LA Digs - Northeast LA Real Estate Blog

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.  

You’re getting ready to put your home up for sale soon which has you making endless to-do lists of things that need to get done so that your house makes the biggest impact when it goes on the market. You've read article after article about creating curb appeal, decluttering and removing personal belongings, staging each room so it looks like a model home. There’s the deep cleaning, minor repairs to take care of, and giving your walls a fresh coat of paint. It can all start to seem extremely overwhelming and expensive!

We've seen this happen with our clients over and over and so we decided to find a way to make the process much easier (and less stressful!). 

Enter Compass Concierge. With this only-at-Compass offering, we'll front the cost of services to improve your home for a quicker, more profitable return. Exclusive to our clients, our Concierge program will prepare your home for the market. From deep-cleaning to cosmetic improvements, we'll work with you to assess every opportunity to elevate your home's value. 

And with our in-house construction company, Eagle Rock Restoration, all you have to do is decide which improvements you want to include in your preparation plan. We'll manage the project (big or small) from start to finish!

Through this unique philanthropy program, we're giving back to the community, one home at a time. 

As your agent, our primary goal is to find new ways to sell your home as fast as possible for the highest price, so we couldn't be more excited to share a new initiative with you today: Compass Coming Soon. A unique pre-marketing opportunity, Coming Soon will allow us to reach potential buyers before officially listing your home. Why is this so important? For a few key reasons:

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.

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.

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:

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

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:

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.

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.

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.”

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

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.

The newly passed Tax Reform Act supplies perks based on investments in property, but not everyone benefits and there is a downside.

It's been all over the news. Pundits have been spinning the plusses and minuses of the newly passed Tax Reform Act. Some say homeowners are going to get the shaft. Some say there will be a windfall for homeowners and investors. As a long-time real estate professional, my inbox has been inundated with questions from those who just purchased homes in Highland Park and Eagle Rock this year, as well as those looking to invest in homes for sale in Pasadena, Mt. Washington and other areas of North East Los Angeles.

The long and short of it? I have good news and I have not-so-good news. The good news is, the new tax reform act that was just passed by both houses of Congress isn't as bad as it could have been for those who have some financial interest in real estate. The not-so-good news is, it's not going to be as good for real estate as it has been over the past several years.

1. We can still write off some state and local taxes up to $10,000. The bad news is that is actually a tax increase for those of us who have more than an $800,000 house and/or still pay some other state or local taxes.

2.  We still have the mortgage interest deduction, but only up to a mortgage of $750,000, instead of the $1,000,000 it has been.

3. The $500,000 capital gains exclusion is not affected! If you have lived in your primary residence for 2 of the last 5 years, you and your spouse can each deduct up to $250,000 of your net capital gain when you sell your house.

So there it is. The basic nuts and bolts. The rules haven't changed. When it comes to investing in any sort of real estate, the rule is, take your time, perform your due diligence, be well informed and understand the benefits and potential pitfalls.

It has always been advisable to consult your tax consultant before making any decisions regarding your real estate activity. This is certainly true today.

Let's face it: When buying a home, the word "affordable" is relative, but that doesn't mean we shouldn't look at what the numbers say.

The big question plaguing many wannabe homebuyers today is, where can I afford to buy? They say they can’t afford the high sticker price of homes for sale in Mount Washington, Eagle Rock or Highland Park. For many buyers, even homes for sale in Glassell Park - once up-and-coming and affordable - is out of their reach.

Always being mindful that the median price of affordable places like Detroit, Michigan ($36,000), Harlingen, Texas ($84,000) or even nearby Desert Hot Springs ($188,000) is what more people think of as "affordable", there are some communities in Los Angeles, not too far from Eagle Rock, that are a bit more affordable as you can see in the table below.

Experienced realtors understand that real estate sales is a numbers game. Why are there so few homes on the market? Let's look at the numbers.

While homes for sale in Highland Park, Eagle Rock and Mt. Washington are still greatly in-demand, there are fewer homes on the market in Northeast Los Angeles. This is true of real estate in Altadena, Pasadena and surrounding areas.

In the quest to understand why Northeast Los Angeles is experiencing such low housing sale inventory, I thought it might be helpful to start with some actual numbers.

There is quite a bit of talk about how many more people there are in Northeast Los Angeles than there used to be. For some perspective, I have also included nearby South Pasadena.

When it comes to selling a home in Northeast LA, conventional wisdom tell us, if you have a great home to put on the market, it will be in-demand no matter what time of the year.

They say "timing is everything" about, oh, everything and they're probably right. It's certainly true about buying and selling real estate. This is especially true in the red-hot Northeast Los Angeles real estate market, where homes in Mt. Washington, Highland Park and Eagle Rock are in high demand and real estate in Pasadena, Glendale and Altadena continue to surge.

Many potential sellers believe, for instance, that the holiday season is not an ideal time to put their NELA home on the market. Are they correct? This question is more complicated than it seems, but there is a way to understand it all.

When negotiating the details of a home sale, being shy - and making assumptions - are sure to work against you.

Homebuying is both an art and a science, whether we're talking about buying in the ultra-hot Highland Park real estate market or purchasing homes in Glassell Park, Mt. Washington or, our favorite neighborhood, Eagle Rock. There are tried and trued methods and rules that buyers should understand well in advance of signing on the line that's dotted. Here's one of those vital rules to remember:

When purchasing a home, never assume anything. I can’t count how many times I've heard homebuyers state: “But I assumed that the Seller would leave the refrigerator (or stove, or washer/dryer, or garden tools, etc.).”

Here is how it works under the current California purchase agreement—if it isn’t attached, it isn’t staying unless you specifically ask for it and the Seller agrees to leave it. I refer you to page 3, item 8 of the contract: “Items listed as included or excluded in the MLS, flyers or marketing materials are not included in the purchase price or excluded from the sale unless specified in paragraph 8 B or C.” I also include verbal statements from either agent or anyone else about what stays or goes as something to confirm in writing.

So do you want that birdbath that perfectly goes with the house but is just sitting on the ground outside? Then ask for it! In writing on Page 3, Item 8. Are you not sure if the birdbath (or washer/dryer, or bookcase, or kitchen island and bar stools) is going to stay? Trick question—if it isn’t specified in the purchase contract, it’s not supposed to stay!

Sometimes items that you thought were attached are not. If there is anything you want that you assume (that danger word again) is attached, ask for it anyway just to make sure. It’s better to err on the side of being thought silly for asking for the apparently built-in SubZero refrigerator than to see after the day escrow closes that it is gone.

Sellers, you need to pay attention also. If you want that wonderful chandelier that is the centerpiece of the whole dining room, you should replace it before you go on the market. Otherwise, you are supposed to leave it with the house. Putting it in the marketing remarks that it will be replaced in escrow is asking for the buyer to fixate on that as the main reason that they offered what they did for the house. You can negotiate that out in the contract, but why ask for trouble? Avoid problems, never give the buyer a chance to flip out over it. This is one of the rare times that it’s really better not to talk about something you know about the house.

Eagle Rock homes are now selling in the millions of dollars ... for turnkey homes and fixers. What does this mean to buyers and sellers?

Everyone from homeowners, homebuyers, home sellers, Eagle Rock realtors and market analysts have been keeping a close eye on the Eagle Rock real estate for a long while. The long, steady growth of the market has been the talk of the town. Now enough data is in and the information we can glean from the numbers is telling indeed.

There are so many interesting things to note in this table (all data from TheMLS):

By studying the available data and comparing year-over-year market performance in NELA, there's much to surmise.

The Northeast Los Angeles real estate market continues to be strong, if not for how many homes are on the market, than strong in terms of the average final price of homes sold. Homes in Eagle Rock and real estate in Glassell Park and Highland Park continue to be in-demand. A quick look at the data confirms that even in 2017, it's still a perfect time to sell your home and, if you're seeking to buy, there are still some good deals out there to be had.

Let’s see how some popular zipcodes compare in terms of some of the factors we have to consider when looking for that dream house. This table looks at how competitive a marketplace is in terms of available listings of single family homes to buy and their average sales price, as well how much and what direction the market has changed since end of summer 2015.

There’s an art to selling real estate, but the science of numbers comes into play for any great real estate agent.

It’s no secret that the communities that comprise Northeast Los Angeles – Eagle Rock, Highland Park, Mt. Washington and Garvanza, to name a few – represent a hot real estate market. Homes for sale in Glassell Park can draw several dozens of prospective buyers to an open house. Homes in Pasadena almost always sell quickly and with multiple offers. How does that work exactly?

Selling real estate is a numbers game. The more potential buyers that see your listing, the more inquires we receive. The more inquiries we receive, the more likely we are to have a lot of prospects show up to an open house or request a showing. The more showings, the more offers. The more offers, the chance of achieving an over-the-asking-price offer for your home.