Give Me a Call

323-243-1234

Email Me

keely.myres@compass.com
Slide One
Slide One
Slide Two
Slide Two
Slide Three
Slide Three

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!

Ut ac justo metus, at porttitor metus. Proin posuere, lacus non congue commodo, dolor tellus semper justo, eget sollicitudin quam eros sed ipsum. Phasellus nec est sed mauris ultricies porta. Cras ut viverra augue. Nam eget nisl tellus. Morbi quis lacus purus, a ornare quam.

The Worst Home Price Declines Are Behind Us 

 



Some Highlights

  • While home prices vary by local area, they’ve already hit their low point nationally, and now they’re starting to rise again.
  • Last July, prices started to decline, but around February, they began climbing back up.
  • If you put your plans to move on hold waiting to see what would happen with home prices, let’s connect to discuss if now’s the right time to jump back in.
Continue reading
  248 Hits
248 Hits

Why Aren’t Home Prices Crashing?

Los-Robles-5025-front-3sm

There have been a lot of shifts in the housing market recently. Mortgage rates rose dramatically last year, impacting many people’s ability to buy a home. And after several years of rapid price appreciation, home prices finally peaked last summer. These changes led to a rise in headlines saying prices would end up crashing.

Even though we’re no longer seeing the buyer frenzy that drove home values up during the pandemic, prices have been relatively flat at the national level. Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), doesn’t expect that to change:

[H]ome prices will be steady in most parts of the country with a minor change in the national median home price.”

You might think sellers would have to lower prices to attract buyers in today’s market, and that’s part of why some may have been waiting for prices to come crashing down. But there’s another factor at play – low inventory. And according to Yun, that’s limiting just how low prices will go:

“We simply don’t have enough inventory. Will some markets see a price decline? Yes. [But] with the supply not being there, the repeat of a 30 percent price decline is highly, highly unlikely.”

As you can see in the graph below, we’ve been at or near record-low inventory levels for a few years now.

That lack of available homes on the market is putting upward pressure on prices. Bankrate puts it like this:

“This ongoing lack of inventory explains why many buyers still have little choice but to bid up prices. And it also indicates that the supply-and-demand equation simply won’t allow a price crash in the near future.”

If more homes don’t come to the market, a lack of supply will keep prices from crashing, and, according to industry expert Rick Sharga, inventory isn’t likely to rise significantly this year:

“I believe that we’re likely to see low inventory continue to vex the housing market throughout 2023.”

Sellers are under no pressure to move since they have plenty of equity right now. That equity acts as a cushion for homeowners, lowering the chances of distressed sales like foreclosures and short sales. And with many homeowners locked into low mortgage rates, that equity cushion isn’t going anywhere soon.

With so few homes available for sale today, it’s important to work with a trusted real estate agent who understands your local area and can navigate the current market volatility.

Bottom Line

A lot of people expected prices would crash this year thanks to low buyer demand, but that isn’t happening. Why? There aren’t enough homes for sale. If you’re thinking about moving this spring, let’s connect.

Continue reading
  315 Hits
Tags:
315 Hits

What Does it Mean to be in a Seller's Market?

Even though activity in the housing market has slowed from the frenzy we saw over a year ago, today’s low supply of homes for sale is still a sellers’ market. But what does that really mean? And why are conditions today so good if you want to list your house?

It starts with the number of homes available for sale. The latest Existing Home Sales Report from the National Association of Realtors (NAR) shows housing supply is still astonishingly low. Today, we have a 2.6-month supply (this is nationally, although a very similar trend in our Northeast Los Angeles neighborhoods) of homes at the current sales pace. Historically, a 6-month supply is necessary for a ‘normal’ or ‘neutral’ market in which there are enough homes available for active buyers (see graph below):

What Does This Mean for You?

When the supply of homes for sale is as low as it is right now, it’s much harder for buyers to find one to purchase. That creates increased competition among purchasers and keeps upward pressure on prices. And if buyers know they’re not the only one interested in a home, they’re going to do their best to submit a very attractive offer. As this happens, sellers are positioned to negotiate deals that meet their ideal terms. Lawrence Yun, Chief Economist at NAR, says:

“Inventory levels are still at historic lows. Consequently, multiple offers are returning on a good number of properties.”

Right now, there are still buyers who are ready, willing, and able to purchase a home. If you list your house right now in good condition and at the right price, it could get a lot of attention from competitive buyers.

Bottom Line

Today’s sellers’ market holds great opportunities for homeowners ready to make a move. Listing your house now will maximize your exposure to serious, competitive buyers. Let’s connect to discuss how to jumpstart the selling process.

Continue reading
  111 Hits
111 Hits

Why Today’s Housing Market Isn’t Headed for a Crash

03_Worcester-Ave-981_Front3-mls

67% of Americans say a housing market crash is imminent in the next three years. With all the talk in the media lately about shifts in the housing market, it makes sense why so many people feel this way. But there’s good news. Current data shows today’s market is nothing like it was before the housing crash in 2008.

Back Then, Mortgage Standards Were Less Strict

During the lead-up to the housing crisis, it was much easier to get a home loan than it is today. Banks were creating artificial demand by lowering lending standards and making it easy for just about anyone to qualify for a home loan or refinance an existing one.

As a result, lending institutions took on much greater risk in both the person and the mortgage products offered. That led to mass defaults, foreclosures, and falling prices. Today, things are different, and purchasers face much higher standards from mortgage companies.

The graph below uses data from the Mortgage Bankers Association (MBA) to help tell this story. In this index, the higher the number, the easier it is to get a mortgage. The lower the number, the harder it is.

This graph also shows just how different things are today compared to the spike in credit availability leading up to the crash. Tighter lending standards have helped prevent a situation that could lead to a wave of foreclosures like the last time.

Foreclosure Volume Has Declined a Lot Since the Crash

Another difference is the number of homeowners that were facing foreclosure when the housing bubble burst. Foreclosure activity has been lower since the crash, largely because buyers today are more qualified and less likely to default on their loans. The graph below uses data from ATTOM to show the difference between last time and now:

So even as foreclosures tick up, the total number is still very low. And on top of that, most experts don’t expect foreclosures to go up drastically like they did following the crash in 2008. Bill McBride, Founder of Calculated Risk, explains the impact a large increase in foreclosures had on home prices back then – and how that’s unlikely this time.



“The bottom line is there will be an increase in foreclosures over the next year (from record level lows), but there will not be a huge wave of distressed sales as happened following the housing bubble. The distressed sales during the housing bust led to cascading price declines, and that will not happen this time.”

The Supply of Homes for Sale Today Is More Limited

For historical context, there were too many homes for sale during the housing crisis (many of which were short sales and foreclosures), and that caused prices to fall dramatically. Supply has increased since the start of this year, but there’s still a shortage of inventory available overall, primarily due to years of underbuilding homes.

The graph below uses data from the National Association of Realtors (NAR) to show how the months’ supply of homes available now compares to the crash. Today, unsold inventory sits at just 2.7-months’ supply at the current sales pace, which is significantly lower than the last time. There just isn’t enough inventory on the market for home prices to come crashing down like they did last time, even though some overheated markets may experience slight declines.

Bottom Line

If recent headlines have you worried we’re headed for another housing crash, the data above should help ease those fears. Expert insights and the most current data clearly show that today’s market is nothing like it was last time.

Continue reading
  105 Hits
105 Hits

What Buyer Activity Tells Us About the Housing Market

Though the housing market is no longer experiencing the frenzy of a year ago, buyers are showing their interest in purchasing a home. According to U.S. News:

“Housing markets have cooled slightly, but demand hasn’t disappeared, and in many places remains strong largely due to the shortage of homes on the market.”

That activity can be seen in the latest ShowingTime Showing Index, which is a measure of buyers actively touring available homes (see graph below):

The 62% jump in showings from December to January is one of the largest on record. There were also more showings in January than in any other month since last May. As you can see in the graph, it’s normal for showings to increase early in the year, but the jump this January was larger than usual, and a lot of that has to do with mortgage rates. Michael Lane, VP of Sales and Industry at ShowingTime+, explains:

“It’s typical to see a seasonal increase in home showings in January as buyers get ready for the spring market, but a larger increase than any January before after last year’s rapid cooldown is significant. Mortgage rate activity this spring will play a big role in sales activity, but January’s home showings are a positive sign that buyers are getting back out there . . .”

It's important to note that mortgage rates hovered in the low 6% range in January, which played a role in the high number of showings. What does this mean? When mortgage rates eased, buyer interest climbed. The jump in home showings early this year makes one thing clear – while rates may be volatile right now, there are interested buyers out there, and when mortgage rates are favorable, they’re ready to make their move. 

Continue reading
  133 Hits
133 Hits

Real Estate Market Update First Quarter 2021

Let's take a look at the numbers comparing the real estate activity in the first quarter of 2021 to the same time period in 2019 and 2020.

 First Quarter
Year Over Year

 Eagle Rock 90041  Highland Park 90042 Glassell Park/
Mt Washington 90065 
El Sereno. 90032 Altadena 91001  South Pasadena 91030

2019

#Sold/

Av List $/

Av Sold $

 

52

973K

1,003K

 
 

81

859K

880K

 

90

901K

921K

 

66

641K

636K

 

102

989K

1000K

 
 

38

1333K

1362K

2020

#Sold/

Av List $/

Av Sold $

 

52

984K

1010K

 

 

84

890K

916K

 
 

56

871K

893K

 

43

671K

682K

 

 

89

949K

962K

 

 

29

1546K

1612K

 
 
2021

#Sold/

Av List $/

Av Sold $

 

103

1150K

1233K

 

 

189

995K

1036K

 

 

169

1026K

1061K

 

 

124

774K

777K

 

 

189

1197K

1202K

 

 

78

1,810K

1,737K

 

What does all this mean?  You can interpret these numbers different ways, but the basic truth would seem to be across the board that prices are going up!  That’s surprising as all you read about the economy says that we can’t sustain these prices.  Many of us wonder where these people are getting the money to pay these prices.  Prices went up in 2020, too, even though Altadena’s average sales price didn’t.  I’m going to go out on a limb here and say that the ones who made offers on some of the houses in Altadena, and found that they were competing with as many as 50 offers didn’t think that the market was slowing down.  In other words, well-priced, well prepared houses did well.  Those owners who over-priced their homes or didn’t see why they should make their home attractive to a buyer didn’t do as well. And that’s in every market. There is a lot of thought and experience that goes into pricing and marketing for higher sales prices even though it looks like you can put any price you want on a house and you’ll get it.  

Low interest rates were credited with much of the activity.  Interest rates have increased lately, but mostly to 2019 levels, still under 4%.  Still low by historic levels. And the numbers of houses sold has doubled since 2019 levels, so current interest rates are not affecting number of sales or average sales prices in the first third of 2021. Will it continue?  I wish I knew because I could make much more money if I did, and you could, too. But as they say, my crystal ball is in the shop now.

Continue reading
  4648 Hits
4648 Hits

Our Local Market Continues to Heat Up Through the Summer

We are looking at both July and August for this article (see previous months in my last market update). Comparing the two months to last year at the same time gets even more interesting. Only Altadena has a lower average sales price and fewer sales this year over last, and just in August, not July. And that’s contrary to my impression of Altadena sales because it seemed like those sales were going higher and higher. That’s why we compare these things over time. One month doesn’t a market make.

In general, waiting for recessionary price reductions is counter-productive: prices are trending up and sales volume is generally up. I credit the low interest rates that seem to be lasting at least through the end of the year, according to the Federal Reserve (which doesn’t really speak to mortgage rates but it does influence them). 

The trick is qualifying for a loan either to buy or refinance a home loan.  If you are lucky enough to still be working you can lock in rates at their lowest ever!  Even South Pasadena is up in both volume and price after a disappointing May and June, when we usually see the robust result of the spring buying season.

If you’ve figured out where you can live cheaper and work from home, now is a really good time to sell.  And who wouldn’t like to lock in a sub 3.0% interest rate for a 30-year fixed mortgage!?

Continue reading
  4796 Hits
4796 Hits

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.

 

Continue reading
  4755 Hits
4755 Hits

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?

Continue reading
  5263 Hits
5263 Hits

Forbearance Does NOT Equal Forgiveness

As news and information about relief assistance swirls around in the midst of this crisis, there are lots of questions about what to do with your mortgage payments. To some, it can be interpreted that if you just don't pay your mortgage payment right now all will be forgiven. This is not true, and can have some serious affects on your financial health, and truly the health of the economy as a whole. 

Here is information from a lender friend of ours, Scott Groves with Movement Mortgage, that explains forbearance and how it works:

"If you, or your clients, are in dire-straights and having to make the toughest of financial decisions - like, what bills do I pay or how do I buy food - then I understand that you must do EVERYTHING you can to improve your cash-flow situation.

That being said, applying for a FORBEARANCE on your mortgage payment should be an ABSOLUTE LAST RESORT when it comes to your finances.

Continue reading
  2333 Hits
2333 Hits

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

Continue reading
  1613 Hits
1613 Hits

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.

Continue reading
  2654 Hits
2654 Hits

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:

od75JgpQ

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

Continue reading
  2723 Hits
2723 Hits

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:

Continue reading
  2970 Hits
2970 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.

Continue reading
  3217 Hits
3217 Hits

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.

Continue reading
  3052 Hits
3052 Hits

The new Tax Reform Act: How will it affect your real estate life?

The new Tax Reform Act: How will it affect your real estate life?

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.

Continue reading
  3844 Hits
3844 Hits

Priced Out of Prime NELA Real Estate? There's Still Hope For Something Affordable and Close By

Priced Out of Prime NELA Real Estate? There's Still Hope For Something Affordable and Close By

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.

Continue reading
  2887 Hits
2887 Hits

NELA's Low Housing Inventory - Here's Part of the Story

NELA's Low Housing Inventory - Here's Part of the Story

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.

Continue reading
  2740 Hits
2740 Hits

Is the Holidays the Best Time to Put My NELA Home on the Market? If Not, When Is?

Is the Holidays the Best Time to Put My NELA Home on the Market? If Not, When Is?

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.

Continue reading
  2154 Hits
2154 Hits