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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!

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

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

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

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

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

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


 

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

 

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

 

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

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

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

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

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First Time Homebuyers: Feel Like You Have a Tiger by the Tail?

First Time Homebuyers: Feel Like You Have a Tiger by the Tail?

If today's homebuyers want to score big in the hot and active Northeast LA real estate market, it behooves them to think like a seasoned investor.

Many first time buyers in the crazy Northeast Los Angeles real estate market do feel like they have a tiger by the proverbial tail. From their point of view, they looked at dozens of homes for sale in Highland Park or Eagle Rock, dutifully attending open houses. They have competed time after time, pouring their hearts out in charming "I love your house and we are the cute couple you should pick to buy it" letters, scraping together every dime they can, revealing all their financial secrets to people they've never met and probably never will. And then, the 13th or 23rd time they go through this, they win!

They get to buy a house! Now what?


Now they do inspections and, oh my! This house needs work! It costs more than anyone they are related to — anyone they've ever known — has ever paid and it's not perfect! Not only that, this crazy market has been going up way too long and they just know that the minute they close escrow, the crash will happen and they will be stuck with an overpriced turkey that still needs work. Yikes! They have listened to their friends and reluctantly to Uncle Joe the accountant who bought his last house in 1982, and they are beginning to think the family and friends might be right—they are being chumps and they'd better get out while they can.

But they have a buyers' agent who reassures them that even though the house was sold as-is, even though the homeowners provided a general inspection and even a chimney and sewer inspection that revealed these issues, they can still ask for credits and repairs and negotiate the price down.

What the seller may choose to do about the requests is anyone's guess — but often they say no, or maybe they'll negotiate a little bit. Now the ball is back in the buyer's court. What next?

General thoughts: you can say yes, no, or negotiate somewhere between. But if this was a multiple offer situation, there is a good chance the seller has a backup offer, maybe even higher than yours, just waiting for you to back out. Or if you just give up and back out, often the property ends up selling for even more than you were willing to pay. We had that happen a few times in the last year, and sometimes it was a very significant amount of money.

Ask yourself if what you are feeling about this house is really your fear talking. After all, this is a big financial step for you—it might be the biggest step you've ever taken and you don't want to make a mistake. If you are asking all your friends and family what you should do, remember that the best advice they can give you from their perspective is to not take the step— because that is the "safe" choice. But in a couple of years when you still are renting an apartment and prices have continued to go up, will it really have been the safest path?

Some background: this crazy market has been recovering from the Great Recession for a good 5 to 8 years depending on where you are and what you define as "The Bottom." The majority of buyers have only been aware of it for about 4 years, when the number of homes on the market around my 'hood in Northeast Los Angeles dropped to almost nothing and prices started spiking up. For about the last 3 years, some people (many of them smart savvy Realtors) have said that this market is unsustainable and prices will soon level off—possibly even go down!

Suggestion #1: Look at what investors are doing. The beginning of the Renaissance of Highland Park began in 2009 when it truly was the bottom and investors came in and bought crummy thrashed foreclosures for cash, fixed them up with some style so that the people who could get a loan (if only from the Bank of Mom & Dad) would be attracted by the good looks and affordable prices and buy them—and the investor made a good profit. When the great deals got scooped up after a few years, eventually most investors moved on to higher priced neighborhoods where the profit margins were even higher again. Look at what's going on now, though—the investors have come back! Now NELA is where they can make a profit.

Many buyers today say that investors have scooped up all the "deals" and they cannot afford to buy the $million-plus flips that they produce. My question is, why didn't you buy the fixer when it was affordable and fix it up yourself? I have often heard buyers say that that is what they would like to do, but the investor went in and scooped up the property for themselves. In many cases, that is just not so. Here are the facts: in the 90041 Eagle Rock zip code, there were 34 $million + sales in 2016. Of them, 19 were flips. Of them, 12 were listed in the MLS, they were on the market an average of 69 days, and they sold for an average price of $645,000, which was slightly under the average asking price. And they sold fixed up for an average of $1,184,000 in 20 days on the market. That's about a $500,000 gross profit. Figuring in maybe $350,000 in renovation and sales costs, you have a net profit of $150,000. I'm guessing on costs, by the way.

But let's assume you never wanted to buy a fixer. The other interesting lesson to learn from where the investors are buying is that they think Northeast Los Angeles can sustain their investment/profit formula. Remember, they have a lot of risk—they generally pay cash (often with expensive hard-money loans), often self-fund the renovation, and generally take several months to complete the project. They do not want to risk so much money and time and then see the market go away, so if they have faith in the future market, that's a good sign.

Suggestion #2: Don't be confused about what you are really buying. Fix-it items on a house are just that, fixes. What is really important is the location, the lifestyle it offers you, the amenities nearby. I know my friends in the Midwest think our market is crazy—and they thought so 34 years ago when we bought our first house in Eagle Rock for $95,000. That particular house is probably worth $750,000 today, while the same house in Springfield, Missouri might be worth $125,000 today, maybe not that much. If the price of the home is that important or necessary to you, by all means, move to a less expensive area.

Keep in mind that real estate is primarily a long-term investment. If you are planning to move on in 2 years, maybe you should rent. But if you have the money and it seems like the right next step in your life, don't let your fears hold you back.

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Letters to Tracy

do I ever even stand a chance on your listings? Obviously, you have many of the best listings in the areas in which I'm looking, and I'd like to try to find a way to be more competitive.

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Today's Loan Jungle

Well, I now see that we should definitely undergo the loan process in some manner right now, because no matter how excruciating we find the process to be when we represent our clients, it is about 100 times more excruciating when we have to go through it ourselves.
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Market Update for Monday, March 08, 2010

Let's look at some numbers on this beautiful almost Spring morning:

We have a very energetic market in Northeast Los Angeles. In Eagle Rock 90041 since the beginning of the year, almost as many properties have closed escrow as have been listed. When you add in pending sales, you can see that we are quickly selling off the inventory. The sales numbers are moving almost as strongly in the other two zip codes which include all of Highland Park, Glassell Park, Mount Washington and Sagamore Park. At this rate, low inventories could continue throughout this year. Since this is a supply and demand business, if the demand keeps up at this rate, we will continue to have multiple offers and some increase in prices.

From the Combined LA/Westside Multiple Listing ServiceMarket Update Northeast Los Angeles Mar 8 2010

The questions are:

  • Will the demand keep up?
  • Are first-time buyers driving the market?
  • Will they put on the brakes when the tax credit goes away on April 30?
  • What are your thoughts?
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Here is Tracy's new and improved blog at last!

It's great to be back posting after a several month hiatus. Bear with me while I work out the bugs.

My focus is on life in Northeast Los Angeles and the San Gabriel Valley, with a particular emphasis on housing since that is what I do--connect interesting homes with interesting people. I define interesting in a lot of different ways, so don't worry about whether what you want is interesting enough for me, let me be the judge of that, ok?
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