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LA Digs - Northeast LA Real Estate Blog

Welcome to LA Digs, the real estate and Northeast Los Angeles community blog written by Realtors Tracy King and Keely Myres.

Here, we share tips, market updates, and local news bits to keep you informed on what's happening in Northeast Los Angeles and the surrounding neighborhoods. Read on to learn about the latest in your neighborhood!

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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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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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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Homebuyer? Home Seller? You’re Gonna Want to Know Home Values

Homebuyer? Home Seller? You’re Gonna Want to Know Home Values

What is the best way to obtain an accurate value of your home? There’s a simple answer.

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?

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How to Be the Most Successful Seller

How to Be the Most Successful Seller

When we talk to a homeowner who is thinking of selling, we outline our process. Some people choose to follow every step we describe and they are usually the most successful sellers we have.

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."

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What is an ARM Loan?

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

cell (818) 679-5188 |  e-fax (877) 808-9569

NMLS ID #365178

This email address is being protected from spambots. You need JavaScript enabled to view it.

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What is Happening in the Real Estate Market?

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


Articles:

“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.

CNBC



“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

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October Sales: Highland Park, 90042

Here are the closed sales during the month of October in Highland Park*:

October Sales_ 90042-1 copy
Here's what you need to know about these numbers:


  • In October 2010 there were 18 sales, same as this month.

  • The average sales price in October 2010 was $357,028 (compared with $394,506 this year, an increase of 10%)

  • In October 2010 there were 10 distressed sales - five short sales, five bank-owned sales.  In October 2011 that was reduced to 8 distressed sales - two short sales and six bank-owned.   That's a reduction of 11% in distressed sales.


*Single-family home sales in the 90042 zip code only.

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October Sales: Eagle Rock, 90041

Here are the closed sales during the month of October in Eagle Rock*:

October Sales_ 90041-2 copy

Here's what you need to know about these numbers:


  • October of 2010 there were 10 sales (compared with 15 October sales this year, an increase of 50%)

  • The average sales price in October 2010 was $491,556 (compared with 386,537, a decrease of 21%)

  • In October 2010, two of the sales were short sales, and one was an REO.  This year there were five distressed sales (1 short sale and 4 REOs).   That's actually roughly the same percentage - 30-33% of closed sales are distressed properties.


*Single-family home sales in the 90041 zip code only.

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Property Boundaries

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.

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Never Say Never

The headlines from the Los Angeles Business Journal read:

Will L.A. home prices ever head up? Yes, but foreclosures, demographics will make it a slow march.

The article continued:

After a wrenching 6-year decline, the good news is that Los Angeles house prices are no longer in a tailspin.

“People always ask me, ‘When will I see my house worth what it was in 1989?’ I tell them, ‘It’s going to be awhile,’” said Fred Sands, president of Fred Sands Realtors.

In L.A. County overall, home prices have fallen around 30% since 1990.

Yes, folks, this was published in 1996, over 15 years ago. Did prices ever go back up to what they were in 1989? They were at a median price of $215,000 then for Los Angeles County. According to the Los Angeles Almanac, the median returned to the $215,000 number in 2000, so it took eleven years to complete that cycle.

What are they now? According to Dataquick, the comprehensive real estate database, the median price in March, 2011 was $320,000, a 43% drop from the highest median price in Los Angeles County history in 2006 when it reached $584,800. When will we complete this cycle? No one knows, but please, never say never.
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Tax Implications and Consequences of a Short Sale or Foreclosure

Here is a really good article that explains the tax implications and consequences of going through a short sale or foreclosure:Tax Implications & Consequences of a Short Sale or Foreclosure
http://www.moneycrashers.com/short-sale-foreclosure-tax-implications-conseque...
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Is Putting Money into a Refinance a Good Investment?

Today’s interest rates are the lowest in just about forever. Yet a number of people are not refinancing to take advantage of these rates because the value of their homes is not quite enough to show that the equity is the 20 to 25% that the lender requires to do the loan. What am I talking about? Lenders today like for borrowers to have a healthy amount of equity in their homes before they lend them money at the incredibly more affordable interest rate than any of us have seen in any of our memories. That’s so in case we don’t make our payments and the lender has to foreclose, they will actually be able to sell our property for enough to pay them back for their investment, even if we don’t make our payments for many months and even if the value of our property goes down after they give us the money.

Interest rates are so low right now that even if you are a bit “upside down” with your loan, meaning that you owe, say, 90% of what it is worth today, you might want to consider investing in paying down your mortgage balance to complete the refinance. Jack Guttentag, The Mortgage Professor, wrote an article for Inman News that illustrates the scenario (http://www.inman.com/buyers-sellers/columnists/jackguttentag/reap-benefits-cash-in-refinance). Check out his calculator to see what return paying a lower interest rate yields on your money: http://www.mtgprofessor.com/Calculators/Calculator3f.html.

One important element to this idea depends on whether you can get an appraisal that reflects an acceptable value for your home. I blogged recently about my personal trials and tribulations regarding this, but in the end, I was offered a lower interest rate than I could have gotten earlier this year, and although I had to put money in to get the loan, I think it was totally worth it in the long run.
Another element is, of course, do you have the money to put into the payoff? This is obviously not a solution for those who are upside down and unable to pay down the mortgage or having trouble affording their payments.
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