Home Buying in Los Angeles>Question Details

Neerja Jetley, Home Buyer in singapore

I am looking to buy an apartment in downtown LA as my son is an undergrad at USC and is looking to move out

Asked by Neerja Jetley, singapore Tue Feb 19, 2008

the university provided housing. We heard of the south group building a set of new condo called elleven, evo and vero. i would like to know about the neighbourhood and whether prices are likely to go down here?

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Neerja,
Los Angeles is the most overpriced housing market in the country. Prices are falling like a rock and they have a long, long, long way to go...
Look at this chart for a snapshot of Los Angeles versus other housing markets and you will see that nowhere is as overpriced as LA.
http://tinyurl.com/2s7xj3

Also, check out this article:
http://www.businessweek.com/magazine/content/08_06/b40700407…

Prices will fall to get in line with Home Price vs. Rent and Median Home Price vs. Median income ratios. You will probably kick yourself if you buy a home anytime soon. Renting is your best bet right now, and wait to buy in 2011 or 2012 or even later.

If you bought a condo for $300,000 and next year, you saw an identical condo in that buildingselling for less than $200,000, would you kick youself? You are in a prime position to rent a great place and negotiate a great price for that rental. Save your money and buy in a few years.

Good luck,
John
2 votes Thank Flag Link Tue Feb 19, 2008
If you only plan to hold onto your housing for 3-4 years, then rent. Some great rentals can be had downtown for $1800 per month in some very nice buildings.

But if you are the type to hold onto these properties for future generations, then Evo or Elleven are great choices. Elleven has resales already available and Evo won't be ready for occupation for another 9 months. Equally promising alternatives for future resale value is Eastern Columbia. I'm looking forward to the Brockman building myself.

Nevertheless, keep in mind your time horizon. Holding on for 10 years? go ahead and buy, you will not be out money when selling it back in 10 years. This only applies to Downtown L.A. properties. If you are willing to buy in San Marino, then you should buy now as the prices there will be more insulated from the correction due to the lack of speculation in those neighborhoods.

Quinn Kiet
The L.A. Condo Store
Downtown Sales Specialists
http://www.condostorela.com
Web Reference: http://www.condostorela.com
1 vote Thank Flag Link Tue Feb 26, 2008
John, yes Los Angeles is extremely over-priced compared to other areas. Why? One reason is because people want to live here. You're recommending people not purchase a home for 3 or 4 years? That's a lot of rent, and no tax benefit. Anyone that lives here knows the rental prices in LA , especially on the westside, are very high and continue to climb. No one has a crystal ball to tell them the future and I do think prices will level out some here, but I don't think the bottom is going to fall out like you seem to be suggesting. But, we're all entitled to our own opinions and this is just mine. I'm not an expert on the real estate market.
1 vote Thank Flag Link Thu Feb 21, 2008
Neerja,
Downtown Los Angeles is an exciting place. As a resident of downtown and a real estate agent I can tell you there are so many different areas, buildings and choices for your son. There are some wonderful buildings that only provide rentals and other buildings are for sale. If you would like to learn more about the different lofts, you can visit:
http://www.loftla.com/loftla/

This website is not driven by a real estate agent or a real estate company.

I have lived in downtown L.A. for almost 3 years now and have seen it change dramatically over time. I would love to answer any questions you may have or address any concerns.

You can reach me at 310-777-2874 or at allison@sanbornteam.com

I hope I can help you and your son.

FIGHT ON!

Allison Sanborn
The Sanborn Team
Prudential California Realty
310-777-2858
Web Reference: http://www.sanbornteam.com
1 vote Thank Flag Link Tue Feb 19, 2008
Hi, Neerja. Elleven is sold out. I can check to see if there are any re-sales available. The South Group has built a series of new buildings in Los Angeles that adhere to the green concept with sustainable materials, use of natural light, and I think they also used VOC paint.

Evo is now being offered for sale. I'm not sure yet what the status on the other projects is. In this market everything is negotiable. Los Angeles has pockets where real estate is not going down but has actually increased. I cannot give you the statistics at this moment for the downtown area.

I would be happy to assist you in finding your son a downtown loft/condo to move into.

Here is a news article about the South Group, Elleven:
http://findarticles.com/p/articles/mi_m0EIN/is_2004_Dec_17/a…
Web Reference: http://www.DotChance.com
1 vote Thank Flag Link Tue Feb 19, 2008
Neerja, I have a graduate degree in economics from USC and work in downtown LA. I strongly caution you against purchasing a condo in that area right now.

Apart from a few “the world is flat” realtors, everyone realizes that residential real estate prices are falling in Los Angeles County. Those that are expecting a quick turn around from this bubble are dreaming. The last cycle took about 11 years to reach peaking pricing from the previous peak. Here are your Los Angeles County vanilla medians between 1989 and 2000: http://www.laalmanac.com/economy/ec37.htm

1989: $214,831
2000: $215,900

Pretty amazing, someone who purchased the “median home” for 214,831 sold for 215,900 11 years later. However, this bubble appears even larger that the 1989 run up, as depicted in the following graph: http://latimesblogs.latimes.com/laland/2008/04/where-we-stand.html . Granted prices are falling faster, so perhaps we can reach a bottom faster.

In my opinion this would generally be a terrible time to “invest” in real estate, unless you must buy now (because of a 1031 exchange, for example). All leading indicators are pointing in the same direction as to the Los Angeles market, (i) inventory has increased, (ii) sales transaction volume has slowed dramatically, (iii) lending standards have tightened (pulling thousands of potential buyers from the market), (iv) notices of defaults and foreclosures are at records levels, (v) the economy is slowing (looking more and more like a recession), (vi) literally thousands of high paying mortgage and other real estate related jobs have been lost in southern California over the past year and (vii) the mania which surrounded the real estate market a few years ago has been replaced by a conservative caution steering people to other investment classes. All of these factors will put downward pressure on pricing for some time to come.

The reality is that prices will almost certainly be lower later this year, likely lower in 2009 and possibly even lower in 2010. Real estate cycles take many years to play out and we are at the early stages of a down cycle.

With that said, if you can truly afford the condo with a large down payment and conventional financing and they don't care about prices dropping further, consider the purchase. But you SHOULD NOT purchase with the expectation of future price gains for a long time. If history is any guide, prices will not rebound quickly when the bottom is finally reached.

Best of Luck and congrats on having your son at USC. I am sure he will enjoy his experience there.
NewportFiji
0 votes Thank Flag Link Fri May 2, 2008
The South group does great work. The buildings are very modern, with clean lines and green building. They are in the South Park area which is one of the strongest performing areas Downtown and I would expect that to continue. (It's also the closest to USC). Flower lofts might be another good option as units have already fallen substantially in price.

There are actually some good deals Downtown right now, but you need to know where to buy, and I agree with condo store in that it depends on your time frame to keep. (I don't think a generation is required)

I am happy to help if you have any other questions.
0 votes Thank Flag Link Thu May 1, 2008
Neerja, our office just sold a great loft in downtown LA for under $300k...it is in an historic building that qualifies for the Mills Act which will save a lot of money in property taxes. Are you interested in something like this?
Web Reference: http://www.DotChance.com
0 votes Thank Flag Link Wed Feb 27, 2008
Actually, Debin, I don't need a crystal ball and neither do you.
There is hundreds of years of statistical data available on the price of homes around the world--if you know how to do the math, you can forecast it well. You know how I know?

Because THE ECONOMIST magazine called the peak of the market in 2005. Why? They actually calculate numbers, and do not rely on BS wishful thinking and faulty reasoning like, "People want to live here."

It costs $98 bucks for a yearly subscription to THE ECONOMIST. You might want to try it rather than lose hundreds of thousands of dollars overpaying for real estate like the masses....

By the way, I'm going to be a buyer on the West Side of LA. Love the area. But I'm going to pay PENNIES on the dollar for a great home in a prime location. PENNIES. Not even 25 percent of the peak.
0 votes Thank Flag Link Thu Feb 21, 2008
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