We will never hear this promo for the evening news: “Los Angeles real estate is normal — News at 11.” It might sound boring at first, but for those who are considering the purchase, sale or lease of a Downtown loft or condo, understanding the economics is definitely of interest, particularly for those who really value their dollars. NEW HOMES
First of all, most people have a hard time believing or understanding that the real estate market in Downtown LA is normal. What is normal? Well, in a sense, DTLA real estate cannot be called normal because it has a more rapid pace of growth and change than other real estate markets. Downtown has really exploded in population, infrastructure and home values over the past 15 years. But aside from that, recent prices in Downtown have risen at a relatively calm yet still brisk annual rate of 6% for condos, with rental prices increasing at about 7%. This has caused most developers to focus on building apartments for lease instead of condos for sale. Only three condo projects are currently under construction in Downtown, while more than a dozen rental apartment projects are under way. That means that renters are expected to make lots of long-term profit for apartment developers, at the cost of neglecting the renter’s own real estate portfolio. Because real estate is the largest investment that most people make, long-term renters risk neglecting their retirement potential. #news
In a normal market, successful real estate investors focus on the fundamentals: Interest rates are near historic lows, which is good for buyers and sellers because it means that buyers can pay a higher purchase price for a property and sellers can get more for the sale of their homes. In a normal market, it is financially desirable for most to buy rather than rent. Currently, there are an unusually large percentage of renters in Downtown because many still strongly remember the crash in home prices in 2009. Those who might prefer to own, yet decide to put off a home purchase, will likely find that themselves locked out of the market for more than 15 years to come as they watch Downtown continue to soar beyond normal expectations.
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Copyright © 2016 This free information provided courtesy L.A. Loft Blog and LAcondoInfo.com with information provided by Corey Chambers, Realty Source Inc, BRE#01889449 We are not associated with the homeowner’s association, seller or developer. For more information, contact (213) 880-9910 or visit LAcondoInfo.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.