LA Digs - Northeast LA Real Estate Blog

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.

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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.

The latest in Highland Park real estate news - nine single-family homes are being built on Burwood Avenue in Highland Park. Curious about the rumors of "gated community" and the like, I attended the Highland Park Neighborhood Council Meeting to hear a presentation by a representative from Williams Homes, a smaller developer who works out of Santa Clarita, who is building the project. I will tell you right now, this is an opinion piece, not a news article. And when you say Santa Clarita to me, I think of packed-in-like-sardines cheesy spec-built stucco developments with no soul. Here are the facts according to Keith Herren, Executive Vice President of Williams Homes:

 

• The development plan has been approved. Grading has begun, sewers and water are in, the streets will be in soon, and home construction will begin within a couple of months.
• The homes will be 2400-2700 square feet. The flat lots will have 2-story homes. The hillside lots will have 3-story homes with the main living area on the second floor, bedrooms on the top floor.
• The lots will be about 5,000 square feet and the homes will each have yards.
• The price is going to be in the $700,000-$750,000 range.
• The style will be contemporary, a lot like the Rock Row development on Yosemite Drive in Eagle Rock.
• The development will not be gated.

 

The discussion at the Neighborhood Council was lively. Neighboring residents voiced their objections to the style and the size of the homes because they felt it would be inconsistent with their smaller, historic Craftsman-style homes. These folks have every right to their opinion. They feel that no one will want to buy the new homes because they don't represent the historic nature of Highland Park. 

 

I think it will be very interesting to see what becomes of these 9 homes. We have seen inappropriate developments in Highland Park before--the Monterey Hills development that sold out eventually, and the four homes on North Staley off of Avenue 64, to name two. Both projects were supremely not Craftsman style, the Monterey Hills project was a large enough development that it was its own community, separate from the main part of Highland Park. The four homes on North Staley were real tract-style homes, priced in the $800,000-plus range and they still haven't sold.

 

I think this development could be different. For one thing, the homes are going to have some style and character, even though it isn't a Craftsman style. I hope they will incorporate some green building materials and features, like the Rock Row development did. Personally, I would much rather see an honest contemporary-styled home next to an original Craftsman home than see an imitation of the faceless beige stucco homes that stretch for miles in so many developments in Orange, Riverside, or San Bernardino counties. 

 

We have a contemporary home coming on the market next week which will set a precedent for this development, and it's maybe a half-mile away. 5830 Buena Vista Terrace is an architectural, eco-friendly contemporary that knocks my socks off, and I think the buyers are going to flock over to buy it. It has about the same square footage as these homes, 4 bedrooms, 4 baths, views from almost every window, a very private setting, and much more. We listed it for $799,000, Come check it out and tell me if you agree that it's about good style versus no style. Highland Park is historic and full of Craftsman homes, but it also has some interesting modern and contemporary homes scattered throughout. 

Now that we have officially closed escrow on this Highland Park home and are in no fear of jinxing anything, I can say - this was one of the smoothest home sales we've had in awhile. We had the magic combination of wonderful sellers, excited buyers, and professional buyers' agents to work with, such a joy! We launched 1503 Nolden Street on to the market in December, right in the midst of the holiday season. Even so, we received multiple offers and started the new year off with a new escrow. We negotiated a final sales price of $637,000 for this three bedroom, three bath home in like-new condition.

Property Details:
Listed for $599,000
Sold for $637,000
3 bedrooms, 3 baths
1,920 sq. ft. on a 7,772 sq. ft. lot
Built in 2005

Redfin, a popular home search engine, recently surveyed which neighborhoods or cities will be the most up-and-coming in 2013. To come up with the top neighborhoods in each market, they evaluated how each market was trending at the end of 2012 in four categories: on-market listings, sales volume, median price per square foot, and list price to sales price ratio. The areas with the most consistent trends in each category were labeled the “hottest in 2013.”

Well, what do you know? Highland Park, CA and Eagle Rock, CA are in the top 5 hottest neighborhoods, with Glassell Park, CA not too far behind! Of course WE know these are fantastic neighborhoods, but it’s always great to see recognition on a wider level. With great schools, or schools rapidly improving, lots of new businesses moving in and re-energizing the area, and convenient commutes, our neighborhoods are providing great communities for new buyers to settle down in.

Why did three of Northeast LA’s great ‘hoods get picked? According to Redfin, “The hottest neighborhoods are all seeing shrinking selection, increasing sales, and increasing prices—often at rates far above the metro areas that contain them.

Year-over-year trend in listings, sales, and median price per square foot as of December 2012

In our own experience, we are seeing multiple offers on most of our listings, often within a few days of bringing a home on the market. Most recently, our listing at 217 Newland Street in Highland Park received 13 offers within 6 days of being on the Multiple Listing Service, going into escrow with a sales price much higher than the list price of $299,000.

What’s causing this flurry of activity? Incredibly low inventory (Highland Park has been averaging 38 single family homes for sale, compared with 85 at the beginning of 2012), interest rates continuing to be at record lows, and an incredible amount of well-qualified buyers in the marketplace.

If you have been thinking of making a move, this is the best time in the Northeast Los Angeles real estate market last five years. We have seen sellers be pleasantly surprised at what their homes are selling for.

The first quarter issue of our newsletter is available online now!  Click here to get the latest news on Northeast LA real estate, including:

• The Big Seller Question: Why won't they just make an offer?


• Current state of the market


• Northeast LA real estate by the numbers


• Is cash always king?


• Shadow inventory: What the heck is it? Will it even affect our local market?

Click here to download a PDF copy.  If you would like to receive a hard copy via snail mail, email us your address - it's free!

This beautiful Craftsman bungalow was snapped up quickly in multiple offers when we brought it on the market in December. Features of 5921 Annan Way include hardwood floors throughout, remodeled kitchen and bath, updated systems, and a serene deck in the back yard. We just handed the keys over to the lucky buyer, and she is excited to move in. Congratulations to our sellers and the new home owner!

Property Details:
Listed for $429,00
Sold for $408,000
2 bedrooms, 1 bath
1,020 sq. ft. on a 3,840 sq. ft lot
Built in 1911

Here are all the single family home sales in Highland Park 90042 from this November.  The high sales price was $630,000 (compared to $680,000 in October), the low sales price was $210,000 (up from $175,000 in October), and there was a median sales price of $360,000 (down from $405,000 in October).

Also check out the November home sales for Eagle Rock and Glassell Park/Mount Washington.

You can see what Highland Park homes sold in October here.

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


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.

Distress sales account for between 30-50% of the total housing sales both nationwide and in a number of local areas. In 2008 and 2009, there were a lot of foreclosures and now there are many more short sales. This has had a downward pressure on home prices in general. Also affecting prices has been the uncertain job market. If you are afraid you might lose your job, you don’t want to put your life savings into a down payment on a home you might not be able to afford in a few months. A number of homeowners have experienced job loss and this has resulted in many of the distress sales. You see the inter-woven relationship between the economy and the housing industry operating here.

But look at this graph of housing inventory for Eagle Rock 90041:



The number of homes on the market compared to the number of homes that go pending and sold has dropped significantly over the last couple of years. The monthly supply of inventory of homes available to sell was slightly over 2 months in September, 2011.

Typically, less than 4 months inventory indicates a seller’s market. So why are prices down? The common theory today is that “Shadow Inventory” (the number of potential foreclosures and short sales from people who are currently “upside down” on their loans) is causing prices to stay low. Why? Because if they all came on the market at once, prices would collapse. I have pooh-poohed this theory before because why would they all come on the market at the same time?

But here is another way to look at it:

With the inventory so low, this inventory of distress sales does take on a significant importance. Meaning, if over half the properties that sell are distress sales, those distressed prices affect the regular market. The common discount that a short or foreclosed property sells at has been computed as around 27%. But if you look at this year’s Eagle Rock prices, you only see a 5% discount. Why? Partly because with so many distressed sales, they have pulled the prices of “normal” sales down to a lower level in general.

Another aspect of the market is the “retail show ready” property vs. the “fixer poorly presented” property.  Look at 2030 Estes Rd, a midcentury home, almost entirely remodeled, staged and gorgeous - and compare it to 4842 Algoma, a short sale, not available to be shown, in need of a lot of repair. Guess which one sold for $925,000 (23% over the original list price) in multiple offers in 21 days (start to close of escrow) and which one sold for $470,000 (15% under list price) in 48 days? That is a huge difference in price for houses that were very similar in size. And they both sold for cash!

This is an extreme example of a distress property selling at over 50% less than the regular sale, but the condition, location and amenities of the properties were quite different as well. In other words, if these two properties were in the exact same condition and presented equally, Estes still would have sold for more because of its location, style and amenities. But how much more? That’s why pricing a home for sale and determining value with an appraisal is an art, not a science.

Now I understand why some foreclosure agents (who typically deal with a lot of offers) are so difficult to get a response from when I submit an offer to them. I have a listing that we “event priced,” that is, we listed it at such a good deal for the neighborhood it’s in that lots of people made offers. We had initial offers that went 25% over asking, so we countered everyone back at that. A number of people dropped out with the attitude of “Was that a typo?” “How do you think you are going to get that?” and the like.  But we did get a few that were up at that price, and the highest one was quite a bit over.

So why did it take us almost a month to get this home in escrow?

The highest offer was VA financing, which means no down payment, seller to pay 3% of the buyer’s closing costs. The real issue is that, because the house needs work, a VA appraiser could require a lot of repairs and the seller would have to fix them before the loan could be finally approved. The seller isn’t in a position to do repairs (a major reason why we priced it the way we did.) So this is kind of a “teaser” offer. When I asked the lender what could happen with the appraisal, he said it was 50/50 that they would require a lot of repairs.  How much of a gambler is the seller?

The next highest offer was for cash. They accepted our terms, but didn’t read the offer well enough to see that they were supposed to counter us back with their best and final offer. We couldn’t reach them for several days and when we did, we were told that we should have emailed them. So why give us phone numbers? Why didn’t they tell us that? Then they said yes to our “best offer over” price verbally, but then they countered in writing at $15,000 less.

The next offer was the most reliable deal: cash, a good agent, a savvy buyer. But at this point it’s the third highest.

Which one would you take? Or would you keep waiting?

How is 90042 doing this year over last year at this time?

What looks like bad news is that the number of listings is up while the number of pending and closed sales is down:

But wait! Look at the average price per square foot!


And look at the average sales price vs. list price!


What is a buyer or seller to do?

If you listen to the news, you will be so confused. One day it’s a good market and housing is a good buy, the next day there is more trouble to come.


Right now, interest rates are back under the 5% range, sellers who are realistic and motivated are eager to sell, and buyers who have the courage to take advantage of this market can find good quality homes to buy.  So all of you, call me!  If you are motivated, I can help you realize your real estate goals.

Open Tuesday, October 12, 10:00-2:00pm
Open Thursday, October 14, 10:00-2:00pm
Open Sunday, October 17, 2:00-5:00pm

You can also call to schedule a private showing if you can't make the open house times. For more pictures, visit www.6163BuenaVista.com.

This home was snatched up quickly when it went on the market over the summer, but lucky for you it is back on the market and ready for YOU to grab and take residence in. If you'd like to see it, give me a call at 626-827-9795.

Listing courtesy of Rob Kallick and Matt Morgus, Keller Williams.