Rates Up, But Prices Still High?

When rates go up, normally, prices start barreling down. But prices haven't gone down much at all. This is because there's not as much housing available to go around. When you see areas that have some more price softening, you'll see that the areas have more housing inventory. 

One thing is for sure, there are some deals to be had out there as the multiple offers are starting to go away, and price drops have increased and days on the market are also increasing about about 10 days compared to the same time last year.

Some interesting deals right now in DTLA based on Price/SF, rare corner, Mills Act, layout, etc:

Cornell Loft #704 - $465K - L-shaped layout, parking, massive windows, Mills Act

https://www.themls.com/mlslistingphoto/listing/slideshow/#/24-374153

Bartlett Loft #1304 - $465K - 14" ceilings, Mills Act, exposed brick, north facing

https://www.themls.com/mlslistingphoto/listing/slideshow/#/24-347225

Eckardt #504 - $489K - Parking, soaring ceilings, Mills Act

https://www.themls.com/mlslistingphoto/listing/slideshow/#/23-313901

Eckardt Loft #403 - $475K - Corner orientation parking, Mills Act

https://www.themls.com/mlslistingphoto/listing/slideshow/#/24-348103

Rowan Loft #816 - $550K - Rare corner with coveted park views, Mills Act

https://www.themls.com/mlslistingphoto/listing/slideshow/#/24-372451

Textile Loft #1002 - $595K - Parking, storage, corner orientation for stunning views, Mills Act

https://www.themls.com/mlslistingphoto/listing/slideshow/#/24-373185

EVO #402 - $599K - 2 bathrooms, luxury amenities, parking

https://www.themls.com/mlslistingphoto/listing/slideshow/#/24-375881

Eastern Columbia #307 - $810K - Massive 14' ceilings, coveted south facing, EV Charger, Mills Act

https://www.themls.com/mlslistingphoto/listing/slideshow/#/24-374437

Eastern Columbia #603 - $900K - Massive double unit, 2250sf, Mills Act, storage unit, parking

https://www.themls.com/mlslistingphoto/listing/slideshow/#/24-372451

The Holiday Buy List Should Include Property

The winter is the worst time to sell, but the best time to buy. This is when deals can be made, price drops seen and desperation is running high for sellers. 

Which brings me to talk about buying during the holidays. Two of my investment properties were bought during the holiday months. I lowballed, got the offer accepted with no counters. This is because properties aren't selling as quickly and sellers just want to get out. So, buyers out there, remember that if you're thinking of waiting to buy in May or June of next year, then you will likely pay a bit more, or end up in a bidding war with other buyers. Of course interest rates could fluctuate, and they will, but the forecast is that they will be roughly the same as this year, or a tad higher.

Condos and Lofts Selling Nicely in DTLA, Rentals Softening a Tad

According to The Real Deal, "As Los Angeles grapples with a severe affordable housing crisis, a new study shows condo and loft sales remain strong...Prices in DTLA continued to increase, rising almost 4.5 percent year-over-year to $697 per square foot. That’s a more modest jump than last year, which saw prices rise up by 11 percent."

Rentals, however, are showing a softening, but still not a dip in prices. Competition is fueling this. 

What to Look Out for in a High Market in DTLA

Gone are the days of just snatching up lofts because they were there for the taking.  The prices are going up and the inventory is still very low, keeping prices even higher. So many downtown homeowners are here to stay--with so much now at their doorstep, it's become one of the most exciting places to visit and live. The dilemma for most buyers is inventory is low, prices are high, and it's a risk to wait in case the market goes up.

In these times, you need to look out for the following if you're in the market to buy. If you can get 2 or more of the following ticked off, then you're doing well;

1. Units that have upside potential. Rather than buy a completely remodeled place, look for one that needs some rehab. New kitchen or new flooring perhaps. Or bathroom remodels. Even something as minor as new lighting. By you adding 10k-20k, you can add 50k in value.

2. Look for buildings with great amenities. There are a lot of new lease-only buildings on the market with top notch amenities. That is your competition. A building with amenities is going always have some value.

3. Buy in a building that offers parking. Enough said.

4. Buy a unit that has something unique and special, like a great city view, or overlooking the park. Or one that has an extra bedroom nook. Or that has a balcony. It's hard to get it all without spending over 1M, but if you can get into a unit that has one or two special features that other units don't have, it's going to add value.

5. Buy in a building that has good development around it. Meaning retail, office space, grocery stores, parks, hospitals, Metro access, etc.

Buy, Sell or Hold?

Downtown (and LA in general) prices are up, per usual, inventory is low, and it's a Seller's market. Prices have well surpassed the 2007 height, and are now beginning to stabilize due to the holidays.

So what to do, BUY, SELL or HOLD?

Assuming you have equity, if you need the cash to upgrade, relocate or just to have liquid for whatever, SELL. It's a good time because prices are higher than ever before and buyers are pent up because inventory has been low for at least 12 months.

If you're buying to invest in the short term, don't. If you're buying to invest in the long term, then BUY. Prices are high, but they are going to be stabilizing into next year, so if you're planning on holding for a while (5-7 years) or you're sick of renting (I predict rental prices will continue to increase again next year in DTLA), then BUY. Why pay a landlord when you can pay yourself while gaining equity?

If you are not planning to do anything with the equity money, then HOLD. DTLA is getting lots of good investment in terms of qualified resident buyers, businesses looking to expand, companies relocating, and developers that are looking to be in one of the most unique parts of LA (e.g. The Row, At Mateo, Oceanwide Plaza). This will only help continued growth and revitalization.

The Upside of "Older" Properties in DTLA

One thing about those 10-year old condos and the 80-year old loft conversions that were done in the mid 2000s is that the square footage of what was selling was a lot larger than the average brand new home today. Nevermind that the price/sf has gone up all over the city. It's that now, 900sf is the size of a 2-bedroom and 1-bedrooms are more like 650sf.

However, back in 2004-2006 when so many lofts and condos were built/converted, the average 1 bedroom was about 800sf. What this means is that if you have a large 1 bedroom, you can think of converting these into 2 bedrooms later on, or marketing them as potential 2-bedrooms. Permits needed, of course.

The moral of the story? Buy a condo or loft that was built 10 years ago if size matters. 

The Cost of Buying and Selling a Condo

Price goes up, you sell. Price is right, you buy. Sounds simple, but there's more to it. There are closing costs involved on both sides, and this is something that your realtor should go over with you.

SELLERS:
In a nutshell, the average expense to sell a home is about 2% of the sales price. So on an $800k sales price, you're looking at about $16k in escrow fees. This comes in the form of transfer taxes, escrow company fees, doc fees, etc. Then there's the agency commissions. So while you might think there's $200k in profits to be made, remember that anywhere from 2-8% will be shaved off in fees.

BUYERS:
For buyers who are getting a loan, closing costs are about 3% on an $800k purchase price. You're looking at $24k approximately. Most of these are loan and title insurance fees, and these are IN ADDITION to the purchase price. So if you have barely enough to put down on a place, know that you're going to need at least a 3-4% buffer due to these closing costs. Cash purchases cut out the loan and title insurance fees so suddenly you're only needing about .05-1% in closing costs.

Super Lofts Available - 2000sf and Larger

600sf is the new 800sf. What I mean is that new units are getting smaller in scale, and the small 800-900sf 1-bedrooms we used to snicker at are now considered large 1-bedrooms. 1000sf is pretty much consider HUGE. Size is becoming a huge commodity, as land and building costs are rising. Back in 2003-2007, developers were a lot more generous, which is why you often get more square footage for your money in buildings that were either built or converted in that period.

Here are some interesting "super lofts" available for sale now:

1100 Wilshire #3702 - 3000SF - 2 Parking Spaces

$5,950,000

Molino Lofts #213 - 4260SF - 5 Parking Spaces

$1,985,000

  

Barker Block Lofts #102 - 2660SF - 2 Parking Spaces

$1,675,000

Barker Block Lofts #144 - 2460SF - 2 Parking Spaces

$1,795,000

TEN50 PH5 - 2268SF - 2 Parking Spaces

$2,600,000

Flower Street Lofts - 2149SF - 2 Parking Spaces

$969,000

Barker Block Lofts #121 - 2040SF - 2 Parking Spaces

$1,200,000

Luma PH105 - 2001SF - 2 Parking Spaces

$1,995,000

Sneak Peek of Upcoming South Park Condo - TEN50

First time since the Ritz Carlton was completed in 2012, new construction condos will be available for sale in downtown Los Angeles. Developed by Trumark Urban and designed by TEN50 is located on Grand and 11th, in the prime area of South Park, just a few blocks from the Historic Core and the Fashion District. Target move-in is November 2015. Contact me to preview the floorplans, amenities and finishes.

Just some of the highlights:
- Infinity edge pool
- Outdoor yoga deck
- Theater/Media room
- Corner Penthouse units
- Boutique style building
- Bertazzoni induction range, Bosch ovens, Liebherr refrigerators
- 24/hour reception
- Parking and storage

 

(Rendering from Photographer of TEN50)

(Rendering from Photographer of TEN50)

(Rendering from Photographer of TEN50)

Get an Art Deco Pied a Terre Before The May Co. Building is Completed - Eastern Columbia #202

The jewel of downtown, Eastern Columbia, has a new unit available for sale. #202 offers concrete floors, stainless steel kitchen appliances, bathroom designed by Kelly Wearstler. The building features a rooftop pool, front desk security, courtyard, gym. Price have been consistently rising with the recent addition of the Ace Hotel, Acne, Tanner Goods, Oak, Aesop, Om Nom Organics, Il Cafe, Urban Outfitters, APC, and soon to arrive just steps away is the revamped May Company Building (to be creative office space, retail, etc.), Clifton's, Big Gay Ice Cream, Case Hotel,  Empire Hotel, and more. 1150sf, 1 parking space. Faces historic Broadway. Asking $790k.

Historic Mills Act Pied a Terre in the $300s

It's still possible to get a historic loft in a wonderful walkable neighborhood in the 300s, in a Mills Act Building. This loft in the lovely Rowan building faces the Spring Street Park and features large double hung windows, exposed brick, Scavolini kitchen, Bosch washer/dryer in the unit, and an open plan layout. The Rowan has a doorman, BBQ patio, hot tubs, and a resident lounge. Walk to  the Farmers Market, Buzz Wine, Bar Ama, Orsa and Winston, Spring for Coffee, The Continental, Spring Street Arcade, Ace Hotel, Terroni, Nickel Diner, Verve Coffee and more. 460sf, 1 parking space with option to lease another. Asking $378k.