May 22, 2008
The Ups And Downs Of LAX Real Estate: Is It Affordable Yet?
I’ve been checking back more frequently with DQNews.com lately. And there has been a lot of movement both upwards and downwards, depending on what happened to sell in the neighborhood. Here’s a quick rundown.
For April, Playa del Rey single-family homes are showing a downward spiral from last year of 34.3%. The median home price? $985,000. Just four homes were sold in April.
In Playa Vista, the condo market went up just a notch, + 1.8% from last year. The median price was $616,000 based on just one sale. (I don’t know about you, but I think that’s just sad.)
Figures for Westchester showed a 7.8% price reduction from April of last year. The median home price is currently at $720,000 based on 22 home sales.
All signs point to an increasing price drop in the LAX area, but are we getting affordable yet? According to this recent article in the Daily Breeze, the answer seems to be yes.
More than one-third of Los Angeles County families could afford buy an entry-level home in the first quarter - 66 percent more than a year earlier - thanks to an epidemic of foreclosures that depressed prices, a trade group said Tuesday.
The latest figures are the highest since the association began tracking housing affordability in 2003, and, experts say, another hopeful sign for Southern California’s troubled real estate market.
Is it a good time to buy? See what Dennis Torres, the director of real estate operations at Pepperdine has to say.
“I would personally wait a year but if you are a buyer this would be a good time to buy a home,” said Dennis Torres, director of real estate operations for Pepperdine University’s Graziadio School of Business and Management.
So what do you all think? Is now a good time to buy? Or will you wait it out until you think we’ve hit bottom?
Lisa said:
I am impressed with the high number of sales in Westchester last month! And, yes, Playa Vista is lookin’ pretty bad if there was only 1 sale last month.
Nope, I don’t consider Westchester and Playa affordable. Nationwide, the once-relied on rule-of-thumb was to buy a home within 2.5 x your annual income. Now, there has always been a premium on CA real estate so the multiplier tends to be higher here, but if you get up to 4 x annual income you are at the point where people really start stretching to make their payment.
I sometimes look at listings in other areas just to get perspective. For instance, in Rancho Cucamonga, where some of my friends live, there are houses that sold for over $800K 1-2 years ago now going (in foreclosure) in the mid 400s. This is for a 3,000+ sf home on a big lot in an area with an “award-winning” school district. Now I would consider that as an increase in affordability. And I know it “is different here” in west LA, but one area can’t go down like that without the other falling some as well.
I bought my last home in foreclosure in 1997 for $165K. The previous owner had paid $250 in 1991. This was in a trendy/hip area of LA (the nice part of Silverlake). So, that was about 40% off. I think this time it will be worse.
As for whether I’ll wait it out ’till bottom. No. I would prefer to wait until 2010, but my husband is getting tired of living in a small apartment, so I think I’ll only be able to keep him waiting until fall 09.
May 22, 2008 3:54 PM
Christina Chan said:
Thanks for the comment, Lisa. How was your experience with the foreclosure process? Would you do it again or buy a home that’s not being repossessed by the bank?
May 22, 2008 4:38 PM
Lisa said:
In this case, the foreclosure kinda fell into my lap. The seller first tried to sell it to me as a short sale (he owed 50K more than what it was worth). The bank wouldn’t approve the short sale because they could see that the seller did have assets to pay this difference; however, the seller said he would rather just hand the keys back to the bank than take the 50K hit. So, I already knew the house and the seller well enough to have faith that the house would not be trashed. I watched the house every day as it went through the foreclosure process and put in the only offer the first day it was made available. I would consider foreclosures again, but I would definitely be more cautious about buying a home where I didn’t know the history as well as this one.
May 28, 2008 3:30 PM
Lisa said:
p.s. just so I don’t come across as a big know-it-all
…we had to make the decision to rent out that house or sell in 2003 when we had to move out of state for a few years…I said we definitely had to sell because there was no way that prices would go above 2003 levels…I was wrong about that one 
May 28, 2008 3:36 PM