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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!

Fear and Real Estate and Life

It turns out that since the lending rules about proving your income have changed, these people are no longer able to qualify for a loan, even though they have a 20% down payment.

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1440 Hits

Why You Should Help Your Kid Buy A House This Year

I can't say it better than this mortgage broker did, so check out Janet Guilbault's blog here:
http://activerain.com/blogsview/1051983/3-2-1-LIFTOFF-Prevent-Failure-to-Launch-Help-Your-Kid-Buy-A-House-This-Year

It's a great opportunity for us parents as well as the kid. How else could we take advantage of the 3.5% down payment possibility that FHA offers? To qualify for FHA, you have to intend to occupy the property as your primary propertythat's the kid part. Plus, you can have a non-occupant co-signerthat's you. If you buy units, as long as your child lives in one, you can do that, too! The First Time Buyer Tax Credit is a bonus. If you do an equity-sharing partnership with your kid, you both can prosper. This is not coddling your kid so much as creating a dynamic investing machine.

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1568 Hits

Buyers Market?—Sellers Market? Part 2.

Last year, when Congress passed the first tax credit for first-time buyers, raised the conforming loan limits and made FHA a viable loan option in our area for the first time in 12 years, we in the real estate industry hoped that the market could return to a more normal state. But then the worldwide economy crashed and more and more people started losing jobs, and predictions of further huge price drops in the housing industry kept the market at pretty much of a standstill in our little corner of the world. Anyone who didn’t really have to sell, didn’t. Then some of the people who hadn’t really had to sell earlier in the year could no longer hang in there or their circumstances changed, and they started to sell. There have been some gems come and go in the last few months. Case in point, 2525 Medlow, a midcentury ranch over 2000 sqft in Eagle Rock, sold last year for $575,000. 4848 Ray Court, Eagle Rock, in escrow for well over its $499,000 asking, 716 Moon in Mt. Washington, a 2-bed, 2-bath midcentury with an incredible view just sold for $567,000. All of these could have sold for more a couple of years ago, and will be worth more again in a few short years, just watch.

But right now buyers are having a hard time. The first-timers who are trying to take advantage of the $8,000 federal tax credit and everyone qualified for the new FHA loan limits are being outbid by investors and people with 20% or more down payment and regular loans. In the last few months, banks have been pricing their foreclosed inventory at fire sale prices, teasing these poor FHA buyers into believing that at last they can catch the dream, only to find their hopes ground under foot by all-cash investors and insider pals of someone who makes an offer before the property even comes on the market.
One really nasty result is that some neighborhoods have seen their price point dive because only the foreclosures at fire sale prices are selling there. Now with the market picking up, we have a new problem: obtaining a fair and realistic appraisal.
As of May 1, the Home Valuation Code of Conduct came into effect. Essentially, it makes the appraisal process for any Fannie Mae or Freddie Mac loan more expensive, cumbersome, and in the end less accurate than the former system. For a complete discussion of this, check out http://reesespiecesofrealestate.com/2009/05/02/new-rules-for-home-appraisals-went-into-effect-may-1/ . Even without this new code, appraisers have been erring on the side of being overcautious in their appraisals because of the bad press they’ve received. Also, in many neighborhoods, the sales of bank foreclosures and short sales grew to such numbers that appraisers have had to use them as comparables even though a nice home with a real human seller is generally worth more than a distress sale because of its condition. Appraisals are always difficult in an appreciating market and now they are going to be difficult no matter what market we’re in. What to do? The person who pays cash has an advantage here, but they usually want to buy the home at a significant discount. I’m in an escrow where there is no appraisal contingency, but I’m afraid we can’t insist on that every time, much as I’d like to.
One way you can help is to sign the petition on the website, http://www.hvccpetition.com. The loan and appraisal industries are overreacting to the scrutiny they’ve been under. Those in favor of stringent regulation are trying to reduce the fraud that has riddled the industry in the last few years, but the consequence to this “code of conduct” may be to grind to a halt the very loan programs that should be moving us forward. Even though FHA appraisers are not currently affected by the code, they are regulated by other restrictive rules that make it difficult for these entry-level buyers to actually buy the homes they can afford. For example, FHA appraisers are stricter with the condition of the property concerning both repairs and unpermitted space. And the topper is that the FHA loan process has been taking far too long. Every Realtor I talk to who has an FHA deal has a tale of escrow dragging on for weeks beyond the scheduled close date. The story is that the lenders are overwhelmed, but they are overwhelmed by overcautious rules more than understaffing.

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1430 Hits

Buyers Market. No, Sellers Market!

But in Northeast Los Angeles and the foothills of the San Gabriel Valley, we see the active listing inventory declining and lots of properties selling in multiple offers. What is this?

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2108 Hits

Today is Earth Day!

Today is the 39th anniversary of the first celebration of Earth Daywhy, it's as old as I am! But you know that I'm a child of the 60's, don't you. There are lots of great links to explore including http://www.stopglobalwarming.org/default.asp , www.planetgreen.com , http://www.epa.gov/pick5/ .

If you want to celebrate Earth Day with a crowd, today is the grand opening of a new exhibit in the Rose Garden at Exposition Park called Cool Globes, Hot Ideas for a Cooler Planet. Check out the details at www.coolglobes.com/la.php.

Just for fun and also because it seemed like the right thing to do on Earth Day if I were to attend a fight global warming event, I wondered if I could easily take public transportation from near my home in Eagle Rock to Exposition Park. First, be sure to go to www.Metro.Net, not www.Metro.com. After you click on Maps, the planner is very simple to use if you are open to taking the bus. Forget rail for now. Sigh. Maybe next year, if the Expo line is completed on time. But today, for $2.50 round trip, you can go from the corner of Eagle Rock and Colorado Blvd to Exposition Park in about an hour each way on Metro Local 81. The Metro Trip Planner estimates that the cost if you drove your car would be $6.82 each way if you use the estimate of 54.1 cents/mile. So you would save money as well as pollution if you took the bus.

If you want to celebrate by using rail travel, you can hop on down to Union Station and catch the free noon concert performance by Carina Ricco on the South Plaza. Check it out at http://metro.net/news_info/press/metro_063.htm

Happy Earth Day!

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1450 Hits

My Latest Restaurant Guide to Eagle Rock and Environs

Oinkster Eagle Rock

Oinkster Eagle Rock

Here is my freshly updated and very subjective Restaurant Guide. Feel free to share it and to comment on it.

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1452 Hits

Eagle Rock Real Estate Report

Eagle Rock Real Estate Report February 13, 2009

What's the story with short sales? (Again, a short sale is where the owner owes more to the bank than they can get for the property, so they can't sell unless the lender agrees to take less).  Are they working out for people?  In Eagle Rock, 17 of the 47 active listings are short sales, 7 of the 22 properties in escrow are short sales, and 1 of the 9 closed sales so far this year was a short sale. So the percentage of each goes from 36% of the actives to 32% of the pendings to 11% of the solds are short sales.

Contrast that with foreclosures: 7 of the 47 active listings, 9 of the 22 pending, and 5 of the 9 closed sales are REO. The percentage goes like this: 15% of the actives, 41% of the pending, and 55% of the closed are bank-owned.

So there are a number of short sales that try to close escrow, few that actually do. On the other hand, foreclosures are selling like hotcakes. And, though it's a very small sample, two-thirds of the closed sales in Eagle Rock so far this year, 2009, were distress sales, which is almost as high a number as in Highland Park (see my February 7 blog). And actually, one of the "regular" sales was a trust sale, so that reduces the "normal" number even more.

My view is that the short sales you see clogging up the active listing inventory are confusing the general buyer public. You see these artificially low-priced homes, like the one at 4911 Townsend listed for $250,000, and everyone thinks they are going to get a deal. Well, let's follow that one and see how it pans out. It will be a learning experience for us all. My prediction: if it ever sells as a short sale, it won't sell for $250,000, it will be more, because the house is too big to sell for that little, even though it needs a lot of work. It will get bid up to a higher price. Will the bank approve that price? Or will it eventually go to foreclosure? Let's watch that one and find out.

**UPDATE** Today (November 14, 2010) I looked up the MLS record on 4911 Townsend to see what did ever happen to that property, and the answer is... nothing!  It expired on the MLS July 29, 2009, which means that it either did not sell and the seller decided to keep making payments, or the listing agent never updated the listing.  Looking up the property in the title records I see that it hasn't changed hands since 2006, so I'm assuming the lender did not give short sale approval and so the seller has kept making his payments and kept the house.

Here is an example of what pricing right will do: I saw 5420 Mt. Helena, which came on the market at $559,000 with a list date of 2/6/09 and by 2/10/09, the listing agent told me it had received 4 offers and was now in escrow. It was a trust sale and the family just wanted it sold. I'll bet that one sold for more than its list price as well, because you cannot underprice a home, even in this price-conscious market. If it looks like a deal, more than one buyer will think so.

Of course we all want a deal, we don't want to pay more than something is worth, especially in today's market. Which gets us into the whole discussion of value, of what is a fair market price? Is the price today the same price it will be worth in a month? If the buyer and seller can't agree on a number today, then we don't have a sale. What will the property be worth in two months? Is the market going up or down? If you are overpriced today, what does that make you in two months if you still have't sold? Or is it just that the right person hasn't come along?

It's not simple buying real estate today, is it? Unless you just want to buy a home, need to move, find a place you can afford, and buy it. Oh, that sounds simple. Why is all the rest going on?

And that's why we have the whole real estate industry, my friends. What should be a simple transaction is full of so many questions to be answered.

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1645 Hits

Buyers In Today's Market

Buyers in today's market are seeing some of the most confusing contradictions we've had in the market in my 18 years selling real estate. On the one hand, there is more inventory including more foreclosures and short sales than we've had in over 12 years, and we often see price reductions of over $100,000 on some even modestly priced homes. On the other hand, we see multiple offers with prices going over asking. It doesn't seem to make any sense.

Especially in these confusing times, pricing it right is the key to success. The hard part for a buyer to figure out is whether the price is right or can they offer less? Sellers are wondering whether the right price is too low and can they try just a bit higher? If the price is good enough to draw multiple offers, is it crazy to be in a bidding war when all the news says we're in a down market?

Here's the really hard part: you need to rely on the advice that moves you toward what you really want. This is true of any subject, from housing to your career. That means that your mother or nephew or friend at the office is not who you should rely on because they are rarely the ones who tell you to do something adventurous. They usually see their role in your life as the cautionary voice of what can go bad. This way, they are never wrong. If you ignore their advice and do something and it doesn't turn out, they told you so. If you don't do it, they were right and can never be proven wrong. And if you do it anyway and it turns out great, well, maybe you forget that they told you not to do it. The only advice that people seem to take from friends all the time which is risky is buying stocks. And that turns out badly so often, it's amazing.

What to do? Buy because you need a place to live. Buy because you want your own home in a neighborhood so you can be a grownup and a citizen and participate in the American Dream. Buy because you're tired of your landlord raising your rent and telling you you can't smoke in your own home, or own a dog, or paint your bedroom purple. Buy because you are tired of seeing all that rent money go to helping your landlord buy your house with you not getting any ownership of it.

Buying a house as purely an investment strategy is not a bad thing, but you cannot expect to see your stock share go predictably up like the accumulated interest on a CD. Over time, say 5 to 10 years, you are pretty sure to see your initial investment increase significantly. But don't make that the only reason to own a home.
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1737 Hits