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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!

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

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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.

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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.

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