Does anyone else think Downtown LA Real Estate is too expensive? (rental, house)
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My wife and I bought a condo downtown last year. Yes its pricey but you're getting what's turning into the most walkable neighborhood in LA. Also, you're essentially making a bet on future property values down here. We haven't gotten an appraisal yet but some of our neighbors have, and the increase in value is astounding. For example one couple bought their loft for $300k a year ago and it was recently appraised at $420k. In other words OP, yes its expensive, but you stand to do quite well on your investment if you can stomach the initial cost.
Also, in regard to the monthly HOA fees - yes they tend to be high, but if you move into one of the historic loft buildings here you can get a huge reduction in your property taxes via the Mills Act which effectively offsets some of those HOA costs. For example, our HOA's are around $500/mo, but we're saving around 70% on our property taxes and are only paying $90/mo on them because we live in a Mills Act building. That savings doesn't quite offset all of our HOAs, but it certainly helps.
EDIT: I'm not sure what you're range is, but there's an AMAZING unit in our building - the nicest I've seen:
My wife and I bought a condo downtown last year. Yes its pricey but you're getting what's turning into the most walkable neighborhood in LA. Also, you're essentially making a bet on future property values down here. We haven't gotten an appraisal yet but some of our neighbors have, and the increase in value is astounding. For example one couple bought their loft for $300k a year ago and it was recently appraised at $420k. In other words OP, yes its expensive, but you stand to do quite well on your investment if you can stomach the initial cost.
Also, in regard to the monthly HOA fees - yes they tend to be high, but if you move into one of the historic loft buildings here you can get a huge reduction in your property taxes via the Mills Act which effectively offsets some of those HOA costs. For example, our HOA's are around $500/mo, but we're saving around 70% on our property taxes and are only paying $90/mo on them because we live in a Mills Act building. That savings doesn't quite offset all of our HOAs, but it certainly helps.
EDIT: I'm not sure what you're range is, but there's an AMAZING unit in our building - the nicest I've seen:
A few years ago it was not. I know several people who bought cash during that time and are not even living in or renting out...just holding. Of course you can do that at an SB building like Higgins or Grand that require all cash purchases(or at least did) and have low HOA's. Doesn't work at one of the places with $500-$800 HOA's.
Renting is considerably cheaper at the moment. I don't know how long it will stay that way. But I know that theres a pretty high vacancy rate on rentals...more than is advertised. I moved out of the building I lived in two weeks prior to Christmas. Two other tennants also moved out that day. Two weeks prior to Christmas. Typically not a time people move. And there was already more open units than any time since I had moved there a few years back. To me that says a lot.
Several buildings that were at 100% occupancy in 2012 all of a sudden have openings...at rent prices that fell back to 2010-2011 rents...which were the lowest rents since DTLA started its renewal around 2005. Specifically the Blackstone fell back to renting at the same amount they did when they opened...$1400-1500 for a one bedroom apartment(which is sort of rare...most DTLA places are lofts).
I wonder what will happen to rents when all the new places come on line. The place I was renting was $1720/mo when I left, and if I was a new tennant I would not pay more than $1600/mo.
In short, I think people buying now, and in the past 6 months or so, in a articifically restricted market, are kinda idiots. Under current comparable conditions, including HOA, the place I was renting would cost around $2500-2600/mo to purchase. Thats comparing nearby buildings actual sales prices plus HOA and thats considering a 20% down payment.
Now if you really want to live downtown and believe it will go up continually, then I guess you have to get in somewhere. But if those prices are really solid, I have a super difficult time believing that more units won't soon be available for sale.
It definitely seems there could be a lot of buildings built or converted, creating more supply.
Neighboring Boyle Heights would also be a great place to 'expand' downtown so to speak. If those single family homes could be rezoned . This is years down the road of course..especially with how long it takes to get things done in L.A
So, I’m in the marketing for a condo (sort of). I broke down and finally admitted to myself that I’m intrigued by downtown. I used to work down there and know the area well. I like the urban feel, the lounges, restaurants, etc.. and I’m sure it’s going to be the next big LA neighborhood to boom. It may take 10 years, but I feel like I should buy now while the prices are lower (than what they will be once it blossoms).
However, the condo prices are the same in downtown LA as they are in Santa Monica, West LA, and Brentwood. Why is it so expensive? It doesn’t have the cliche compared to other parts of LA such as the Westside, West Hollywood, Beverly Hills, Silver Lake, etc… (yet).
If it were priced right, I feel like it would attract young professionals and help the area grow bigger, faster (than it is already growing). Why would a majority of people want to move downtown for the same price as it is to be close to the beach, unless it was close to work?
Someone please explain this to me…
You missed out, plain and simple. While you might not have been in a position to buy after the drop in 09, in the several years afterward, prices were down. Now they've gone back up.
You seem to look at everything from the perspective of the "young professional". Young professionals are a dime a dozen, more like a million per dime. You seem to want to live there so I really can't figure out why you think others do not.
I definitely agree with this. The time to buy was from 2009-late 2012.
Hard to say if we will see another massive drop like that..I don't imagine we will as most of the drop was based on loose lending standards that have seen been mostly eliminated to prevent such a thing from happening. "Liar Loans" etc.
I think there are many areas in the country that have growing ,improving downtown areas..but most of them don't have the weather or culture of L.A
I have no doubt though that those areas will appreciate , and some of them have appreciated amazingly. More even then these increases from $300k to $600k that you see in places like L.A
It's not unheard of where properties that were once worth hardly anything are now worth 400% or more.
Of course there are also other places where prices are still low...sometimes it's the neighborhood right next to the "hot" neighborhood. One place I see this happening now is Philadelphia.
This also happened in L.A ...but the bottom started to get too high to where it became unaffordable for most people.
There are parts of the country where you can live practically mortgage free by buying a duplex or 2-4unit and renting the other unit(s) out.
People that couldn't afford West L.A for example would simply "buy in the valley" but then the valley became too expensive.
People that couldn't afford Silverlake just moved to neighboring Echo Park for cheaper homes..but now they are insane too.
I agree that the 'boom' has happened for the most part in DT.
Anyways the point is across the country there are neighborhoods that you couldn't pay certain people to live in and now those same types of people are getting into bidding wars to live there.
Brooklyn, Echo Park, Downtown L.A the list goes on.
I think Boyle Heights will be one of the next neighborhoods to gentrify...but it's not really cheap..although I guess it's 'cheap' for L.A..
You missed out, plain and simple. While you might not have been in a position to buy after the drop in 09, in the several years afterward, prices were down. Now they've gone back up.
You seem to look at everything from the perspective of the "young professional". Young professionals are a dime a dozen, more like a million per dime. You seem to want to live there so I really can't figure out why you think others do not.
Housing prices change, all the time.
Yes, I know I missed out, but I wasn't even living in LA in 2009.
I don't make the income I make now until 2012. I couldn't afford a place until then.
Luckily I did put a lot of my money into the market from 08 - 12 and it has grown considerably.
I guess I’ll just wait for the next downturn, there is no rush.
I definitely agree with this. The time to buy was from 2009-late 2012.
Hard to say if we will see another massive drop like that..I don't imagine we will as most of the drop was based on loose lending standards that have seen been mostly eliminated to prevent such a thing from happening. "Liar Loans" etc.
I think there are many areas in the country that have growing ,improving downtown areas..but most of them don't have the weather or culture of L.A
I have no doubt though that those areas will appreciate , and some of them have appreciated amazingly. More even then these increases from $300k to $600k that you see in places like L.A
It's not unheard of where properties that were once worth hardly anything are now worth 400% or more.
Of course there are also other places where prices are still low...sometimes it's the neighborhood right next to the "hot" neighborhood. One place I see this happening now is Philadelphia.
This also happened in L.A ...but the bottom started to get too high to where it became unaffordable for most people.
There are parts of the country where you can live practically mortgage free by buying a duplex or 2-4unit and renting the other unit(s) out.
People that couldn't afford West L.A for example would simply "buy in the valley" but then the valley became too expensive.
People that couldn't afford Silverlake just moved to neighboring Echo Park for cheaper homes..but now they are insane too.
I agree that the 'boom' has happened for the most part in DT.
Anyways the point is across the country there are neighborhoods that you couldn't pay certain people to live in and now those same types of people are getting into bidding wars to live there.
Brooklyn, Echo Park, Downtown L.A the list goes on.
I think Boyle Heights will be one of the next neighborhoods to gentrify...but it's not really cheap..although I guess it's 'cheap' for L.A..
You are about 1 mile from the Arts district which is pretty much the epicenter for hip in L.A right now.
Interesting - I have only been to Boyle Heights once. I’m pretty sure my girlfriend would kill me if I took her to that neighborhood, but wow… a 3 bed/1ba for $214k… that’s a pretty awesome deal.
I might have to read up on the neighborhood on curbed LA and see what the future plans hold for that hood. If Eagle Rock and Highland Park skyrocket in price, perhaps that’s the next place?
Interesting - I have only been to Boyle Heights once. I’m pretty sure my girlfriend would kill me if I took her to that neighborhood, but wow… a 3 bed/1ba for $214k… that’s a pretty awesome deal.
I might have to read up on the neighborhood on curbed LA and see what the future plans hold for that hood. If Eagle Rock and Highland Park skyrocket in price, perhaps that’s the next place?
Yeah the 214k deal..looked to be one of the cheaper ones. There really isn't much inventory. I remember when there was a bunch , but there was more inventory everywhere.
Here are some articles about Boyle Heights gentrification or signs of 'pregentrification' or improvement
Some interesting stuff.. with the demand for people wanting to live in Downtown and High prices I see BC changing a lot in the future. I have a feeling many of the homes are probably paid off as it seems to be a neighborhood with many long term residents, the houses have been around a long time (that could pose issues too of course)...but maybe for the right amount of cash they'd move..but then the question is where would they live unless they are willing to move out of state or out of country moving somewhere else would be more expensive.
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