Hipster neighborhoods and the flippers that love them: Eagle Rock housing and sprucing up small spaces for hefty price tags.
Rinse and repeat. That seems to be the mantra some flippers are adhering to in certain SoCal neighborhoods. Some zip codes seem to attract flippers like flies to a bright light. Eagle Rock is one of those markets. Nestled between Glendale and Pasadena, Eagle Rock seems to be a siren call for hipsters. What I find interesting in these hipster hoods is that they try to pitch a frugal eco-friendly lifestyle yet carry a massive mortgage. Okay, you are growing tomatoes and radishes but now have a mortgage on a $700,000 crap shack. Seems like cognitive dissonance especially when you are getting such a tiny living space. Hipsters seem to be buying it up but the market is now cooling off. Apparently living in a closet and having a tiny garden isn’t so appealing when you look at the underlying price tag.
Eagle Rock fun
I’ve gotten a few e-mails from those in the housing industry talking about how hot Eagle Rock has become. A sort of center of hipster wishes and aspirations. It is an odd pitch when you are telling your prospective buyers to enjoy more “earthly†desires yet slap on a price tag as if they were buying an Italian Villa. Only in SoCal does it cost a lot to live as if you were broke.
I think smart sellers are realizing that something is turning in the market and are trying to capitalize while the getting is good. Take a look at this pad:
1727 N Avenue 45, Los Angeles, CA 90041
2 beds, 1 bath, 700 square feet
Don’t you love the color saturation in this picture? You might as well be in a comic book. 700 square feet is the size of a bachelor pad. Let us look at the ad:
“Imagine a place where you can live, work and camp by the fireside, a home with an enchanting garden producing fruits, vegetables, and herbs on a drip irrigation system. Welcome home to a sunny and sophisticated renovated 1922 bungalow boasting a generous living room, new floors and windows, with built-in storage and tons of light. The open layout reveals a fresh kitchen with white cabinets and granite counters, stackable w/d and eat-in space, stainless steel appliances, and classic details.â€
“Generous†living room? Camp by the fireside? Keep in mind this place was originally built nearly 100 years ago. Someone is in a position to make some good money here:
Someone snagged this place in 2011 for $200,000. It was then flipped for $330,000 three months later. Now, the current sellers are trying to sell it for $579,000. It looks like someone nearly bought this place in late August.
Now what happened in two years to justify a price jump from $330,000 to $579,000 on a 700 square foot Eagle Rock bungalow? Of course in SoCal real estate, you can always fake it until you make it. The current list price of $579,000 brings this place to a price of $827 per square foot which is very high, even for trendy Eagle Rock.
I love how Zillow also allows some owners to put a “Make me Move†price tag just for the heck of it. Take a look at some other owners in Eagle Rock fishing for offers:
Generate interest without the commitment of listing your home. Also, with your garden you’ll be able to grow fresh veggies instead of chowing on Fancy Feast because of your massive mortgage. Eagle Rock is an interesting neighborhood and a hotbed of flipper activity. It’ll be interesting to see if this continues as the market is now cooling off.
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58 Responses to “Hipster neighborhoods and the flippers that love them: Eagle Rock housing and sprucing up small spaces for hefty price tags.”
Why would anyone opt to pay outrageous “rent” to some bank for the ‘privilege’ of mortgaging one’s future in order to occupy some small cottage located on the grounds of a Debtor’s Prison?
It’s funny how HGTV has convinced people that renting a pot of money so you can call yourself a “home owner” is so much better than renting a house! Most people buying mortgages at current valuations will NEVER own the collateral (the box Realtors call “a home”). They are the true renters.
Agreed! I have just been thinking that myself. Why am I in such a rush to get on the hook for a 30 yr debt obligation. The only reason would be if hyperinflation hits and with bank failsures and bailins they end up just letting you keep the house free. I think the chance of that is low. So no way do I want to jump in. I am just going to sit back and wait for prices to come well below rent to buy.
Housing IS Tanking Hard in 2014!!
I am in no rush to buy 🙂
I love Socal cash deals. I forbid interest. Finally, you guys are listening to me! Mecca West! Wonderful!
Young Jim, looks like we are both playing the waiting game for prices to go down before buying. Something tells me we won’t be the only ones interested in buying below rental parity RE. A big tank in 2016 or 2017 would work out perfectly for my time table.
Housing to TANK super mega HARD soon !&!%!@!
In another thread posted that his friend put that exact same house on the market. He came back to say it was sold. Now it’s back on the market. What could’ve gone wrong?
It looks like they set up a tent in the back yard as a guest bedroom. I’m surprised they’re not calling it a 3 bedroom, 1 bath and including it in the square footage. It looks like they also converted the garage, which is not legal.
Ridiculous.
The garage conversion is not illegal because it still has a garage door and you can still drive your car in it.
Thanks for clarifying Marino. What they have is a legal garage that’s been converted to a home office, so you can park your car in your office and sit in it while you work.
“The open layout reveals a fresh kitchen with white cabinets and granite counters, stackable w/d and eat-in space, stainless steel appliances, and classic details.â€
It makes it sound like the stackable w/d and the eat-in space, are one and the same….how “enchanting.”
Are the hipsters having children yet? 700 square feet sounds wonderful if the memory of a college dorm room is still fresh in your mind. What happens, though, when the first little snowflake arrives with its crib, stroller, swing, etc? Is it smart to stretch yourself to buy a home that is only going to fit your lifestyle for a few years?
700 sq ft is tiny. I lived in a 600 sq ft apartment and it was cramped as all hell. I ran some numbers and it looks like with 20% down, you’re looking at a mortgage payment of around $2400/month. I’m pretty sure you can find a better rental deal than this.
Go to Zillow and take a look at this place. You’ll notice that the rooms have next to nothing in them and are furnished with some pretty small pieces. Combined with the obligatory wide angle lens and night time beauty shots, this place looks waaaay bigger than it really is.
Plus, take the time to use Google street view and cruise around the neighbourhood. Not hideous, but not wonderful either. Gang central is relatively close by, so remember to lock your doors and don’t leave stuff sitting around. Oh, and note the speed hump on Ave. 45, just outside your window.
Note also that the L.A. heat and smog will make this place hellish at various times of the year. (Went to OXY, so I know the area.) Something to keep in mind since I didn’t see any AC units as I flipped through the pictures. Didn’t see any trees either.
This is not 700K worth of nice
I hate the expression “tons of light.” Photons don’t weigh all that much. It’d take an awful lot of photons to weigh even a single tons, much less several.
Yet I’ve seen so many listings in which a house is allegedly filled with “tons of light.”
In the 1970s, actress Lindsay Wagner (aka The Bionic Woman) described Eagle Rock as a rough neighborhood, in a TV Guide interview. It was where she’d grown up.
An angry Eagle Rock resident replied in at Letter to the Editor that Eagle Rock was not rough. That it was a nice neighborhood, full of working class families. Maybe a poorer neighborhood, but nice, safe, and decent.
I was a Lindsay Wagner fan back then, in my high school days. It was the first I ever heard of Eagle Rock. I wondered then what Eagle Rock was like, whether it had ever been rough in the 1950s/60s when Wagner grew up, or whether it was a nice working class neighborhood.
Sorry… I should’ve posted this here:
As someone who grew up in adjacent Highland Park in the ’50s and ’60s, I’d say Lindsay was trying for some street cred with that one! Even Highland Park was more like the description painted by the letters to the editor. There were occasional incidents of kids getting into serious fights and that sort of thing, but the real “vots†(what we called gangsters back then) were in Cypress Park and Lincoln Heights. “
“eagle rock” looks more like a swallows nest lol.
They only swallow if you are rich.
My impression of hipsters is that most seem to be trust fund babies who care more about making fashion statements than anything else. I was in a hipster neighborhood recently and asked to be directed to a place with GOOD coffee. Of course the chain places are just horrible horrible so I was directed to an ubertrendy place with day old microwaved coffee that was significantly overpriced. I left my $4 cup of brown water by the funky couch and walked. That said enough for me about the hipsters. Next!
That is true of the one person I know who is living in a Hipster neighborhood and is a hardcore “foodie”. But he also has a decent job and is single (in a long distance relationship). Not every trust baby is a loser with bucks.
To further clarify my remark, my hipster-foodie colleague would’ve walked out of that coffee place too! You should see him fussing over the preparation of the “perfect” cup of coffee!
I wonder what your definition of hipster is? It’s usually someone in their 20’s whose life is about art, music, partying, and maybe drugs. Normally, they are poor – bohemian living. The idea of rich and hipster don’t really go with one another. The people you are talking about are the people that move in after the hipsters are priced out.
There are rich hipsters. Trust fund babies, as they’re called.
A lot of “cool jobs” in the glamor fields — publishing, fashion, art galleries, museums, music, film, TV — pay next to nothing to lower-level employees. Often such jobs DO pay nothing, as they’re “internships.”
I’ve read about unpaid interns well into their 20s, going from internship to internship. About editorships for prestigious magazines and publishers that pay minimum wage. About assistants and script readers for film producers who work for free.
There was a lawsuit about it: http://articles.latimes.com/2014/apr/06/business/la-fi-ct-hollywood-interns-unpaid-internships
I’ve read other articles expressing concern that such widespread use of unpaid interns is racially discriminatory, since only young people with rich parents (mostly white or Asian) can afford to work for free for years on end, hoping for some big break.
Yes, there are plenty of rich hipsters amid the poor hipsters. I suspect the rich ones don’t speak of their wealth, lest the poor ones envy them.
I think a lot of these hipsters get paid well to do really fun jobs. They attract a lot of resentment from the traditionalists, because they are young and having fun, and really got some high paying bullshit dotcom job because of their youth. They attract a lot of resentment from the working class locals, because the locals don’t make a lot of money, and also because the hipsters are assholes from suburbia.
There’s also the race issue. Face it, the media and Hollywood and dotcoms are racist. They’re not as bad as the old segregationists, or even the regular labor market of the 60s and 70s, but the stats don’t lie. Gentrification just highlights the fact that racism and sexism in employment exists, and the effect is to make whites and Asians wealthier than Black and Brown people. (Whites especially, because Asians are ass-out of Hollywood.) Ask where these gentrifiers work.
This is ER adjacent. 672 SF Sold for $320K in December 2013. Flipped for $520K in July 2014 ($40K over asking). Zillow estimate now about $455K.
https://www.redfin.com/CA/Los-Angeles/6223-Strickland-Ave-90042/home/7084773
Still obscenely overpriced at $455K, IMO.
However, it’s a great little place for one person, and I love the terraced lot, which has all kinds of possibilities. I would love to design a garden for that lot. The house, too, has been nicely upgraded.
Seriously, who is the idiot that pays over $100K for one of these places? Eagle Rock is ok, but it’s not that central. Why wouldn’t you pay a little more or less and just get a waaaay nicer condo?
Sorry Resident but Strickland Avenue is in Highland Park. 90042 is Highland Park. 90041 is Eagle Rock. Believe it or not there is a big difference even though the neighborhoods are only a 1/2 mile away.
As someone who grew up in adjacent Highland Park in the ’50s and ’60s, I’d say Lindsay was trying for some street cred with that one! Even Highland Park was more like the description painted by the letters to the editor. There were occasional incidents of kids getting into serious fights and that sort of thing, but the real “vots” (what we called gangsters back then) were in Cypress Park and Lincoln Heights.
“Vots” Is that short for “vatos” (dudes)
Yes, I guess you might call it “Spinglish”… an English word modified from Spanish. Like “buckaroo” from “vaquero” or “lariat” from “la riata”. As opposed to Spanglish (examples: la marketa, watchale!).
I think you all have this finance thing all wrong. I am not the biggest fan of zero hedge aka gloom and doom but I think they finally nailed it with this one.
http://www.zerohedge.com/news/2014-09-06/stocks-have-reached-permanently-high-plateau
I think we can all agree that “permanently high plateau” will be the new word (or phrase) of the week. I love how it gives me chills when I say it out loud…
From Wikipedia article on economist Irving Fisher of Yale University:
“The stock market crash of 1929 and the subsequent Great Depression cost Fisher much of his personal wealth and academic reputation. He famously predicted, three days before the crash, “Stock prices have reached what looks like a permanently high plateau.” Irving Fisher stated on October 21 that the market was “only shaking out of the lunatic fringe” and went on to explain why he felt the prices still had not caught up with their real value and should go much higher. On Wednesday, October 23, he announced in a banker’s meeting “security values in most instances were not inflated.” For months after the Crash, he continued to assure investors that a recovery was just around the corner. Once the Great Depression was in full force, he did warn that the ongoing drastic deflation was the cause of the disastrous cascading insolvencies then plaguing the American economy because deflation increased the real value of debts fixed in dollar terms. Fisher was so discredited by his 1929 pronouncements and by the failure of a firm he had started that few people took notice of his “debt-deflation” analysis of the Depression. People instead eagerly turned to the ideas of Keynes. Fisher’s debt-deflation scenario has since seen a revival since the 1980s.”
Indeed it seems that one’s biggest goofs live on forever! Even if you eventually learn something useful from your mistake.
Here is better one : http://www.zerohedge.com/news/2014-09-06/meet-access-affordable-mortgages-act-how-congress-will-create-next-crisis
Congress is now considering H.R. 5148: Access to Affordable Mortgages Act.
‘Considering’ is a bit premature. While the summary description makes it sound like a bad idea, it’s still in committee in the House and doesn’t have a single co-sponsor, or a Senate version.
Wouldn’t hurt to call your Congressperson if they’re on the House Financial Services committee, but I give it pretty long odds of becoming law. That said, it could certainly be a harbinger of a trend toward loosening standards.
If only LA incomes skyrocketed as quickly as LA housing prices…
Eagle Rock has some plusses and one big negative. Plusses are two big main drags (Eagle Rock & Colorado) with some older shop space for trendy stores, houses on hillsides (feel safer), Occidental College (on the border with Highland Park) gives it a “culture” aspect, and it borders Pasadena and Glendale(mentioned already, of course). The 800 pound negative is that when all is said and done, you’re still in N.E. Los Angeles, and have to put up with the crappy LA City services, etc. Why not just live in Glendale?
I was at the Eagle Rock Mall two Christmases ago, and it reminded me of all the declining malls out in shabbier areas of Orange County that I’ve been to. I probably won’t be going over to Eagle Rock again since Ernie Jr’s Taco House closed. My Wife had a nostalgic love of that place, and the view of Eagle Rock (the neighborhood, not the landmark) from the windows was great!
Everyone is a renter. You rent your crapshack property form he government. Finance the purchase with the bank and you still owe 1.25 to 2% in CA a year to the state of California I the form of tax. Then there is maintaining costs, association fees, condo fees if you get a condo, and endless repairs.
That 1MM home will cost you $12,500 year in tax and likely a other $8,500 in other maintenance and fees. And this is before any of the principal or interest is paid.
Sadly, the American buying public in general are fools. They are not finance savvy, and they just repeat the standard housing mantras. We all know them. Those buyers often think payments and 1 month ahead I their financial future. I wonder how many are a few missed pay checks away from financial collapse.
Is it better to be prudent and live like a popper with the security of savings? Or is it better to take risks and live ghetto fabulous in your hipster neighborhood?
It’s all a matter of preference. I prefer not being a slave to large payments that take up most of my income.
“Everyone is a renter. You rent your crapshack property form he government.”
Yep. Quit paying property taxes and you’ll see who really owns your home.
“That 1MM home will cost you $12,500 year in tax and likely a other $8,500 in other maintenance and fees”
that right there i more than my rent….by a lot!
We have overpriced crapshacks in the Sacramento suburbs too.
My landlords have finally listed the home I rent, for sale. And I use the word listed loosely! They did inform me they were doing FSBO since they want to extract every penny they can since they are underwater. Mom and Dad are throwing some $$ in to get them off the hook apparently.
They’ve listed it on Craigslist. Too cheap and stupid to even use a FSBO service/website. I couldn’t stop laughing.
I had an appraisal done when they “offered” to sell it to me. Came back at $326,000.
Guess what they “listed it” for – $400,000.
I presented the appraisal to the owners, and it was completely ignored. I asked them are you going to get it appraised before you put it on the market? Reminded them that at this pricepoint – lower end in my zip – most buyers will be FHA or even conventional, they will be scraping up the 20% down, and if they will have to meet the difference between appraised price and the ridiculous asking price if they want to close.
Fantasy land. Stupid, ignorant people.
“Reminded them that at this pricepoint ($400K)– lower end in my zip”
that is so completely out of reach for me, if it was half that then maybe.
You forgot some of the other good parts, Calgirl.
>>And it needs at least $30,000 worth of repairs made. New flooring, new appliances, no backyard landscaping or drainage just a slab of concrete and bare spotted bark. It totally floods in winter.<<
This market, has been under the influence of the Vested Interests for way too long – they're become coarsened to the extreme value of real estate. ($3/4 of a million dollars for that crapshack, in Doc's article? Twilight Zone.). Just hope we soon get the crash, and volume lending to saver-renters/upsizers. A rebalancing. My tip, look for signs bankers are tightening up their mortgage lending criteria to bring about the first stage + taper + other monetary tightening. China appears to have just about begun its own HPC.
I have a sister-in-law (who is broke) who told me that she could never rent because she needs to “be grounded”. I asked her why she needed to owe hundreds of thousands of dollars to a bank to feel grounded.
She’s right, that is definitely like being grounded. Now, go to your room for 30 years and only come out for work and dinner!
Who is Redfin?
What’s with the insane price jump this year?!? $500,000+ for 700 square feet? That’s expensive in Vancouver!! Let a lone in SoCal. I guess if the markets picking up. Just recently in Orlando, a cab driver mentioned the economy is getting better now. That’s a good sign, even for hipster neighbourhoods! Ha!
I like your writing.
Jullian
Housing to tank hard in 2016!!!
a guy from Seattle (September 4, 2014 ): “$100K a year here, in Seattle, won’t buy anything decent either, but we, supposedly, have lower housing prices than SoCal… BTW, my household income is way above $100K a year, so I know what I am talking about…”
___
The complacent owners of real estate at ponzi values, need to be broken, to make way for fresh lending to younger people, at much lower house prices. It chews me up so many young people under attack, for so many years, sacrificied for those who chose to overpay, and those who are already sitting on decades of house price inflation wealth. We need a market again.
I just watched “No Retreat No Surrender” (1986) where the family moves to Seattle, and get a rental, and the Dad works in a local bar for his pay. And Jason goes and visits Bruce Lee’s grave. Two good music tracks in that movie… ‘Hold On To The Vision’ and ‘No Retreat No Surrender’. Good cheesy songs to keep my spirits up, until this market breaks.
English Brian: “The complacent owners of real estate at ponzi values, need to be broken, to make way for fresh lending to younger people,”
Yet some people on this board claim that young people don’t WANT to own homes. That they value the freedom that comes with renting.
I hope buyers who buy at these prices are served for their greed and ignorance. Consider when the Iphone first came out at a peak price and then later hear Apple drop its prices. All first time buyers balked at this. Well too bad for their ignorance to be the first to own.
Housing will be tanking for two years already in 2016!!!
john williams says real unemployment is more than 22%
Finally, Wall Street gets put on trial: We can still hold the 0.1 percent responsible for tanking the economy
Too Big To Fail bailouts let them get away with it. The amazing result of California fraud trial could change that
http://www.salon.com/2014/09/07/finally_wall_street_gets_put_on_trial_we_can_still_hold_the_0_1_percent_responsible_for_tanking_the_economy/
What this article fails to say is that the majority of homes in Eagle Rock are selling in multiple offers and for over the asking price. This is a basic real estate 101 in supply and demand. Homes in this neighborhood are selling on an average of 2.9% above the asking price for a reason. I guess everyone buying in the neighborhood must be a fool as the median sold prices in Eagle Rock have gone up 19.7% year over year since July 2013.
This article also picks out one home as an extreme example. There are plenty of other way more affordable homes in Eagle Rock other than a 700 sq/ft house for $579,000. Way to be an alarmist.
On the other hand, if you want to live in a good neighborhood that has a decent public school in the big city you are going to pay for it. You get what you pay for.
Head down the street to Silver Lake and Echo Park and you will really be surprised at the “crazy prices” considering you can’t even buy a home for $579,000.
As an Eagle Rock resident I’m lucky and grateful that I purchased when I did 2 years ago. My house is now worth easily $150,000 more than what I paid for it. Maybe I’ll take my profits and rent for a few years or maybe I’ll just stay and live in a house that I like and in a neighborhood that I love.
Please click on the Redfin.com link below for my references to the stats in my comment above.
https://www.redfin.com/zipcode/90041
The idea that Eagle Rock cannot sustain high prices is interesting, but it’s possible for any neighborhood to become a place where affluent or wealthy people want to live. Look at the Venice area. It used to be a ghetto. Not “ghetto” but an actual ghetto back when there were racist restrictions on where people could buy homes. It was one of many communities that weren’t racist – so people of color lived there, and the government and banks redlined the area, assuring it would be a ghetto for a long time.
Now Venice is expensive. Most of the poor people have been priced out. They’re living in lower-income areas. Yes, there’s a bit of a bubble there, but the overall trend has been stable, high prices.
White flight conspired to make Eagle Rock a bit of a ghetto, but I don’t think it ever became one. It went from middle class to middle class minorities. That’s all. Now bona fide affluent people want to live there.
The concentration of buying in one area can sustain prices. As long as the general (and mostly white) population of highly paid people will choose to live only in specific neighborhoods, and create a de-facto racist house-buyer market, prices can be sustained.
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