impossible payment like they did in 2008. And those homes that sold in 2009 were not your dream homes either. People who own dream homes don’t generally have to put them on the market at the bottom of a sales cycle. No one does that unless they have no other alternative.

So what about the increasing inventory? A lot of homeowners are still trying to cash in on the high prices and they are comparing their homes with cream of the crop “done” homes or super well-located homes with a lot of potential. But times have changed, folks—you can’t put a cluttered, dirty home on the market with a few bad cell phone photographs and expect to sell for a top price. You should expect to put in a lot of effort and possibly money to present your home in its best light, hire the best experienced Realtor you can find and do what they say. This thought that all Realtors are alike and do the same thing so you just need to hire the cheapest one and he will sell your house for a lot of money is as mistaken as thinking the diamond earrings you buy at the big box discount store are just like the ones you could buy at Tiffany’s for five times as much. Anyway, those sellers are the ones driving up the inventory numbers and when they expire, the numbers will go back down and only a few buyers will have the money to buy the good homes that are left. We just put two properties into escrow for over $200,000 above their list prices because they are special, well-prepared and well-marketed homes.

It’s not a logical situation, potential buyers aren’t squeezed out of this market because interest rates have ticked up, they are squeezed out by not being able buy the home of their choice at the price they can or want to pay and they can’t or won’t find an acceptable alternative. The only houses that sell quickly in a changing market like this one are super great prepared homes or super well-priced ones, just like always.

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Magical Thinking and this Crazy Real Estate Market

Magical Thinking and this Crazy Real Estate Market

Homebuyers and home sellers's expectations often clash with harsh realities of the market when it comes to the nitty gritty ... selling price and offers.

Magical thinking and this crazy real estate market. What am I talking about? I have some examples.


The Home Sellers’ Magical Thinking

PREMISE: The house next door to mine sold last year for $1.1 million. It was smaller and there was only one house on the property. We have two houses and more square footage, therefore we should list ours for $1.2 million and get at least as much as that one.

FACTS: The house next door was small, but every detail was well designed and evoked a very emotional response. The landscaping was lush and serene, like a Zen retreat, a special relaxing haven in the midst of a harsh city.

The subject property lacked curb appeal and the landscaping was non-existent. Being a 2-unit income property, it is valued very differently and income properties are supposed to be valued on a formula based on its income. Historically low rents in a rent-controlled area do adversely affect the property’s value. That’s why vacant properties usually sell more quickly and at a higher price than ones that have been occupied by long-term tenants in a rent controlled area.

PREMISE: Why are these offers so low? I saw that a house sold just down this very street for over a hundred thousand more!

FACTS: There hasn’t been a sale this high on this street in over two years, and that one was a 5-bedroom, 3-bath redone Craftsman. This is a 2-bedroom, 1-bath home with a lot of view but no yard.

What am I saying? We don’t value our own property anything like a buyer or an appraiser will.

But sellers aren’t the only ones subject to magical thinking. In fact, homebuyers can really try to bend reality to suit their own agendas.

Homebuyers' Magical Thinking

PREMISE: Today, we have a Sellers' market that has actually been going strong for a good 6 years. Buyers are convinced that now is the time for what has gone up to come down, and down hard. We all remember the Great Recession, don’t we? In Northeast Los Angeles, we lost 40 to 50% of our average sales price in just 15 months. But buyers today have an even better fantasy: prices will fall to 2009 levels just long enough that they will be able to buy their dream home for a bargain price, then right after they close escrow, prices will rally back up to 2018 levels.

FACTS: Many facts belie this fantasy. Do those of you who were actually in the market in 2009 remember what the houses for sale were like? Many were distress sales, so forget about beautifully prepared homes, forget about pre-inspections, and forget about decent loans with low interest rates and 21-day closes. The loan process was so draconian only those who could prove they didn’t really need a loan could get one. Plus, even more properties were selling for cash than are today and most sellers rightly preferred cash sales over the obstacle course that was the loan process then. Owners who didn’t have to sell (such as owners who were not in trouble, owners who had pride of ownership and didn't have to deal with penny-pinching buyers who acted like their lovely home was just a piece of trash) just waited it out. What happens then? Low inventory and higher prices. This is known as unintended consequences.

There is a whiff of desperation in the air today ... 

Sellers want to time the market for the highest possible sales price, and buyers worry that if they buy now, they will close escrow the day before the market crashes and they will be left owning an overpriced turkey. What happened to owning a home as a place to enjoy your life, raise your family, and do whatever you want without a landlord telling you that you can’t? Even if you buy your home at the height of the market, if you hold onto it long enough, it will increase in value. And if you look at the prices over time, a correction almost never takes prices down to previous lows. Even the overblown prices of 2006-2007 are not seen today:

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So if you want to buy a nice house in a great neighborhood for a bargain price, you will most likely be leaving LA.

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What's Going On With This Market?

What's Going On With This Market?

Regardless of how confusing interpreting the market may be, one thing is clear: Buyers and sellers need an agent who understands the fine points of buying and selling.

After a long, steady period of seeing homes for sale in Highland Park and Eagle Rock selling fast and high, and homes in Glassell Park and Mt. Washington being snatched up with record multiple offers, there are signs that trend is changing.

Everyone is talking about it—the market seems to be slowing down! I’ve talked to Realtors, potential sellers, buyers, and the man on the street—they all feel the same. So are they right? Well, let’s see. Looking at the Trends analysis for Eagle Rock since May of 2012 we see this:

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1918 Hits

NELA Real Estate: The Numbers - Jan 1-May 31, 2017/2018

NELA Real Estate: The Numbers - Jan 1-May 31,  2017/2018

Just when some said real estate prices can't climb any higher, guess what? They're still climing in Northeast Los Angeles.

The numbers are in and there are no surprises. Homes in Highland Park and Hermon, Eagle Rock, South Pasadena, as well as Mt. Washington and Glassell Park homes are selling well, selling fast and selling for a lot.

Let's look at zip Codes 90041 (Eagle Rock), 90042 (Highland Park-Hermon) 90065 (Glassell Park-Mount Washington), and 91030 (South Pasadena) averages.

Note: All data is taken from , except the last column in 2018 is the percent increase from 2017 to 2018. The first column is first the year, then the average sales price for all single family homes in that zip code, the zip code with just the homes that sold for $1 million or more. AV SF is "average square feet", AV $/SF is "average price per square foot". The DOM is "days on market". LP is the "average list price" when the property went into escrow. The LP/SP is the list price/sales price ratio—a number over 100 is what percent the sales price exceeded the list price. And then #SALES is "number of sales" for that category January 1-May 31. %YOY$ is the percent increase in sales price from 2017 to 2018.


 

2017 AV SF AV $ / SF DOM LP $ SP $ LP/SP # Sales
90041 1630 588 53 882,659 900,602 105 60
90041
$ Million
2508 513 83 1,287,643 1,299,509 102 14
90042 1330 599 41 696,853 724,068 104 110
90042
$ Million
2473 441 22 1,049,200 1,124,380 109 5
90065 1540 549 48 772,614 790,986 102 112
90065
$ Million
2473 501 52 1,131,187 1,166,733 104 15
91030 2338 659 40 1,405,591 1,460,193 105 44
91030
$ Million
2484 662 40 1,498,526 1,556,803 105 38

 

2018 AV SF AV $ / SF DOM LP $ SP $ LP/SP # Sales % YOY $
90041 1781 628 40 1,035,928 1,062,825 105 60 12.72
90041
$ Million
2437 622 54 1,144,392 1,465,333 104 24 12.76
90042 1525 611 41 809,800 845,285 105 128 16.74
90042
$ Million
2072 574 31 1,070,463 1,139,133 107 30 1.30
90065 1548 625 36 852,667 888,339 105 126 12.30
90065
$ Million
2266 587 28 1,183,485 1,247,163 107 33 6.87
91030 2353 746 35 1,627,598 1,687,116 105 43 15.54
91030
$ Million
2461 744 37 1,708,633 1,769,667 105 39 13.69

 

Yes, you’re right—the market has continued to climb in Northeast Los Angeles. And it has climbed even more in South Pasadena. I’m sure this will spark more discussion of “are we in a bubble?” but I have been hearing from financial and real estate insiders that we have at least until 2020 before there are any signs of a major correction. And I have also heard  “it can’t go on like this,” with several compelling reasons why not. There is a lot of gray between “bubble burst”, “flatten out” and “keep going up.”

If you keep saying the same thing about the market, it will eventually be true—because real estate and financial markets are cyclical. The difficulty is exactly “when” markets will change, not “if” they will change. It’s sort of like predicting exactly when someone will die. You can be sure that it will eventually happen, but when exactly is based on so many variables, any prediction is only a guess. Maybe it’s a very educated and well-reasoned guess, but that’s not the same as knowing. Because NELA and South Pasadena have very few developments and most of the single family homes are custom built, it’s especially difficult to make general rules about their value.

This is what I’ve seen: the homes that sell for the most money tend to be those that are in great condition, great style, great locations, and/or have great potential. Location seems to be the most important, but great and stylish updates are a close second. That means that if your house is in great shape but needs updating and it’s not the best location, you aren’t going to get top dollar. However, you might be surprised by how much you do sell for in this market. It will almost certainly be more than you ever would have made before now.

Thinking that now might be a good time for you to sell? We know some stuff about how to strategize getting you the most possible now for your home. Call us for a consultation.

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This Real Estate Rule Changed over Twenty Years Ago

This Real Estate Rule Changed over Twenty Years Ago

If the home you sell was your primary residence two of the last 5 years, guess what? There is no tax on your capital gains!

Whether we’re talking homes for sale in Glassell Park, commercial real estate in Eagle Rock or homes in Mt. Washington, nobody can dispute that it has been a seller’s market. Northeast Los Angeles real estate market remains red hot and many property owners have cashed in.

Though surely not everyone …

I can’t tell you how many times over the last 29 years someone has told me, “I don’t want to sell because I don’t want to pay the tax if I don’t buy another property within 2 years.”

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The 2017 Million Dollar Story Exceeds Expectations (Well, Mine Anyway)

The 2017 Million Dollar Story Exceeds Expectations (Well, Mine Anyway)

An investment in homeownership in NELA isn't just a sound investment in the good life. It's a good investment period. The numbers tell the story and they don't lie.

It's official. Owners of single family homes in Highland Park, Eagle Rock, Mt. Washington and even Glassell Park homes are asking - and getting - a million dollars or more. Let's face it: There's never been a better time to be a homeowner in Northeast Los Angeles. The numbers are in!

As of December 29, 2017 (the last day of the year that sales could be recorded by the County), zip code 90041 had 51 single family homes sell for over $1 million each, including the highest sale ever recorded here. And now in January, 2018, an even higher highest sale ever closed escrow! Yes, after 7 years of trying with various agents, the almost 3-acre historic Bekins estate at last sold to a comedian and his heiress wife for $5,250,000!


The following table shows the number of $million homes sold over the last 6 years in Eagle Rock (zipcode 90041), Highland Park (90042), Glassell Park (including Mt. Washington--90065) and for some contrast, South Pasadena (91030).

Million $ Single Family Homes

  Zip Code 90041
Eagle Rock
90042
Highland Park
90065
Glassell Park
Mt. Washington
91030
South Pasadena
 
  2012 0 1 2 30  
  2013 0 1 4 63  
  2014 10 3 5 76  
  2015 20 7 18 95  
  2016 34 10 27 97  
  2017 51 19 50 95  

What is going on? Are we in a bubble? This is the question so many people are asking now. Respected real estate experts (and it seems like everyone else) have been asking this question since 2012. These very same experts have been absolutely certain that these price increases are unsustainable. And yet they continue. Why? Partly because we continue to experience low interest rates and low inventory. Also, Northeast Los Angeles is still cheaper than most communities to the west of us like Los Feliz, Silverlake, even Echo Park. We are considered the closest “decent” neighborhoods to downtown according to many buyers. Others are beginning to look at other neighborhoods like El Sereno and Lincoln Heights who are seeing prices go up accordingly.

Let’s face it, prices go up and some people can no longer afford to buy where they want to. This is not a new story, but it’s painful if it’s your story.

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  2087 Hits
2087 Hits