The Real Estate Update…Hey everyone, it's been a while since my last email so I have a few things to mention. I tried to keep it as short as possible. Speed-readers enjoy!
So, I've been really busy with a few new listings, a couple of buyers and I moved into a new loft (again). I currently have two homes I'm co-listing for sale in Eagle Rock and a house in Hollywood I'm listing for lease. Check out the photos and details below or visit my website for the specifics. If you help me find someone, I'll give you free gas for a year (not only did I want to say that, but I meant it)!
The loft… aka my new live-work office is a really amazing space. It's 2,000 sq.ft. with 25 ft. ceilings, multiple levels, and a rooftop deck that faces the Staples Center, LA Live and South LA (word!). While I'm happy to have it and I needed the space, the main reason I took it is because I want to showcase art as a side project.
The real estate market is rapidly changing...The reason I'm sending this email is real estate. Down to business. This has been a pretty crazy and historic year for real estate. I'm sure everyone has heard that the FDIC took over IndyMac Bank last Friday after a bank run put the financial powerhouse into a stock-market tale spin (because of bad loans) and the Fed is in the process of helping out mortgage giants Fannie Mae and Freddie Mac which together own half of our country's mortgages (also because of bad loans)… And so the majority of real estate prices have dropped down significantly to more affordable levels thanks to the surplus of foreclosures on the market.
This could all seem really scary, especially to the more paranoid and apocalyptic in the group, but obviously the end is not near. It's 2008, not 2012. For those who want to make a killing in real estate, this is starting to become that market.
What we're facing is a huge-long-over-due-wake-up call. Unfortunately, it's at a time when the US economy is already feeling the strains of a financial crunch.
So with this wake-up call…Things are starting to make sense to those of us who are serious about real estate. People who can afford houses are stilling buying them but now they have to jump through hoops by proving their income, having savings and good credit. These aren't crazy requirements if you think about them.
Seriously, last year I turned away several transactions because my clients were trying to rely on the shady teaser-rate loans that were so prevalent during the height of market speculation.
As an example, I had a client named Hank who was a 56 year old male-nurse who had never owned a home. He was dead-set on buying a home but I knew he couldn't afford it and that the only loan package he could get, an ARM, would put him in foreclosure one or two years down the road.
"This is my only chance to stop renting," he said to me several times in his tiny Koreatown apartment. I understood what he was feeling, I too had felt the same way he did having grown-up in apartments my whole life and having purchased a property... but I advised him against buying. After he persisted, I finally told him to find a new realtor, because I wouldn't facilitate his purchase. And because I was so adamant, he postponed his plans and now thanks me with news of all these foreclosures.
What would you have done in my situation? Am I an idiot? Many people's reactions are a definite yes when I tell them that story.
We're told that this is America and a sucker's born every minute, and all that money out there is for the taking right? Well, it's that type of selfish and short-sighted thinking that's lead to thousands of people foreclosing. Sure a lot of people made a ton of money, but in the end we're all getting screwed because it's our tax money that's bailing out these banks. And besides, I can't put a price on my conscience and though I could have more money in my savings now, it really isn't worth it to me to get a couple more commissions at the price of other people's lives.
Where the market is headed?So real quick, I'll tell you where we are and where the market is headed. Prices are reasonable and properties in crappy areas are going to go down more. Nice areas, even with foreclosures are going to stay close to what they are already. Simple. Financing on the other hand isn't as simple.
You basically can't get a stated-income loan and you need to put down more money. That's tough but completely reasonable. The speculation frenzy has passed and now sounder financial practices are coming back in place.
On top of these requirements, we're going to see interest rates rise. So obviously, this is a perfect storm for investing... we have neglected properties (invest in them and build equity), at lowered prices (buying low) and still low mortgage rates (borrow money without getting gouged).
When I started buying owner-occupied investment properties, I was young and didn't have a great job or a savings. In fact, I used a credit card cash advance to close my first deal. This would never happen now. So that's bad for a few people (like the old-young me), but very good for the general real estate market, because people who can't afford to buy property shouldn't.
End of story, sorry for the long email. I'll keep it shorter next time!
Walking through Westlake this morning and found this strange lion sculpture jutting out of a building... a building full of illegal immigrants and security bars over the windows. It doesn't match the facade at all, although its been recently re-painted, there's an electrical j-box floating in front of it. The great thing about Los Angeles is how random things are here. This is especially true for the section of Downtown LA that I live in. Its a unique melting pot of new and old, wealth and poverty, art and trash.
