Walking in LA: DTLA is the Most Walkable Neighborhood

In so many ways, DTLA is changing the way we view Los Angeles. Sprawl isn't the only way of life. Nor is it all about getting in the car to grab a cup of coffee or to pick up groceries. And it doesn't have to be about commuting 25 miles each way to get to work. According to Walkscore.com, DTLA has a 93% walkscore, 99% transit score, and 69% bike score (and getting better all the time). This is pretty unusual for Los Angeles, but it shows that you CAN walk in L.A.

10-Minute walk to/from:

SOUTH PARK to: Expo Line, Red Line, Ralphs, The Bloc, Staples Center, LA Live, Figueroa Hotel, Restaurant Row

HISTORIC CORE to: Red Line, Pershing Square, Restaurant Row, Jewelry District, Ace Hotel, Grand Central Market

CITY HALL to: Grand Central Market, Little Tokyo, Gold Line, Bunker Hill, Grand Park

ARTS DISTRICT: Little Tokyo, Gold Line, Woori Market, Urth Cafe, Wurstkuche, Pie Hole, Umami, Grand Park

The Rush to Buy - 2 Reasons in DTLA

Pickings are slim in DTLA these days. The inventory hovers around 90 condos available for sale at any given time. And a small portion of that is senior citizen housing, so the number is actually less than 90. With such low supply, it's no wonder prices are as high as ever. This low inventory (fueled by tons of investors from NYC, SF, overseas) is one of the reasons buyers are snapping up the prime units (higher floor, corner unit, views, doorman, pool, patio, etc.). The second reason is rent control. Most buildings in DTLA (in fact nearly all) are not subject to rent control laws, meaning landlords can increase rents upon every lease renewal. Why do you think so many people have investments here?

SOLD OVER ASKING - Spacious Split Level Loft with Private Patio - Barker Block #126

True live/work corner loft in the Barker Block building with 2350sf of living space, making it one of the most spacious lofts in the building. Designed by The KOR Group, the building boasts a lovely rooftop pool and gym--both with views for miles, courtyard areas and an art exhibition tunnel. Plus it's directly across the street from Urth Cafe, perfect for that morning coffee run. The stunning oversized loft features a unique split level floorplan and a private patio. Has original wood beams, beautiful hardwood floors, 2 bathrooms and 2 assigned parking spaces. Listed at $1.179MM. 

Buyer Confidence is Back

Despite it being a typically slow time of year, condo purchases haven't stopped. In fact, a significant percentage of lofts are now selling for asking price or higher. Of course there are properties that sell for below asking, but these tend to be properties that have funky layouts, dated kitchens and bathrooms, existing tenants, a terrible view, etc. Even then, they rarely go for too far below asking. Overall, home seekers and investors are feeling more confident about purchasing, and in downtown in particular. With interest rates still at historic lows and ever increasing rent prices, it's essentially more practical to buy, especially since your downpayment serves as instant equity. Something to think about.

Average Price Per SF of Condos/Coops in Major Areas

Average price/sf in Manhattan: $1363

Average price/sf in SF (City): $1262

Average price/sf in Santa Monica: $840

Average price/sf in Beverly Hills: $690

Average price/sf in DTLA: $546

Net Worth of Homeowners vs. Renters

According to a study by the Federal Reserve Survey of Consumer Finances, all other things being equal, "median homeowners had nearly $200,000 in net worth as compared to $5000 for renters."

Sidebar: Yes, we know that many homeowners were under water on their mortgage when the bubble burst in 2009. However, many of these same homeowners that held on for 4 years (yes, until 2013) saw their homes go right back to where they bought at the "height."

A successful landlord once said to me: "Paying a mortgage is like paying rent, except that you own the property and you can sell it for a profit once it appreciates, which it always does over time." 

The point is, whether you buy at the height or the bottom, if you hold on to property long enough, chances are, your home will have equity because over time, property values always go up. It's really that simple. I don't know anyone who hasn't thought to themselves, "I wish I had bought back then."

Sidebar: While buying property is one of the oldest, tried and true ways to wealth, you should do it smartly. This means putting 10-20% or more down--which I always advise my buyer clients. This helps provide instant equity.

Spacious Top Floor Loft with Vaulted Ceilings - Molino Lofts #306

Spacious, oversized unit at Molino Lofts. Original brick walls, vaulted ceilings over 14" in a true open plan loft layout. True live/work loft on the top floor designed by the KOR Group, the building boasts a lovely rooftop pool with views for miles, lounge deck and parking. Around the corner from Urth Cafe, Blue Bottle, Zinc, Wurstkuche, Urban Radish, Church & State. Loft is a particularly large floorplan with exposed beams, and more. Listed at $975k for 1810 sf of livable, workable space.

SOLD - Corner Warehouse Loft with Balcony - Toy Factory #519

Amazing spacious loft with 14" ceilings and polished concrete floors in the heart of the Arts District. This stylish live/work loft features endless upgrades that include custom-built room dividers , gourmet kitchen, custom-built closet and more. The unit also features a private balcony and 2 parking spaces. The building boasts a rooftop pool and gym--both with views for miles, lower rooftop courtyard and a full gym. Located across the street from Church & State, Daily Dose, Pour Haus, Little Bear, Urban Radish, and just a couple blocks from Bestia and Handsome Coffee. This pristine loft is listed at $819k for 1438sf of space. Has 1 bath.

10 Things About the Current State of Real Estate in DTLA

While this post is dedicated to DTLA, much of it applies to the overall Los Angeles housing market. 10 things to note:

1. Hard to believe that in 1984, average 30-year fixed mortgage rates were over 14%. Rates have since steadily declined, making it much cheaper to borrow money. While 2012 had some real historic lows (3.35!), 2014 is proving to still be super low at about 4.2% YTD.

2. For some buildings in DTLA, the prices have now reached above the height of 2007. Many of those who were under water are now able to sell, but these homeowners are optimistic and are waiting for prices to increase further before selling. With all the new walkable development happening, many homeowners who once had thoughts of selling are now asking themselves, why leave?

3. According to The MLS, the average rent in DTLA for a 1 bedroom was about $2100 in 2009. Average rent price in DTLA in 2014 was $2300 for a 1 bedroom. Higher than the average rent increases plus no rent control is why those who want to have cashflow-positive investments (including me) are buying in DTLA.

4.According to Downtown News, more than 5000 residential units are being built in DTLA in the next 5 years. Of them, less than 10% will be condos. The rest will be rentals. You can bet the demand for condos will continue to be very high in the coming years. And this means higher prices for condos.

5. According to the DCBID, currently there are more than 52,000 residents in DTLA, up 15% from 2011.

6. According to the DCBID, the average income of a DTLA household is $98,700/year. And you wonder why properties are getting really expensive--people with high incomes are buying and renting here.

7. There are more than 20 coffee shops now within a 1-mile radius from the center of DTLA. And most have opened doors in the past 2 years. We all know what that means.

8. The average price per sf in downtown in 2011 was approximately $347/sf. In 2014, it's $546/sf.

9. DTLA has the largest network of the public transportation in all of LA, thanks to the Union Station. The regional connector and the Streetcar will further enhance the accessibility and revitalization.

10. Clean tech incubator labs will soon be inhabiting a reused warehouse in the Arts District. The hope is that DTLA will be the future center of clean technology.

SOLD FOR DOUBLE THE ASKING - Unusual Opp for a Raw 1800sf Loft for $179k - Little Tokyo Lofts #106

This type of opportunity is rare in this market. This 1800sf mutlilevel loft is asking $179,000. The catch is that it's pretty raw. Forget about the drywall--I'm talking about plumbing, ducting work, and most likely electrical and potentially some foundation work. Inspections will tell. But at this price, this is a dream project for an architect's or anyone with a vision and some cash to make it happen. This will likely go over the asking price. Open house Wednesday 8/27 from 11-2pm.

Courtesy of Rhett Winchell of Kennedy Wilson