Homeowner Equity Gains 12.2% between 2016-2017

A lot of homeowners who bought in 2016 are now enjoying about 12.2% in average equity, according to CoreLogic's Home Equity Report. In downtown, 2018 is up about 3-5% (depending on the building) since 2017. So prices are still climbing, but at a slower pace. Inventory is just too low.

Doom and Gloom News for Buyers in LA

I had to do a post about this because all this doom and gloom about not being able to buy if you're a prequalifed buyer is mostly BS. Of course if your budget is under 500k, then yes, you will have very slim pickings. But you can still buy, you just need to reset your expectations.

My advice? Sit down with a lender and see exactly how much you can borrow. You might be surprised. I had a client who ended up qualifying for 100k more in his purchase price because his lender told him that the he just needed to wait until his car was paid off in a couple of months.

Maybe you need to buy a condo instead of a house? Maybe instead of Silverlake near the reservoir, you need to look into Atwater? Maybe that 1600sf loft you want should in reality be more like a 1000sf loft? You can't expect to have the same stock available to you as 7 or 8 years ago. Prices are up and inventory is low.

And remember, your first home doesn't have to be the end all. My last client who downsized into a smaller house because that was all they could afford, ended up renting out this house and buying a larger forever home. One property became two!

"Let's See What Happens in the Market Before Doing Anything"

A lot of sellers and buyers say "Let's see what happens in the market before I pull the trigger."

Usually by then, it's too late.

I always ask myself these 4 questions:

1. Have I made a lot of equity in my property?

2. Are things starting to plateau?

3. How long should I hold on this property? So far, holding has worked out well if you bought within the last 7 years. At this point we all have to decide if it makes any more sense to hold. The gains we've seen in the past 7 years are slowing. It may be another 7 years before we see increases like those again.

4. At the same time, historically low interest rates are going up. Do I wait to buy because prices might come down, and, risk a higher interest rate?

It's harder to get clear cut answers these days. But if you've been thinking of selling for years, now is probably one of the best times because we've surpassed heights again.

If you're thinking of buying, you need to really consider the interest rate lock. Sure the rates might come down and you can refinance, but what if they continue to go up?