Expert Advice: should I invest in LA Housing Market, by Adrian Bates.

By Adrian Bates

Expert Advice: Should I Invest in the LA Housing Market

Now is the time to buy; a time such as this may never again present itself. A time where interest rates are at their historic low- lowinterest rates that make it possible to afford a bigger home. It is important to stress that you invest now, as what goes down undoubtedly goes up. Many people cite that down payment is the number one challenge that hinders them from buying homes. Golden State Financial Authority provides an array of down payment assistance programs that you can use. Some of which do not require an income limit. And as you shop around for an investment property, take a look at this overview of the LA housing market.

INVENTORY.

There is little inventory coming on to the LA housing market, and the pandemic might be to blame. The number of active listings is also down, and the months’ supply is down to 1.9 months. As of June, this year, data from CAR showed that even sales and pending sales were declining. These

sales declined by -13.9%, and properties in escrow went down by -5.3% this June. And as so, the little available inventory is seeing a lot of offers. Knowing this as an investor, expect to engage in bidding wars. It will be better to make the best offer going in.

PRICE APPRECIATION.

As you enter the LA market, keep in mind that competition is quite stiff, and you will have to bring your A-game. I was working with a first-time homebuyer, she was only 26 years old, and she was in the market for a two-bedroom one bath home. For such a property, we were looking at $375K. It took 90 days to land property because of the bidding, and we saw the property move to $420K, ultimately stopping at $500k.

As of June 2021, the price appreciation in LA was 24.8%, and the sale-to-price ratio was 101.42%. So, if you are in the market looking to invest, keep in mind that you will pay over the listing price.

RENTAL PROPERTIES.

It is a good idea to consider investing in rental properties, especially multi-family properties. As more people get the vaccine, life is regaining some semblance of normalcy, and people are moving back to the city. Therefore, there is a gap to be filled by providing these properties. The rent might be considerably lower this year than last year, with rent this year averaging $ 1,970 compared to the previous year’s $ 2,250. Alternatively, you might think of acquiring office spaces as companies will begin, albeit slowly, to go back to working in the office.

FORECLOSURES.

Foreclosure is devastating to homeowners, and despite the government’s forbearance program, some homes are still facing foreclosure. California as a whole ranked ninth with the most foreclosures this May, according to Sofi.com. One thousand five hundred twenty-nine of its units out of the 14,175,976 were facing foreclosure, and narrowing it down further, that’s one in every 9,271 households. For an investor, though, this might be a golden opportunity to invest in these properties as they are relatively cheap.

For first-time homebuyers, remember to keep all your essential documents. During the home-buying process, it is also crucial to not make big purchases such as cars, deposit money in offshore accounts, or even create considerable deposits in your account without documentation. Activities such as these may lead to a cancellation of your mortgage application. More importantly, get preapproved for a home you can afford. It makes the home buying process a tad easier.

Sources:

https://www.noradarealestate.com/blog/losangeles-real-estate-market/ https://www.redfin.com/city/11203/CA/Los-

Angeles/housing-market https://www.realtor.com/realestateandhomessearch/Los-Angeles_CA/overview