Home Buyers

When we take the Los Angeles home buying market into consideration, it’s a good idea to look at trends throughout Southern California. According to the Los Angeles Times, buyers are re-entering the residential real estate market because mortgage rates are declining and underlying motives for home ownership, including the cost of rent, are on the rise.

As of summer 2023, the number of Southern California home sales increased 34% according to Redfin sales data. More people are buying homes, although the total home sale inventory is down when compared to the same point in time in 2022.

Real Estate Headlines Can Be Confusing

It can get confusing to read headlines about home prices and sales volume in any area, especially a complex and busy real estate market like Los Angeles.

One recent headline from the Orange County Register read “Home Prices fell in 61% of Orange County.” This headline could inspire many people to think that prices had fallen by over 60 percent.

However, what the headline really meant was that homes for sale in over 60% of Orange County’s neighborhoods had dropped by 3% or slightly more. About 20% of neighborhoods in the OC saw more than 3% price gains, and about 20% stayed the same.

Location Within Counties and Region Matters

Where homes are located within the city or county matters when home prices are concerned. According to Redfin, average LA home prices were well over $1 million for the last part of 2022, and are now averaging about $950,000.

Sites like Niche.com track the benefits of various neighborhoods and ZIP codes for different types of home buyers. For example, 90232, located in Culver City, gets an A+ from Niche, and has an average home value of over $1.2 million per home. This area hasn’t seen a big drop in home prices over the past year, but it also hasn’t seen huge price increases either.

Work With A Firm That Understands Price, Value, and Your Needs

A home price isn’t the only factor influencing whether you will want to make an offer to buy a home or not. The home’s location, amenities, family or single-friendliness, transportation options, and culture are all influencing factors.

An experienced firm like California Platinum Loans can offer assistance in locating the best options in home purchase as well as mortgage financing. Contact them today to learn more and continue your Los Angeles home buying journey.

Sources:

Khouri, Andrew. “Southern California home prices have been falling. Are the drops over?” Los Angeles Times, 25 May 2023, url: https://www.latimes.com/california/story/2023-05-25/southern-california-home-prices-have-been-falling-but-are-the-drops-over

Lanser, Jonathan. “Home Prices fell in 61% of Orange County. Did Your ZIP drop?” Orange County Register, 13 May 2023, url: https://www.ocregister.com/2023/05/13/home-prices-fell-in-61-of-orange-county-did-your-zip-drop/

Niche. “2023 Best ZIP Codes to Buy a House in Los Angeles County,” url: https://www.niche.com/places-to-live/search/best-zip-codes-to-buy-a-house/c/los-angeles-county-ca/

Redfin. “Los Angeles Housing Market,” url: https://www.redfin.com/city/11203/CA/Los-Angeles/housing-market

Have you heard this famous Wall Street saying: “The time to buy is when there’s blood in the streets”? This commonly-heard phrase means that in economic conditions where some people are losing money, others will find opportunities to invest.

So, is real estate the same as the stock market? Not exactly. But home buying can be a good investment during an economic downturn. 

Here are three advantages to buying a home during times of inflation as well as economic downturns:

Hedge against inflation

While it’s possible for home values to decline, overall, real estate tends to appreciate in value over time. According to Forbes, the majority of the homes that hit rock bottom in value during the 2008 financial crisis returned to their pre-crash prices in less than a decade.

If you’re interested in buying an investment property, you will receive two anti-inflation benefits: monthly income from the property along with increasing equity in the value of the property itself.

Leveraging the value of the property

The biggest asset that many people have is their home. If you buy a home and begin to build equity, you can use the value of your home to make other investments.

Here’s how that works: if you buy $25,000 in stocks, you have purchased $25,000 in value. This value could increase or decrease depending on stock prices and volatility.

If you invest $25,000 in buying a house, you could receive $100,000 or even more in an increase to your net worth when home equity and tax benefits are taken into consideration. 

Potential for income property

You may own your home and could be thinking about buying a second property as an income property. Or, you could be considering buying a larger home and renting out your current, smaller residence.

Both alternatives can provide you with income and the opportunity for increased real estate value. According to Investopedia, “a well-managed property generates income for owners.” 

Buying a home during an economic downturn can seem risky. But if you’re developing a strong personal financial plan, you can work with experts like California Platinum Loans to discover the optimal home buying opportunities to secure your financial future.

Sources:

Boykin, Ryan. “Reasons to Invest in Real Estate vs. Stocks,” Investopedia, 29 June 2021, url: https://www.investopedia.com/investing/reasons-invest-real-estate-vs-stock-market/

Dellinger, AJ. “Should you buy a house during a recession?” Bankrate, 15 March 2023, url: https://www.bankrate.com/real-estate/buying-home-during-recession/

Furhmann, Ryan. “5 Top Investors Who Profited From the Global Financial Crisis,” Investopedia, 10 June 2022, url: https://www.investopedia.com/financial-edge/0411/5-investors-that-are-both-rich-and-smart.aspx

Wieland, David. “Is Real Estate A Hedge Against Inflation?” Forbes, 28 September 2021, url: https://www.forbes.com/sites/forbesrealestatecouncil/2021/09/28/is-real-estate-a-hedge-against-inflation/

We’ve all heard the stories of people who bid on homes during the hot housing market of recent years and who lost their bids to cash buyers offering more than the home’s asking price.

But human resources manager Stephen Jackson told the Los Angeles Times that he’d been recently been successful in buying a condominium for $20,000 under its asking price: and he wasn’t outbid by a cash buyer.

Better News For Buyers

Rising mortgage interest rates seem to have leveled off and declined from their 2022 peak. This means that people are likely to be able to afford a wider range of homes and be more flexible in their home search.

In addition, the Los Angeles Times reports that while many sellers weren’t willing to make any concessions during the extremely hot L.A. housing market in recent years, they are more willing to cover closing costs or pay for repairs. 

Seller-Paid Mortgage Rate Buydowns

Another benefit that some sellers are offering? Mortgage rate buydowns. Some sellers are willing to pay a portion of closing costs that pay for mortgage discount points. The amount of rate reduction varies depending on the lender. 

Paying upfront points to reduce ultimate amounts paid over a 30-year mortgage can result in some large savings later on. For example, on a 30-year, $400,000 mortgage at 6.5% interest, paying four points to reduce the interest rate would cost $16,000. The pre-paid buydown would reduce the mortgage interest rate from 6.5% to 5.5%, lowering the monthly principal and interest payment from $2,528 to $2,271.

The total savings from this could amount to over $90,000 over the life of the loan.

There are other factors to consider, of course. For example, some loan programs limit how much sellers can contribute to closing costs. You also may not be planning to stay in your home for 30 years, which changes the potential benefit of a mortgage rate buydown.

This is why it’s important to work with a mortgage loan broker that can help you to navigate the complex home-buying and mortgage landscape in Los Angeles. California Platinum Loans can help you find the property that is right for you as well as the right mortgage.

Sources:

Khouri, Andrew. “Some buyers find deals in shifting Southern California housing market,” Los Angeles Times, 19 February 2023, url: https://www.latimes.com/california/story/2023-02-19/seeking-a-deal-some-home-buyers-return-to-the-southern-california-housing-market

Giovanetti, Erika. “A Guide to Seller-Paid Mortgage Rebates,” U.S. News & World Report, 20 January 2023, url: https://money.usnews.com/loans/mortgages/articles/a-guide-to-seller-paid-mortgage-rate-buydowns