Targeting the deal seeking flipper in Los Angeles: 3 homes all in the $100k price range. Low range fixer uppers still on the market.
I usually get e-mails from people mentioning that no deals are to be found in this market. Unfortunately some of these people are targeting very specific markets. As of today, the LA/OC market is the most overpriced in the nation based on what those in the area make. Yet there are deals to be found that meet many of the criteria of buyers: proximity to city hub, weather, and being in L.A. County. Today we’ll show you three homes that are currently on the market and are apparently targeting potential investors. All these homes are in Los Angeles and meet the proximity, sunshine, and traffic prerequisites. As we know all areas will gentrify eventually so why not be part of the expedition troop to hipster out these properties? Let us take a look at three properties in Los Angeles that carry a $100k price tag.
The $100k club
You might find it hard to believe that you can find some homes in Los Angeles for $100k. Don’t expect these homes to be move-in ready or to look like some HGTV special project. Yet these are definitely in the price range for many hipsters.
Crap shacks come in all shapes and sizes. You need to put in some elbow grease to get things up to par but then they are all ready for you to move in.
10807 Lou Dillon Ave
Los Angeles, CA 90059
1 bed, 1 bath 558 square feet
Now I know what you might be thinking and yes, this is a home on the market for sale right now. I’m not sure if you get the table with a glass top in the front yard with this purchase. Everything is negotiable of course so talk with your agent about throwing that in.
Now 1 bed and 1 bath squeezed into 558 square feet is compact. But you are getting all of this for $140,000. Let us move on to the next home.
los angeles home 2
743 W Century Blvd
Los Angeles, CA 90044
2 beds, 1 bath 640 square feet
“Attention all investors.. time to fix and flip.. . New Standard sale… Will not qualify for any type of financing.. Cash offers only..â€
This home needs a tiny bit of yard work first. I love the ad because it is straight to the point. Call your audience “investors†followed by telling them what to do “fix and flip†and then how you can finance the deal. Apparently this deal is only for cash offers. This place was built in 1938 and is listed at $170,000. Now tell me this isn’t a deal? You even get 2 bedrooms on this one.
Let us move on to our final home.
617 E 95th St
Los Angeles, CA 90002
2 beds, 1 bath 672 square feet
“FIXER UPPER!!!! INVESTOR’S DELIGHT. This is cozy two bed and one bath home. nice layout, nice size kitchen w/ laundry room inside. Garage has been converted into living space with full size bathroom. Flat roof. With Tlc this can be a real gem. PLEASE NOTE: ******ACTUAL ADDRESS IS 617 EAST 95TH. NOT WEST. ****** COUNTY RECORDS MAKE A MISTAKE. NEW ON THE MARKET, STARTING THIS THURSDAY. ONLY 1 DAY ON MARKET.â€
I’m sure with “TLC†this place can be a real “gem†as well. Just make sure you bring over your giant SUV packed with TLC because this place needs a bit to fix up. The place is listed at $180,000 so you have a lot of wiggle room to fix up. Again, this property is being targeted to potential investors.
The targeting is important because it speaks to the current market. These homes are priced for even local families yet are being pushed to investors. Anyone with the cash to invest is going to convert these to rentals only taking off more single family homes from the market.  These as investments are not for amateur investors. Are you going to be the first to take the leap to gentrify these markets?
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85 Responses to “Targeting the deal seeking flipper in Los Angeles: 3 homes all in the $100k price range. Low range fixer uppers still on the market.”
With these ‘ Tijuana floor plans ‘ you can fit one illegal per 100 sq. feet.
I’ll take the one with the chicken wire fence for the pit bull .
http://u.zillow.com/p1P9vr
What a deal! This results from gentrification.
How much does it cost to have the house knocked down and the lot cleared? These ‘houses’ are more expensive than the price being asked. No one seriously thinks they’re livable and that a little ‘sweat equity’ will make a difference.
I’m sorry guys, this was published today: http://www.marketwatch.com/story/home-price-growth-races-to-8-month-high-2015-05-05?dist=beforebell
If house prices are coming down, it doesn’t appear to have started at all. Maybe next year, or the year after that? Or the year after that? Either way, even as a market bull, I personally don’t think house prices can climb much higher and I don’t think it’s the right time to buy any more. The vast majority of you missed the boat so I’m very sorry about that. I was in your shoes the last bubble, I made damn sure I wasn’t going to be a sideliner this time. Got mine in 2009 and so damn glad I did.
So there are deals out there…
I read a lot here, I don’t comment too much. I had been super bearish, thinking that with the massive run up in prices since 2011-2012 there was no way incomes were keeping pace and that another crash was inevitable. The only thing that has crashed so far has been my buying power. Now, although as a perspective buyer I would like to see a correction, I just do not see where it is going to come from. I feel like a lack of inventory has spurred the run on prices but the problem for me is I do not see where the inventory is going to come from to cause a correction to occur.
I realize So. Cal has its real estate cycles, but I am worried with what the banks have learned about dealing with foreclosures, there will never be a massive amount of supply of homes again and the costs will only increase.
I hate the “its different this time meme,” but as a former bear I just cannot help but think maybe it really is different this time because TPTB have figured out the one component that can drive prices through the roof in the housing market, low inventory.
I am frustrated and bitter, and in many ways feel it is unfair that some people are paying $600k for houses that were $200k just 25 years ago, but at the same time, sometimes even though you don’t like the game, you still have to play it.
I am in Ventura County…and it seems like inventory is getting tighter and prices are getting higher, and I am thinking I just missed on a great house because I took a day to think about a huge purchase…while I did that an all cash offer and a back up offer appeared and I am not in a position to buy what would equate to a house I would absolutely love to be in.
I used to see the tagline on this blog and think how can one love So Cal so much they can forget about the bubble and the dynamics of pricing here, but I think, despite the costs I have learned to love So Cal and forget the bubble, now I just want to get a piece of the pie before it is too late, I worry I already may have waited too long.
Are others that have been looking to buy feeling this way as well, or are people still feeling like a correction will come and if so what will trigger it?
thanks in advance…
@Bryan, I think for the foreseeable future prices are not going to correct. My belief is low inventory will remain bc unlike the first bubble, the houses this time around were bought by investment vehicles that are not going to get into a financial situation like over leveraged home owners who had no business buying in the first place. Couple that with the massive amount of short term subletting via sites like AirBnB and you have an inventory crisis. Perhaps when the baby boomers start to sell off their homes in mass we will see inventory again. That will be awhile. I still believe if you plan on staying in the home for the long term, buying is a good option even at these prices.
Bryan,
I was looking at properties in Ventura County too and a decent house on the low end is around $500k. I think the correction will come when they run out of qualified people to able to afford a house. Baby boomers are gonna have to sell at some point. Young people even with college degrees don’t have the experience or available jobs to support the current housing price while trying to save for retirement, and raise a family. I bought my house in 2009 so it was not too bad. I’m in my early 30’s and I talk to young people with degrees and I just don’t see how they can duplicate what their parents did by raising a family and buy a home in Ventura County.
with reverse mortgages, many baby boomers ain’t leaving their homes until they’re carried out on a gurney
Besides my few close friends, I do not know any other 30 year older who own a home in so cal, let alone a really nice one. I just bought a home in September. One thing a lot of people do not realize is that the price of buying a house does not include a multiplicity of other costs and fees. Even in my brand new constructions, I’ve already put 10k into it in improvements, and 7k property taxes in less than 1 year.
@Howard Johnson: Congratulations, your parents bought you a house. Or you’re lying, or you lived with mommy and daddy while saving for 10 years and making $100k+ per year. There’s no need to continually gloat about it in multiple article comments; it’s getting pretty old.
I have no relationship with my parents. I cut them off years ago. Sorry you are offended, but I have worked 12+ hour days for the last 8 years with very few breaks. Was a self made millionaire by 25. I can give a rats ass about your jealousy, the money is out there, go get yours!!
You’re definitely not alone, Bryan. A correction will definitely come but the question is when. The fed has made it clear they aren’t going to raise rates anytime soon, yet even with zero rates and the fed flooding the market with cash, our economy is shrinking (0.2% GDP growth in Q1 even using the new calculations). There are different speculations to how catastrophic the next recession will be, but what we know is there has never been a housing market crash that wasn’t accompanied by an overall crash in the economy, so IMO we should keep an eye on a few things that might trigger it: asset bubble, tech bubble, student loan bubble, unfunded liabilities on all tiers of gov’t, etc…
As for the banks holding onto properties, it’s just one of the reasons why inventory is low in LA but unless they get bailed out again in the next recession, my opinion is that these properties are going to quickly be turning into liabilities and they’ll need to unload them.
@Bryan Hi Bryan, I dont know Ventura County well – just heard that Oxnard has many barrio-like areas. Are there nice parts of Oxnard that you would consider buying?
In terms of what will trigger another housing crash – the only thing I can imagine would be a job-loss recession. I dont think our ekonomy is far from that, but perhaps not within the near future either.
I dont think anyone knows when the right time to buy is. IF there is a housing crash, you and I know the investors will swoop in again with all cash offers, but with no NINJA loans, HOW will housing crash?
Good luck.
“you and I know the investors will swoop in again with all cash offers”
It’s a good guess but the wildcard will be if better performing asset classes come around. I don’t think ten years ago many people would have claimed that REO to rental was going to take off the way it did.
@QE Abyss
Why didn’t investors swoop in last time before prices fell by as much as 30%? It wasn’t until the Fed instituted ZIRP, and the government started their extraordinary program that prices stabilized and took off. With ZIRP, investors are forced to shift from safe to risky investments, such as real estate investments. Many all-cash transactions by REITs are actually funds from investors desperate for yield. Should RE prices crash or safer forms of investments return (higher interest rates), some or many of these investors are going to jump ship.
If prices crash again despite their ongoing unprecedented measures, what else could the Fed/government do to rescue RE? What bullets would they have left? NINJA loans were not prominent in past RE crashes. So why would it be different this time? The bubble always has been in the prices, not in the quality of loans.
@Siggy
I think that we can both agree that another crash will be associated with a recession, which will precipitate deflation, including rental prices.
If the Fed is terrified about deflation, it would be safe to assume that REIT investors would be too scared to jump into the water first in fear of catching a falling knife. If all investors were so confident, the stock market would have never crashed in the first place.
Nothing feels worse than being coerced by market forces into purchasing a home.
I’m in the D.C. market, and what made me ultimately capitulate is I just don’t believe our institutions will do the right thing anymore. The message they’ve sent is clear, they will support asset prices no matter how distorted the market gets. They’ll buy every MBS, they’ll make 0% down loans to pets, whatever. I’m just one person, I can’t fight the Fed. Meanwhile my wife wants a place to call her own and where we can start a family.
So we bought a place where there are good schools, and could live 10+ years if the market crashes. It’s smaller than ideal for when kids come, and it’s not a hip area, but it’s within our range of affordability. I absolutely hated helping support these ridiculous prices, but what can you do? Life doesn’t wait forever.
There has been a profound macro-level economic shift over the past 30 years, which has changed the landscape for capital investments across the board.
Unfortunately, little is written on this blog about that; while the attention has been on local median incomes, gentrification denial, water shortages, foreign investment denial, denial about relevance of supply/demand, boomers fleeing to Texas, mythical 3:1 income to mortgage ratio’s, the next “big one” (earthquake), etc.
Some commenters here are so delusional they still believe that Jim Taylor was right about his “tank hard” mantra of last year (hello, NZ!).
Even the Doctor said something about a “15 year cycle” that we’re in. 15 years is enough time to proclaim, “this time it’s different.” It doesn’t’ matter that millions lost their homes to foreclosure…what’s relevant is that their was PLENTY of demand to pick up that slack and that was by all cash or investor crowd.
You hit the nail on the head re: inventory.
As I posted before, and as nobody here understands, higher interest rates will further TIGHTEN inventory, which will put an even firmer floor under prices, or even increase them in certain areas.
It will no longer be the case of the golden sarcophagus, but the golden 3.5% refi that will keep people locked into their homes.
It’s not fair, it just “is.”
Thanks for the commentary…looking in Camarillo only, neighboring town to Oxnard (which yes is not the nicest of areas, but again like expensive LA, nice places next to not nice places still fetch a lot of $)
Like many of you said, a correction may come but it seems years off if it does, unless there is some dramatic change; and there may even be the chance that it will not correct and just tighten and get more expensive from here going forward.
Really kind of gamble, a real expensive, gamble.
I am in the camp of staying for years, kind of would like to by my forever home…mid 30s, married with 3 kids and done having more, so looking for something that suits us now and going forward for the next 40 years, and struggling to find nice homes between the $500k-$600k range, seems like the nice stuff is above $600k and I just cannot get there on one salary of about $100k per year although we do have about $150k in savings as a down payment to help bring our monthly down to a manageable #.
the monthly is not the problem as the loan we are taking would come in under our current rent, I was more or less trying to time the market as we had a foreclosure after buying in 2007 and got completely crushed by not timing the first bubble and crash…that house is still $100k under what our purchase price was in 2007.
Jim Taylor had his day when he had to admit he was wrong, mine came about 2 weeks ago, I just don’t see it coming down again, as much as I wish it would so I did not have to spend so much money on a house, but as they say, “it is what it is.”
A market can’t crash until it just about pulls in everyone who can and will buy.
Get busy with the excuses and buy…
Here’s my favorite flip in one of my favorite neighborhoods:
http://www.zillow.com/homedetails/806-S-Prospect-Ave-Redondo-Beach-CA-90277/21323249_zpid/
When it was listed for sale early last year, I saw an asking price of $599K. I was interested at this price, but then realized it’s right next to a huge SCE power transfer station. It looks like it sold for $546K shortly after, then had some lipstick put on it with a $875K asking price that has been dropping like a rock ever since. This seems like a bargain for the neighborhood! Even with the power station right in the back yard, at this price there has to be someone stepping up soon.
“As I posted before, and as nobody here understands, higher interest rates will further TIGHTEN inventory, which will put an even firmer floor under prices, or even increase them in certain areas.”
We understand full well what you’re claiming. Problem is that it’s just another theory and the future hasn’t happened yet.
If and when interest rates go back up again, they will tighten supply, but they’ll tighten demand even more. Trivially, you can’t have 10x median income prices like you do now with a 10% interest rate because even the interest alone would consume every penny of the median buyer’s income. It is true that supply will tighten too, so the net result is that if interest rates move up substantially, every mortgage holder is locked in place for the next 20 years or so, while non-owners will be pretty much locked out.
@ Bryan: Since you stated you had a negative experience with the last bubble, I’m a bit perplexed that you are considering a gamble in the current market. I think that even the bulls can admit that going all in now is a gamble. It would be pretty devastating if your $150k, which presumably took a lot of effort to accumulate, evaporated if (when) the market takes a dive. Although I realize that people don’t live forever and therefore can’t wait forever to buy, waiting a few years to see what happens seems perfectly reasonable to me.
Who knows, maybe I’ll be the sucker for waiting too long to buy. I figure in the worst case scenario, there are places to move outside of California that are livable and affordable.
@SouthBayPirate, buyer beware for that Redondo Beach property. There is big lawsuit going on with people in the neighborhood claiming stray voltage is leading to all sorts of issues. Buying a fixed up SFR in 90277 for only 649K has some massive caveats.
Read article and do an internet search for many more. It’s a shame because that is otherwise a great neighborhood.
http://www.easyreadernews.com/68102/southern-california-electric-stray-voltage/
@SouthBayPirate, holy crap the article I referenced mentions the previous owners of 806 S. Prospect and all the issues they had. STAY FAR AWAY! WHAT A NIGHTMARE!
“Mary and Constantino Contreras and their children, Cristobal and Stephanie, moved in at 806 S. Prospect Ave. in early 2005.
They’d strived all their lives for what felt like dream home. Constantino worked for a seafood company, and Mary worked as a surgical assistant. The home was just south of the Topaz Substation. The Contrerases were told it was a relatively quiet neighbor. More important were the neighborhood schools. High performing Alta Vista Elementary School was just across the street, Parras Middle School was just down Prospect Avenue, and Redondo Union High School was within a mile.
They paid close to $700,000 for the home and could not have been happier.
“We were like, okay, this is good,†Mary recalled. “This is where the kids are going to graduate. This is where I am going to get old. No worries.â€
They soon noticed strange things about their new home.
The overhead light and fan above Mary and Constantino’s bed would suddenly turn on in the middle of the night. Bulbs throughout the house flickered and burnt out rapidly.
“At first we thought it was a ghost,†Mary said.
Within a year of moving in, Cris, who was 12, began suffering severe joint pain. The family thought it was a combination of growing pains and soccer – Cris was an avid player – but it grew worse.
“I couldn’t get out of bed,†he said. “It was to the point I was taking Motrin for the pain. And I couldn’t walk.â€
Doctors discovered a tumor on his left femur. It was benign, and rather than operate, the tumor was monitored in hopes it would shrink.
Stephanie was 5 when they moved into the neighborhood. She was a precociously bright young girl, energetic and enthusiastic about school. For the first year, everything was fine with her. But eventually she began complaining of frequent heartburn, so much so that she stopped eating much.
“When she would eat solid food, she would complain it was stuck….She was very constipated,†Mary said. “She was not normal. She wouldn’t like to eat very much because it hurt. It made her nauseous, and she would stop eating. She’d be like, ‘I’m done.’†And then she wouldn’t eat any more.â€
Doctors treated her for acid reflux but nothing seemed to work. The problem kept worsening. She was in and out of hospitals, her energy was often low, and she was missing a lot of school. Finally, in 2010, she underwent a surgery called “nissen fundoplication,†intended to address extreme cases of acid reflux. But when the surgeon opened her up, he discovered that it wasn’t acid reflux. Half of her esophagus was paralyzed, and much of her digestive tract was highly inflamed.
Constantino and especially Mary were also suffering insomnia, nausea, and headaches. They were starting to put two and two together. They’d moved out during the economic downturn in 2009 and rented their home, during which time Cris’s tumor shrank and rest of the family’s symptoms eased – all except Stephanie’s digestive problems. They moved back in August, 2011, and immediately started experiencing ill health again.
“I started saying to him, maybe it’s the area we live in,†Mary said.
A few points…
@responder, ernst, builder, LB, & tick tock
-I was being sarcastic with the comment about deals still in so cal…LOL
-I am interested in getting back into the market even though I was burned last time because ultimately I want to own and even though that is a huge chunk of money to give up for the down payment, the tax deductions will make a new place cheaper than my rent on a monthly basis.
-I agree that all costs have gone up, which is why I just do not see affordable housing coming on line unless you want to share walls and floors and ceilings.
-Am thinking the external event could take a while and I would prefer to own now
I expected to crash to come or at the very least be underway by this point but it does not appear to be here or starting and I do not want to continue to live my life wondering if/when I will buy.
It is just time to bite the bullet and buy because I do not see anything in the near term that can or will possibly bring this market back…if we are 1/2 to the next peak then I will at least have a small cushion in there. but what matters is the monthly payments will not kill me.
@Bryan, it sounds like you’re the perfect candidate to be buying a home right now. You want a roof over your head for you and your family, you can afford the mortgage/taxes/insurance, it’s cheaper than renting, and you plan to stay put for a while. It sounds like you have absolutely no reason whatsoever to try timing the market; buy now and as long as you have some job stability you have nothing to worry about. Sure the market could implode and you could end up underwater, but as long as you have a job and a manageable mortgage then a lower home value is irrelevant.
Bryan,
I can give you my perspective as a builder. I know you think I may be biased. I’ll try not to be. I agree that prices are high for many reasons: price of land and prices for ever increasing materials and skilled labor. Everyone is familiar with the dynamic of grocery prices but not everyone is buying construction materials on a daily basis – I do, and it is the same. When I say construction materials I am not saying just lumber, but everything else (i.e. insulation, sheetrock, HVAC equipment, electrical materials plus changes in electrical code).
For these reasons, it is harder and harder to build and make a profit. That is the reason construction plummeted – it is harder and harder for builders to make a profit and without profit there is no construction. Long term, this dynamic is going to create major shortages.
People complain that builders no longer build affordable homes in area they like to live. The reason is simple – they can’t. Whoever is telling you otherwise, they don’t know what they are talking about.
The problem is with globalization and fools (usefull idiots) who vote for politicians who promote a NWO (you know, those politicians promoted by MSM who come from CFR). You can’t have wage increases and good well paying jobs for the middle class and globalization at the same time. Yes some 0.01% at the top will benefit but they benefit at the expense of the vast majority of US citizens. Like you said, it is what it is.
Could prices go lower or higher? Nobody knows. Too many variables in a very instable and complex system. There are also too many actors involved and nobody knows who is going to prevail. Whoever tells you one way or the other, they tell you based on this or that variable, all other things being equal. It makes sense based on one or two variables. The problem is that all other things are NEVER equal.
Some focus on the FED actions because they have power (and they do to a certain extent), but the global bond market is far more powerful and bigger than the FED.
In conclusion, if the process of globalization continues, US will look like a third world country with few rich and most dirt poor.
@Bryan wrote: “So there are deals out there…”
LOL!!!!! You are obviously not familiar with Southern California. Those properties listed above are located in south Los Angeles. South Los Angeles used to be known as South Central L.A. aka the murder capital of the west coast. Median household income in those zip codes are in the $30K to $32K range.
Those properties at $140K to $180K are waaaaaaaay to freaking high unless you like the sound of gunfire, sirens, ambulances and police helicopters on a daily basis.
@Bryan, you will need an external trigger of some sorts to get the housing correction. Big job loss recession, massive rise in interest rates, natural disaster, terrorist attack, etc. With the Fed completely 100% in charge, I think we can rule out a big job loss recession or massive rise in interest rates. Not saying it can’t happen, but the Fed showed their cards a few years ago…to think they wouldn’t do it again is foolish.
No inventory is a combination of several things. Banks withholding properties is likely minor. I think the larger contributors are the move up property ladder is dead, people don’t buy and sell every 7 years like back in the ’80s. Boomers and retirees are staying in their houses for the long haul unlike many people predicted. Throw in investors, cash flush foreigners and you simply don’t have many houses to choose from. The weak hands who bought during the bubble are long gone. That leaves longtime owners with boatloads of equity and recent very qualified buyers.
Good luck with whatever you do.
“As I posted before, and as nobody here understands, higher interest rates will further TIGHTEN inventory, which will put an even firmer floor under prices, or even increase them in certain areas.”
How able are we to determine the potential scope of these “rate-disenfranchised” owners? Not every property owner is holding a mortgage and of those that do, notwithstanding other factors, the benefit of a low rate is only relative to the outstanding levered principal, of which those with a mortgage are in varying stages of an amortization period. The degree of influence to sell being offset by the rate is not the same for all in this cohort. Then there is the impact of new homes and new rentals coming online because used homes don’t exist in a marketplace vacuum.
Even hypothesizing that rates go up enough and every one of those rate-disenfranchished owners don’t sell, those who are not rate-disenfranchised are free to sell and the marketplace continues to set prices on the margins.
The reality is that life happens and there will be a level of rate-disenfranchised owners who will be forced to sell for one reason or another. Of those that do sell, how many will sell to cash only buyers? For those forced to sell to another mortgagor, the higher rate impact to the buyer’s purchasing power affect the price downward. Perhaps the seller instead chooses to become an accidental landlord, which adds to rental supply.
Being rate-disenfranchised doesn’t seem like a desirable position to be stuck in.
On one hand there are claims that rates don’t matter and now we have this new theory to the contrary. While obviously there will be some who will focus on their cost of borrowing, it seems to me that what mortgagors care most about is total monthly cost. After all, that’s what the rental parity equation is based upon.
Boiling down potential future outcomes into a simple abstract formula doesn’t account for the layers of complexity.
Apologies, this was posted to the wrong thread.
Bryan,
I’d agree that we won’t see a price implosion as we did in 2008. This time around, people have been buying with more money down, at ridiculously low rates, and a lot of homes have had real value added to them via remodel/tear down that cannot be ignored. WHEN interest rates rise, I believe there will be a squeeze on inventory but, inexorably, prices will come down. People buy based on a monthly payment and higher rates lowers the overall value of the house they can afford, plus higher rates will knock down the stock market a bit.
Unfortunately, the FED for the past 7 years have not favored pragmatists and savers. And while sites like Dr. Housing Bubble highlight the insanity, we would have been better off not listening to its advice and buying instead (even as recent as a year ago). What’s next? Who knows…. I know friends of mine that have capitulated and bought into the market as they couldn’t wait any longer are now dealing with the stress of high monthly payments and property taxes.
A few points…
@responder, ernst, builder, LB, & tick tock
-I was being sarcastic with the comment about deals still in so cal…LOL
-I am interested in getting back into the market even though I was burned last time because ultimately I want to own and even though that is a huge chunk of money to give up for the down payment, the tax deductions will make a new place cheaper than my rent on a monthly basis.
-I agree that all costs have gone up, which is why I just do not see affordable housing coming on line unless you want to share walls and floors and ceilings.
-Am thinking the external event could take a while and I would prefer to own now
I expected to crash to come or at the very least be underway by this point but it does not appear to be here or starting and I do not want to continue to live my life wondering if/when I will buy.
It is just time to bite the bullet and buy because I do not see anything in the near term that can or will possibly bring this market back…if we are 1/2 to the next peak then I will at least have a small cushion in there. but what matters is the monthly payments will not kill me.
Bryan-
I feel your pain and you are not alone. My husband and I have been looking in Woodland Hills this year and I gotta say I feel defeated.
We have $300 saved as a down payment and will be putting 40% down, but there are not any houses available that look nice in that price range. We saved long and hard for this stinking house and I don’t want some home built in the 50’s with the original kitchen and bathrooms, popcorn ceilings, cheap ceramic tiles throughout and old dingy carpeting. Maybe for a fixer, but not for $700,000. We found one we loved, but got out bid by buyers paying all cash. We were told their family was giving them the money.
I don’t think the prices are comming down anytime soon either. We saw the last bubble and we knew it would crash, but unfortunately we could not as advantage of it at the time. We did not have the money and I lost my job. Now we feel like we are truly ready, but there’s nothing worth buying in my opinion. We are hoping May and June we will see more homes go onto the market, but I’m not holding my breath.
Me neither, inventory is just too tight and personally I don’t see how it will increase…I don’t know that this was the point of the measures taken but it is definitely the result and it seems that there is going to be a long long time until normalcy returns around here. Defeated is exactly how I feel.
I have not lived in the LA area for 30 some years now, but I love where property #3 is. Close to my childhood favorite areas of Inglewood, Compton, South Gate. Ya, the parts of town where the Crackers get mugged or worse. I guess lots of people are willing to be slum lords. Me, you could not pay me enough rent to own that property.
@ Jim gee Jim, you forgot to mention that one of those homes is near the lovely Imperial Gardens and Nickerson Gardens ‘projects’. 🙂
It’s a South Central renaissance! Here is the club those bargains are looking to join –
3 bedrooms in 855 sq ft and there’s nothing quite like stepping over the toilet when getting out of the shower. I can’t image why they’ve had to lower the ask twice in as many months considering the overrides of perfect weather, global international status of the region, and the probability of excellent taco joints around each corner within blocks of this place.
https://www.redfin.com/CA/Los-Angeles/3625-S-St-Andrews-Pl-90018/home/6887007
I’m sure that with the cheapest new windows, basic new garage door, simple frame over the front steps, clearance bin fixtures/appliances, and likely day laborer workmanship is certainly worth a 100% markup. No doubt they paid special attention to rehabbing this 1920’s built gem with high quality electrical and plumbing and comprehensively addressed any potential structural flaws.
“It sits on a quiet street only blocks from USC and the metro rail for easy access to and from school. This beauty can rent per bedroom to USC students, wait for the college renters to come calling all year long.”
Assuredly the best quality USC student renters and their parents won’t hesitate to come a callin’ after discovering what a typical week of crime in that area brings such as in the past week:
A grand theft.
A stolen vehicle.
A robbery.
A stolen vehicle.
A burglary from vehicle.
A robbery.
A robbery.
A petty theft.
An assault with a deadly weapon.
GRAND THEFT: Purse Snatch
A burglary.
A stolen vehicle.
A stolen vehicle. – A recovered vehicle and a stolen vehicle.
A burglary from vehicle.
A burglary from vehicle.
A grand theft from vehicle.
A stolen vehicle.
An assault with a deadly weapon.
A petty theft.
A grand theft.
A petty theft from vehicle.
An attempted burglary.
An assault with a deadly weapon.
A burglary.
A robbery.
A petty theft from vehicle.
An assault with a deadly weapon.
A burglary.
A petty theft.
A robbery.
A robbery.
A robbery.
A theft from person.
A petty theft.
GRAND THEFT: Purse Snatch
A petty theft.
Shooting/Stabbing. Wilshire units o/s shooting, susps 2 BMAs in a veh fled scene northbound
A petty theft from vehicle.
A homicide.
And posters on here used to warn that Santa Monica has some areas that still has gang activity. Guess they’d never buy there either for fear of getting their yoga mat swiped.
Gentrification is a tough call. In Silverlake, Echo Park, Los Feliz, etc. people are winning.
Nobody is saying all of LA will gentrify. But a crime-invested crap shack in Compton will always be way more expensive than a crime-invested crap shack in Cleveland.
What exactly are they winning? Is that how one defines lowered expectations these days?
Why are you bringing other areas into the discussion? The topic is about a certain part of South Central and the claim that student renters will be beating down the door to rent this place. But since you mentioned it, I wonder how the P&L for a buying a flip to rent out in a comparably area in both cities would pencil out.
Since when did Los Feliz require gentrification?
I have been to the LA neighborhoods where these homes are located, and if you buy there all I can say is: “Welcome to the jungle baby!”
Looking these up on Google Maps. Was I the only one to hear the theme from “Sanford & Son”?
Kinda hard to hear any theme music over all the racist dog-whistling in here.
Oh, it’s not just me.
So now the crazy leftist PC crowd has declared dog whistling as being racist?
in order to make any money on these three flips you’d need to buy them way under $140K then spend $40-50K making them nice inside and out, then sell them to an fha first time buyer for around $230-250K. all three of these could make great money if they get bought at the right price. Most people overpay for fixers so they can say they bought a house to flip. They then get their ass handed to them after they rehab and try to price it way too high on the resale. They end up losing $10-$30K and stop flipping homes 🙂
for a projected $40K profit on 200K invested is 20% return in 4-6 months, so approx. 40-60% return on investment annually, that’s a pretty sweet return if you ask me, find me a stock that can double your investment in 24 months, oh and you can rent these out for probably $1300-$1600/month depending on how ghetto the area is.
I know a dude who came to LA from Canada in 1960 with $2500 in his pocket, he’s now worth $1.1 Billion….with a B. All he ever buys is in Watts, Compton, Inglewood, East LA and the surrounding areas. He says the ghetto smells like money to him…
Moral of the story, learn your shit, take small risks at first, put your money where your mouth is, make mistakes, learn more shit from those mistakes, get better at stuff, make money, rinse and repeat. There are no magic pills, magic beans, magic books, magic seminars, or magic words….
I’d love to try and make money in the ‘hood if I didn’t think I would have to look over my shoulder constantly. Like Siggy posted, the typical week of crime will shock most people. Hey, it isn’t safe here no matter your color or nationality. Sadly, the affordable areas of Oxnard are only a little bit better. Oh, there are nice areas – the beach and the new PUD’s near the 101 but those houses cost real money. Not much of a deal for suffering an Oxnard Zip Code.
I’ve been looking at the Inland Empire since I don’t have to commute during rush hour.
There has been a correction there and some almost deals in Corona, Riverside, Temecula, etc. The prices there have been wandering South for nearly a year. I did a climate search after some friends derided the area as “almost desert”. The IE is the same weather or climate zone as much of the San Fernando Valley. It’s not Santa Monica but it’s not desert either. A lot of newer homes on 1/4 acre or more for $300K. Only worth a glance if you don’t have to commute, I expect.
I own property in Temecula. The prices are substantially lower then LA. You can buy a nice home for 300K. The problem is that the appreciation and rents are substantially lower then LA.
True story
I saw the 3rd one on 95th in person before it hit the market. About 2 weeks ago. It was offered to me at $170k. I didn’t feel comfortable with the area, the street, the T alley it sits on, the fact that there is a motel directly next to it, that there was an Infiniti on blocks directly behind it, graffiti representing all the local gangs, a lady literally smoking crack on the sidewalk at 11am in front of the property, an illegally converted garage, code violations, a pit bull that didn’t allow me to view the back yard or electrical panel, people starring at me knowing that obviously I wasn’t welcome.
I asked a Realtor that is well versed with the area. He said stay away and that it’s the wrong pocket to be in. I asked an LAPD officer that patrols the area, and he said run.
I passed. I decided I wasn’t about to buy myself a headache. Although I know people make money in this area. It wasn’t and probably won’t be for me. Ever. But I did the 90044 zip code. Thought there was real potential there.
Overall, it feels like many of you are right… Fed and banks will keep pumping no matter what… prices will likely stay high, and may go up in some areas, esp if they keep allowing Chinese embezzlement refugees in. At some pt, the sovereign debt bubble will blow, probably w US debt north of $20 trillion. That will lead to major spending cutbacks, job losses and subsequent foreclosures, bankruptcies etc. Most lenders and agents I talk to say buy now, make $$ in 3 years, lose $$ in 6+ years..
Time for a crap shack facts update on the good doctor’s posts:
From 3/31/15 post on Pasadena crap:
*844 N. Catalina
Asking $465K on 3/19/15
Sold $510K on 5/2/15
4/17/15 post on Paramount crap:
*15515 Delcombre
Asking $379K, on 3/9/15
Sold $389K on 4/28/15
*8334 Elburg
Asking $305K on 4/11/15
Sale pending 5/5/15
Some of the other crap is still for sale like on Compton’s Piru Street, but can anyone deny that:
Crap sitting on limited solid gold California dirt sure seems to smell good to some people!
There are guys that come pick through the trash bins in my neighborhood each week, so I imagine that they’ve become quite adept at stomaching the stench. Nonetheless, they are willing to pay that price for other’s garbage. They can have it.
Haliburton is dirty money and Facebook is stupid….but they sure make great investments.
Derrick, that’s a nice straw man attempt but the claim being disputed is that a purchase event alone defines some objective value.
Another update for the much publicized house on Doty Avenue in Torrance, this became a topic for several articles.
18826 Doty Avenue, Torrance
Listed 2/11/15 for 609K
Sold 4/10/15 for 630K
Not quite a crap shack, but 1100 sq ft of bliss in your average Torrance neighborhood. It doesn’t matter that 80% of the other owners on the street can’t buy their own house at current prices.
Keep shilling you pathetic realtard.
Interesting editorial in L.A. Times suggesting that perhaps the only solution to drought is for people to move out of L.A. and California. The bigger issue is that no one ever mentions the decades of excess spending, mis-management, and procrastination, and the impacts that will eventually impact every Californian. Things like Stockton just get buried as quickly as possible because no one wants to cloud that nice Chamber of Commerce picture of the sun setting at the beach!
You forgot to include fraud and corruption.
There will be another housing market price reset. We are not in a “new normal” and things are not “different’ this time.
First was the end of QE, then decay of corporate earnings, then growing share buybacks, then come layoffs, then go home prices. A light bulb is often brightest before the filament fails.
@Michael
I agree; RE is currently in a massive bubble. And bubbles do pop regardless of the type of money that helped fuel it. If ZIRP had no downside, why didn’t the Fed drop interest rates earlier and spare us from the “pain” of prior recessions? If rental incomes were so profitable, why didn’t Blackstone and other investment firms get into the REIT business decades ago? Even Yellen expressed her belief that too much leverage was desperately chasing too little yield as stock prices are becoming overvalued.
Good questions Prince.
The most important “re-set” has been on 3.5% interest rate re-fi’s, which along with gvt programs like HARP has cured most mortgage holders buying over the past 15 years.
Government refinancing programs have been nothing but taxpayer handouts for banks and the select few. The majority of HARP refis were used by those with positive equity and did little to help underwater mortgages.
Again, what is the scope of the impact relative to the entire marketplace? Out of all of the potential home pricing activity, what is the percentage that is mortgaged at a low rate and to what extent?
On one hand we are told that rates don’t matter in regard to price action and here’s something to the contrary.
@Michael, you forgot to add M&A’s which is what companies that have not shown revenue or profits do (Facebook) and what companies do when they can’t grow anymore (Google, Yahoo, Apple). It signaled the end of the cycle in the 2000’s. Network Solutions was buying up everything it could to show growth. We laughed because we knew how poorly managed it was.
There’s a very smart and funny poster who goes by What? and other handles.
He’s consistently said supply and demand doesn’t play a role in RE prices.
Here’s what Stephen Scwarzman, CEO of Blackstone Group, the biggest real estate investment group in the world, had to say today:
“What controls real estate values in the long term is supply and demand….so the question is how many things are being built…”
Certainly, you drive around LA and there are multi-unit complexes being built all over the place…this will soak up the pent-up demand for those who want to squeeze into a crap condo.
They simply aren’t building SFR’s in desirable areas of LA/OC anymore (finite supply). Whatever hiccup there will be in terms of local demand will be overwhelmed by the macro factors of soaring global 1% wealth (demand) that wants to find a home in desirable real estate enclaves like Southern California.
Derrick, you are putting a tear to my eye. I have been pounding the table regarding supply and demand for years. If the CEO of Blackstone claims supply and demand is the number 1 factor of RE prices…I would definitely listen. LA and OC prime is built out and there are draconian anti growth measures for the areas that still have “some” buildable land left. To think this doesn’t affect RE prices is foolish.
Real estate runs on money; not population growth, not un-proceedable demand.
One hand pounding “rental parity” and the other “supply/demand”!
To clarify, the CEO did say that short-term the key factor was interest rates; but that long-term it is supply/demand.
@Galaxy
Good point. Real estate prices is traditionally based on qualifiable demand, not simply on population growth. From time to time, easy money policy tries to distort the equation. But that’s why bubbles tend to come crashing back to reality.
I don’t know anything about What? or any other posters, but the takeaway I got from posts disputing “supply and demand” mantra was said by Scwarzman as “in the long term”, therefore it’s a difficult signal to decipher over shorter durations due to transient and distorting input variables.
As for much of the SoCal market, what I increasingly notice are SFH new construction units being placed extremely close together with hardly any outside space and existing SFH becoming sandwiched between newer multi-units that tower around the house in a reminder of the movie Up! Another example is the tear down replacements with McMansions that nearly fill up the entire lot with multiple story building peering down upon the existing more modest homes with outdoor space. With the increased traffic and friction brought by the increased congestion, one can ponder if it’s even worth paying the premium for a SFH being surrounded by all of that and having little privacy. That’s why I rail on the attempts to justify (weather, diversity, international, etc…), because at the end of the day there are still high prices to be paid beyond financial.
And then there’s this: http://www.zerohedge.com/news/2015-05-05/government-using-subprime-mortgages-pump-housing-recovery-taxpayers-will-pay-again
Wash rinse repeat. Add sub-prime auto loans, student debt bubble,bond bubble, tech bubble, dollar bubble, underwater homeowners with 2nd home equity mortgages ready to re-set at higher rates. What could possibly go wrong
The new season of Flip or Flop has begun and thus far, two episodes in, the couple has successfully flipped two homes and averaged 80K profit on both. These two go all over the southland for a deal. On last night’s episode, as they were filming a fixer upper in the hood their SUV was stolen. Right there as the cameras were rolling. Hahaha.
But their still making a ton of money on their flips. Even in 2015. “The road goes on forever and the party never ends.”
Tarek? Is that you?
Uh huh. They rarely show you the ones that they break even on and never the ones they lose on. If you factor everything they put into these flips including interest fees and them paying themselves for the massive amount of time spent, it really isn’t that much money.
ROFL. You scrubs need to read up on your history otherwise you’ll end up like fish getting tossed into the frying pan. Hell yeah this is a bubble. No, this is a different bubble than before – this is an interest rate bubble, but it will burst all the same and take RE down with it. People were making virtually the same arguments in 2004-5 about the RE bubble then – thinking the master planners would keep the party going. Folks, the master planners just end up constructing a “new” fix to the system that breaks down in “new” ways – the laws of economic gravity always win. These “cash” buyers will end up in a liquidity crunch and need to sell, mark my words.
Don’t listen to your feelings, know your history or you will get screwed.
Those big cash buyers have their own shareholders to answer to. Blackstone didn’t magically come up with the cash to buy those huge lots of RE. I’d be surprised if their investors didn’t crowd the exits should their principals dissipate.
Perhaps you haven’t heard. Perfect weather, prime coastal locations, neighborhood revitalization, outdoor seating at ethnic restaurants, and international jet setters had not yet come to Southern California until 2012. None of that was here in 2004-5.
2004-5 was prior to it all hitting the fan. After the meltdown, QE policy in one form or another spread around the world. Wealthy people in places like China came to the realization that keeping all eggs in a basket located in China likely wasn’t a good idea. Sought after RE in the good old US of A is one of the safest bets going for various reasons. This has to be one of the key factors we didn’t see the foreign cash buyer invasion a decade ago. I do not think it will let up anytime soon
LOL, outdoor seating at ethnic food joints, good one! Similar to the RE pimps pushing a place because its within walking distance (or even built on top of) a starbucks or whole foods. WTF!?!
Yeah, foreign buyers are gonna just keep coming. Who do you think they sell their stuff to to make their money? Ever heard of Japanese buying in the 80s/90s? This sucka is going DOWN! I’d worry about whats in (whats left of) your water, because its clearly making people commit financial suicide.
@Lord Blankfein
You’re assuming that the wealthy Chinese will continue to overpay for RE despite trouble brewing up in their own economy. Overpaying for always reeks of desperation and hardly business-savvy. This is the same crowd that created their own domestic RE bubble. Why would it be different when investing in international RE?
Now, the rationales against a RE bubble are:
– all cash buyers (wrong)
– Chinese buyers (created their own domestic RE bubble)
– Lack of inventory (too much cheap money chasing meager investment yields)
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