A proposal out of Sacramento to put denser housing near transit has divided Californians. But a similar program is already underway in the city of Los Angeles.
It’s an incentive program called “Transit-Oriented Communities,” and it’s encouraging developers to build more housing units—including affordable ones available to tenants with qualifying incomes—near major public transportation stops.
Experts agree that to combat a housing shortage, one that has fueled rising rents and real estate prices, Los Angeles needs to build, build, build. Affordable housing is in especially high demand and its growing increasingly harder to find. More than 8,500 units that are income-restricted now are expected to become market-rate over the next five or so years, and it’s estimated that LA County would need to add 517,000 income-restricted units to meet existing demand.
Homebuying in Los Angeles in 2020 is off to a busy start. Agents and real estate observers say that in the “lower” end of the market—where homes are priced below $1.5 million—the early action might be indicative of the year ahead.
“It’s tighter in the lower price thresholds for sure,” says Jonathan Miller, whose real estate and appraising firm, Miller Samuel Inc., tracks home prices in Los Angeles. “Unless there’s a change in economic conditions in some material way, it’s hard to make an argument that things are going to change all that much in 2020.”
In a nationwide survey investment strategists and real estate experts predicted that prices will cool off or even fall in some of the West Coast’s priciest markets this year, including Los Angeles, where the median price of a single-family home was $650,000 in November.
But Los Angeles brokers say they expect prices to stabilize or grow at a slower pace than they did in 2018, when price records were notched month after month. Even though buyers have more power over transactions than they did two years ago, it didn’t swing 100 percent in their favor.
What is working in their favor? Low interest rates. What’s not? Low inventory. Plus, the economy is so robust, there are plenty of buyers.
That means home shoppers should expect to compete with multiple offers in popular areas like the Westside and in “transforming neighborhoods” in Northeast Los Angeles and South LA, regions where home prices grew the most over the last decade.
You’re going to see between $799,000 and $1.4 million be the hottest price points. Buyers need to be prepared to make competitive offers, that could mean submitting offers for over asking price. But that’s not the only way to get creative, perhaps remove loan or appraisal contingencies also don’t expect a perfect house or ask for exorbitant credits on the request for repairs.
And, if you still keep getting out-bid, look for houses that have been sitting on the market for a long time, a sign that they might be overpriced. Embrace homes that might not be well-staged or stylish and consider doing some work on the property to make it suit your tastes.
Millennial buyers want to feel that they can just bring their toothbrush... they can’t imagine doing work. It would be good to look for places that need work and add value. If that’s the case, there are financing options to build renovation costs into a home loan. For example, an adjustable-rate mortgage, while not always ideal, will typically have lower monthly costs in the first few years, which could allow buyers to save more money for repairs.
Also, if you’re a first-time buyer keep in mind that you’ll likely live in the home for at least half a decade. Ask yourself will this work for me for the next five to seven years? It opens up so many possibilities.
In 2015, Chris Pouy’s realtor told him West Adams would be the next “it” neighborhood. Once he checked it out for himself, he didn’t have to be convinced. Central to the Westside and Downtown LA, its streets are lined with tall, bending palm trees and dotted with charming bungalows fronted by grassy lawns.
Pouy owned a loft in the Toy Factory, but the Arts District was getting “bougie,” and he wanted a home in a different neighborhood, this time with a backyard. He put offers in on six or seven houses—and was outbid on all of them.
“I had no idea it was going to be so competitive,” he says.
Then he found a three-bedroom, two-bathroom Craftsman with a swimming pool in neighboring Jefferson Park. It was listed at $599,000, and he remembers thinking: “If I don’t get this one, I might miss my window.” He wrote a letter to the seller and offered to match their highest offer. He scooped it up for $645,000. Today the property is estimated it could sell for $982,000.
Economic uncertainty and affordability issues to subdue California home sales
LOS ANGELES – Low mortgage interest rates will support California’s housing market in 2020 but economic uncertainty and affordability issues will mute sales growth, according to a housing and economic forecast released today by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). (Scroll down the page and look for yellow banner.)
C.A.R.’s “2020 California Housing Market Forecast” sees a small uptick in existing single-family home sales of 0.8 percent next year to reach 393,500 units, up from the projected 2019 sales figure of 390,200. The 2019 figure is 3.1 percent lower compared with the pace of 402,800 homes sold in 2018.
The Los Angeles City Council voted today to lay the groundwork for creating “anti-displacement zones” around new market-rate or “luxury” residential buildings that contain no affordable units.
The vote directs the city’s housing and community investment department, city planning, department, and the city attorneys to draft an ordinance that would put in place a battery of protections aimed at helping renters in a one-mile radius around new developments.
According to the Freddie Mac's latest Primary Mortgage Market Survey, the U.S. 30-year fixed-rate mortgage (FRM) averaged 3.66 percent.
"The housing market continues to steadily gain momentum with rising homebuyer demand and increased construction due to the strong job market, ebullient market sentiment and low mortgage rates," said Sam Khater, Freddie Mac's Chief Economist. "Residential real estate accounts for one-sixth of the economy, and the improving real estate market will support economic growth heading into next year."
Freddie Mac News Facts
Lately I’ve been hearing more people say the American Dream is dead. Or the American dream of owning a home isn’t possible for everyone.
The American dream is about a lot of things like raising a family in a nice neighborhood, owning a business, advancing to the top of your field, etc. We all have our own ideas about the American Dream.
But when it comes to building wealth, you can’t beat home ownership and building equity. It is almost impossible to get ahead by saving alone.
Saying “no” to home ownership is big mistake.
One statistic that I often site is that the net worth of homeowners across the US is around $240,000 BUT the net worth of renters is $5200. (National Association of Realtor statistic)
Why? Because when you pay your mortgage you are paying off your loan. When you pay rent, you are paying someone else’s loan. In other words ZERO is going back into your pockets (not to mention the tax benefits lost and the equity growth).
Here’s a great article that explains more about why Real Estate is the best way to build wealth (posted earlier on my blog)
It’s about to get more difficult for landlords to boot tenants in the city of Los Angeles.
The Los Angeles City Council unanimously passed an emergency moratorium today that will temporarily bar property owners from evicting tenants, unless they have “cause”—for example, they failed to pay rent or violated the terms of a lease.
The ban on “no-fault” evictions is a response to reports from renters, tenant lawyers, and housing advocates that tenants who pay low rents are being evicted to make room for new, higher-paying tenants before California’s rent control law goes into effect in January.
A top-notch credit score can open a lot of doors. With it, you can get access to the best loans at the lowest rates and most favorable terms, which can save you a lot of money. You are more likely to be approved for credit. And you can get approved for the most rewarding credit cards that allow consumers to benefit off the spending they already do.
What Is a Good Credit Score?
There are hundreds of credit scoring models out there, and you likely have multiple credit scores depending on the model being used. Many models use a scoring range between 300 and 850. In such models, a credit score of 700 or above is generally considered good. A score of 800 or above on the same range is considered excellent. Most credit scores fall between 600 and 750.
Mortgage rates dropped to their lowest level since October 2016 due to weaker economic data over the past week.
The 30-year fixed-rate mortgage averaged 3.49% during the week ending Sept. 5, down 9 basis points from the previous week, Freddie Mac reported Thursday.
Rates for 30-year home loans have only increased nine times so far this year — otherwise, they have dropped or remained flat from week to week.
The 15-year fixed-rate mortgage moved down 6 basis points to an average of 3.00%, according to Freddie Mac. The 5/1 adjustable-rate mortgage averaged 3.30%, falling 1 basis point.
California is on the verge of having statewide rent control.
Assembly Bill 1482—which will bar landlords from hiking rents more than 5 percent, plus local inflation, in one year—was approved this afternoon in the state Assembly on a 46-22 vote. Inflation varies by region, but averages about 2.5 percent in California.
The bill now heads to Gov. Gavin Newsom’s desk; he has said he will sign it.
Assembly member David Chiu (D-San Francisco), who authored the bill, says the rent cap is designed to prevent “rent gouging” and “egregious” increases.
The 2008 financial crisis brought the global economy to its knees and sent American home prices into freefall. For anyone who managed to hang on to their job, savings, and credit score, the aftermath of the crisis was a prime opportunity to buy a house at a bargain price.
The Great Recession is the only economic downturn millennials have lived through as adults, so, naturally, they might think that the next recession—which more and more economists believe will hit by 2021—will present a chance for many millennials to finally join the ranks of homeownership.
It doesn’t bring me joy to report that this is unlikely to be the case.
The last recession was an anomaly in more ways than one, and its effect on the housing market is the biggest outlier relative to other recessions. The 2008 recession didn’t cause the housing market to go into freefall. The housing market going into freefall caused the recession.
Home prices in LA County surged to $635,000 in July, shattering an all-time record for the second month in a row.
The county’s median sale price rose 2.8 percent since June and a full 5 percent since July 2018, a new report from real estate data tracker CoreLogic shows. That was the largest yearly gain since November.
CoreLogic analyst Andrew LePage says in a report that the bump in prices may be due in part to falling mortgage interest rates, which have reduced monthly costs for homebuyers who aren’t making all-cash purchases.
Across all of Southern California, sale prices rose 2 percent year over year. But LePage points out that average mortgage payments dropped 7 percent in the same time period due to declining interest rates.
In Los Angeles, home price increases continue to be accompanied by sluggish sales. Last month, 6,965 homes sold countywide—exactly one fewer than in July 2018, despite the fact that this year the month had one additional business day for sales to process.
Across all of Southern California, sales during the month were 2.9 percent below average (excluding the bubble years leading up to the 2008 Great Recession).
In LA County, median sale prices eclipsed the $600,000 mark for the first time in May 2018. LePage says that how high home values grow will probably be determined by a combination of “mortgage rates, buyer confidence, job and income growth, and inventory levels.”
Though many economists expected mortgage interest rates to climb in 2019, they’ve instead dropped, creating a lending environment favorable to buyers—but also encouraging price growth. LA’s median sale price in July was a full $17,000 higher than a month before.
Photo Credit: abc7
Builders in Los Angeles County are reported to be on track to completing nearly 10,000 new homes before the end of the year. The 9,400 units of housing on the way in the second half of 2019 is higher than the number of units constructed in all of 2018—or 2017.
Most economists agree that building new housing is a key part of addressing steep rental prices and home costs throughout the state. Gov. Gavin Newsom pledged last year to oversee construction of 3.5 million new homes by 2025. If distributed according to population, that would leave LA County responsible for contributing nearly 900,000 residences to that total.
Since homeowners and renters require employment to make housing payments (with rare exception), the jobs recovery is key to the housing recovery. Over 4.5 million people are employed in Los Angeles County as of March 2019. This is 222,200 more jobs than at the 2007 peak.
Los Angeles’ jobs recovery rate has slightly trailed the statewide employment recovery in recent years and has begun to slow. From March 2018 to March 2019, the number of jobs grew by a meager 1.3%. This is roughly the same level of job growth experienced statewide.
No, The Fed Didn't Cut Mortgage Rates last week!
Mortgage rates were mostly unchanged, which will come as a surprise to scores of consumers who mistakenly believe the Fed's 0.25% rate cut equates to a 0.25% drop in rates. The Fed does not set mortgage rates!
Actually, to be fair, the Fed Funds Rate (that thing everyone was talking about last week) is in fact the basis for Home Equity Lines of Credit (HELOCs) in many cases, but that's it as far as the mortgage world is concerned. The most common mortgages are determined by other parts of the financial market.
New home-sharing regulations are in place for the city of Los Angeles, changing the way hosts from Airbnb and other rental platforms can book vacation stays and short-term rentals.
Starting July 1, 2019, hosts must register and pay an $89 fee to the city. Hosts can only register one property with the city at a time and the property must be their primary residence (where they live at least six months out of the year). Rentals are limited to a 120-day annual cap, and rent-stabilized units are no longer allowed to be used for home-sharing—even if the host owns the unit.
The city’s planning department has put together a detailed FAQ on the home-sharing ordinance with more information on how to register and pay fees before enforcement of the regulations begin on November 1, 2019.
Alternative Title Everyone Knows a Realtor
As a home owner or home buyer, there are a lot of real estate agents and brokers out there to pick from but precious few have worked in the business as consistently and diligently as I have. Let me explain.
As home sales volume declines, "part time agents" continue to go back into hiding with some expected to “pop up” again once the market returns to full strength.
There is a direct correlation between home sales volume** and agent licensing with licensing movement changing 6-12 months after a consistent change in home sales volume.
Today’s decreased license renewal rate is directly related to the flat-to-down home sales volume experienced since 2016 with 79.3% renewing in 2018 versus 81.4% the year prior 2017. Additionally new sales agents have declined about 10% from 2017 to 2018.
The next substantial increase in sales agents won’t occur until the next boom in real estate sales volume...
One of the most earthquake-prone urban areas in the nation, Los Angeles is likely to be rocked by a major temblor within the next few decades. As nerve-wracking as it may be, preparing for the big one is part of living in LA.
According to the United States Geological Survey, there’s a 60 percent chance an earthquake measuring in at magnitude 6.7 or higher will strike the Los Angeles area in the next 30 years; there’s also a nearly one-in-three chance that earthquake will measure in at 7.5 on the Richter scale.
Given that, it’s good to know what you’re up against.
WASHINGTON—Sales of previously owned homes rose in May, a sign that falling mortgage rates could be nudging the housing market toward a modest spring performance after a sluggish start to this prime selling season.
Sales rose 2.5% in May from the prior month to a seasonally adjusted annual rate of 5.34 million, the National Association of Realtors said Friday.
The spring is crucial to the housing market because roughly 40% of the year’s sales take place in March through June. May was the first month this spring when sales rose from the prior month, but compared with a year earlier sales in May still declined 1.1%
Crissi Avila will teach you how to buy smart. We’ll look at location, development, and turnover so you can spot opportunities long before most even start considering them.