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.
Who would have thought 20 years ago that the rising values of homes in Highland Park and Eagle Rock - as well as real estate in Mt. Washington and Glassell Park - would be the talk of the town? If you own a home in one of these regions - or are looking to buy - odds are that home values are on your mind.
Regardless of whether you’re looking to buy a home or sell a home, it only makes sense that you will eventually want to gain an understanding of your own home’s value, if you’re selling, or the value of a different home if you’re buying.
But with all the information, articles, blogs and website tools out there offering home evaluations, its become easy to get, well, confused. That’s because as you’re performing your research and due diligence, the first thing you’ll notice is that there is little consistency in the values offered. One evaluation will be wildly different from the one before or after.
The reasonable question is, why? How? There’s a simple, straightforward answer: There are actually two types of values of homes - automated home values and manual evaluations.
Automated home values are very useful as a general reference tool, to give you a rough idea of what your home or any other home may be worth in the current market. And sometimes a general, rough idea is a good place to begin.
Let’s be honest, though.
Every home is unique. This is especially true in the neighborhoods of Northeast LA where tract homes don’t really exist. Most every neighborhood in the region is dotted with custom homes and it’s rare to find one that is like another.
Also, there are all sorts of renovations, upgrades and features that aren’t reflected in automated home values. Added up, these renovations and upgrades can make a considerable difference in price.
For instance, there is no way possible that an online tool can know if a home owner has refurbished the kitchen or the master bath. It doesn’t know if all the 80’s era carpet has been replaced with beautiful bamboo or magnesite. It might not even know if a room addition occurred since the last time the home was sold.
So the next reasonable question is, how do you as a home seller learn the true value of your home?
That’s where I come in. As a local professional real estate agent, I know what sells ... and what doesn’t. I know what buyers will pay more for, and how much that renovation really will net you in a home sale. Most importantly, I can provide you with a much more accurate and precise value of your home.
One last question …
When is the best time and date for me to stop by?
We just congratulated the Sellers of a lovely home in Mount Washington on the successful close of the sale of their home. They told us how easy we had made it for them. Selling a house can be a stressful process whether it ends well or not, so this was high praise. Mt. Washington real estate is a hot region, but doesn't mean selling is always a simple matter. The Seller stated, "We just did what you told us to when you told us to do it, and it all worked out."
Here is some information on adjustable rate mortgage loans that came from a lender in our area:
Today I wanted to discuss what an ARM (Adjustable Rate Mortgage) loan is and how it works for buyers. On Friday I locked in a 7/1 ARM at 2.625% for a client of mine. What I realized, while talking through this loan, is that few Realtors, even fewer borrowers, and, sadly, even few lenders really know how ARMs work and why they are still a good product option. Unfortunately, after 2007, many products, like the old ‘option-ARM’ , got grouped together and labeled as ‘liar loans’, ‘predatory loans’, or just plain bad products. That’s NOT the case. With the average Californian staying in their home for 7 years and the average American keeping their home loan for just over 5 years, does it really make sense to pay a higher rate premium to lock into a 30 year mortgage? The answer is maybe. For our client who knows they are going to be selling or refinancing, for any reason, within the next 5-10 years, a 7/1 ARM may be the right product for them. Simply explained, 7/1 means that the loan is ‘locked’ at a specific interest rate for the first 7 years, the adjustable once a year after that. The payment is still set up on a 30 year amortization schedule, so from day one the client is paying down principal. Additionally, the program usually has what’s known as 2/5 rate caps. This means that after the 7th year, the client’s interest rate can only go up a maximum of 2% per year with a lifetime cap of 5% over the start rate. So, for the client I locked in on Friday at 2.625% - who knows he is leaving the state in 5 years – this is the perfect loan for him. He is saving $300 a month over the 30 year fixed option, he is completely locked in for 7 years, and if for some reason he gets stuck with the property or turns it into a rental, his maximum adjustments will be 2% per year with a max rate of 7.625% in the 10th years. A 5/1, 7/1 or 10/1 ARM definitely isn’t for everyone. With 30 year fixed rates so low, I generally recommend a 30 year fixed rate as the #1 option. However, for certain clients, a fully amortized ARM may be the right answer. If you have more questions about these type product, give me a call.
Scott Groves Loan Officer - Team Lead Prospect Mortgage 1660 Hillhurst Ave| Los Angeles| CA 90027 225 S. Lake - 3rd Floor | Pasadena| CA 91101
NMLS ID #365178
From our research department at Teles Properties:
The question is still- “What is Happening in the Market?” This week, “Inside the Market” is highlighting a few articles that seem to address where we are and where things are going for the real estate market. Topics include historically low mortgage rates, a housing market ready for a rebound, falling or rising home prices and the difficulty for some home buyers. Take a look at all the articles below and share your thoughts!
December 12 – 16, 2011
“Residential Housing Ready to Awaken?”
After half a decade of withering sales and slumping prices, there are strong and diverse signs that the single-family housing market is poised for a rebound.
“Mortgage Rates Hold Near Record Low ”
Fixed mortgage rates in the U.S. again held near record lows over the past week, according to Freddie Mac’s weekly survey of mortgage rates.
Wall Street Journal
“Why Home Prices Are (and Aren’t) Stabilizing”
Home prices are falling again, but some analysts see a silver lining because the prices of homes that aren’t selling out of foreclosure have been holding steady.
Wall Street Journal
“Lower Credit Scores Slow Housing Recovery by Thwarting Sales”
Many Americans’ credit scores have fallen because of economic distress in the last few years. It’s probably affecting their ability to get a new mortgage or buy a house
Los Angeles Times
To download the articles from this segment, click on the following links:
Residential Housing Market Ready to Rebound
Mortgage Rates Hold Near Record Low
Why Home Prices Are (and Aren’t) Stabilizing
Lower Credit Scores Slow Housing Recovery by Thwarting Sales
*Single-family home sales in the 90042 zip code only.
*Single-family home sales in the 90041 zip code only.
We Realtors like to think that we are the experts at the center of the transaction, but we really can't give information about aspects of the purchase that are outside our areas of expertise. I'm not a roofer, I can't tell you if the roof looks good. I'm not a plumber, I can't tell you if the house has all copper plumbing. I can help you prioritize what you need to do to put your house on the market, strategize the pricing and marketing plan, write up a good purchase contract, negotiate a sale, guide you through the escrow process and many many other tasks that are part of helping you accomplish your real estate goals. When it comes to plumbing, roofing, flooring and other such things, I defer to others' professional expertise.
I am asked all the time about where property lines are at a property for sale. My answer is always, "If you really want to know, have a survey done." But there is a middle path--once in escrow, you can ask your title company to come out and identify the boundaries. This gives you a pretty good idea of where the lines are, though the survey is still the best way to determine them.
From the excellent loan officer, Linda Wilkes, Prospect Mortgage:
Fences should not be considered an indication of property boundaries. Legal property boundaries are demarcated by surveyor pins or stakes. These are typically 1/2" to 3/4" round iron pipes flush or buried slightly below land surface. Newer pins might have yellow or orange caps that indicate the surveyor's license number.
Locating property lines can be challenging. Older surveyor pins tend to erode. Older property markers could be metal posts, rebar, pipes or car axles. Those having difficulty locating their surveyor pins, also called corner pins, should contact their city or county government and get a copy of their plat map.
A plat map will identify each specific lot located in a subdivision — as well as the shape and dimension of the lot — and where the surveyor pins are located.
If a plat map is not available, or no pins are found, the next step is to contact a registered land surveyor to locate the property lines and set new surveyor pins. The boundary surveyor will thoroughly research city and county records relating to the land and all adjacent property. After research, the field work begins, reconciling the research with the onsite analysis on the property to determine the final boundary lines.
Boundary surveys might also include property improvements, fences, power lines and any encroachments crossing the property lines. Costs of a boundary survey can vary depending on property size, terrain, vegetation, location and season.
A survey is strongly recommended before subdividing, improving or building on land. Building beyond property lines could result in being forced to alter or remove a structure, fines and lawsuits.