My parents own a house in the Beverly Hills PO area of West Los Angeles. They want to sell it, but the situation is such that if they wanted to put 100K into fixing it up, they could probably get 250K more for it than if the sell it as is. For those
who know L.A., it’s a relatively small house in Coldwater Canyon.
So my question to any real estate Dopers, or anyone who’s been buying or selling in West L.A. is this: Is the bubble about to burst? If they put money into fixing it up, but delay the sale by doing so, would they lose by it in the end?
Nobody knows if and when the “bubble” (if there is indeed a bubble) will burst. They should sell the house if they want to use the money elsewhere. Unless the house is in bad condition, it is generally not a good idea to fix it up to sell it. The condition should be factored into the listing price. The danger with doing renovations before selling is that buyers may not agree with your choices, and will discount the house based on the amount of work they will have to do to make it the way they want. You generally do not get out more than you put in for renovations, though there are exceptions (for example, adding a bathroom can add more value than the actual bathroom costs).
That said, if the roof leaks, any of the major systems don’t function, or you can make it show better by tearing up the 1970s shag carpet, by all means do so.
(I never thought I would ever use that sentence in my life.)
People seem to think they know what a buyer wants…and usually they are wrong. Someone might want to buy the house, tear it down, and just build a new one. I know the area you are talking about, and I wouldn’t be surprised if that were someone’s plan. But putting in hardwood floors, insulation, new roof, etc. is not a bad idea if the house is generally sound.
As far as “the bubble”…well, it has reached Las Vegas, so I doubt it will burst in LA anytime soon. The house next to us, the same as ours, cost $138,000, (without the addition of a $20,000 swimming pool), in 1999.
They just sold the house for $310,000 last week.
Looking at prices in NYC, LA and in Las Vegas…my guess is that you don’t have to worry about the prices sinking drastically in the forseable future.
I wish I knew the answer to your question. I’m looking for a nice condo in a good school district somewhere in LA and it’s pretty tough going. It’s nearly impossible to find anything affordable. I’ve been trying to get opinions about whether to purchase now or wait for a real estate crash.
Here are some things I’ve heard that make sense to me (take them or leave them):
[ul]
[li]Usually when a bubble bursts, the extremely high valued homes have the longest fall in prices. Houses that are suited for working families in good school districts tend to weather a crash. Bev Hills has a great school district and people will make sacrifices to send their kids there, compared to say, anywhere in LAUSD.[/li][li]Interest rates are low, blah blah. They will go up of course. Housing prices are likely to come down as rates go up. However, demand will even out, because people want to live in LA. Lower housing prices with higher interest rates probably won’t kill demand dramatically.[/li][li]LA weathered the recession better than a lot of cities. There weren’t massive layoffs. There is some concern about the CA business climate being harsh enough so that companies are moving to other states. Still, LA has some entrenched industry that probably won’t be moving, ever.[/li][li]People are hanging on to their houses because of the crazy bubble. I’m not sure what it would take to suddenly have massive amounts of houses flood the market, but I would think that there would be warning signs.[/li][/ul]
If anyone would care to pick apart these arguments, I would be grateful. I’m nervous about buying a place considering that I’ll have to make some sacrifices to get in the market now.
My personal opinion is that, as soon as I close escrow on some condo, there will be a huge crash. That’s usually what my market-timing is worth. :rolleyes:
I’m here on the East Coast, in the somewhat fahionable Hills of Waltham…and the prices areinsane! Just last week, a small 3-bedroom house on a postage stamp lot went for $385,000! Our house which we bought 6 years ago,was only $100,000. What scares me…the Sunday papers are full of real estate auctions…and pricesKEEP going up! I don’t knowhow anybody can afford these prices.
As for when the crash will come: a huge amount of liquidity has been generated by the run upin the stock market…but when interest rates goup, the market will crash again. Then, the sky-high real estate market will crash…and this time it won’t be pretty-I can see prices dropping by 20-30% or more.
Ads they say, fasten your seatbelt-its going to be a bumpy ride!
Unfortunately wrt the above, the house is actually in Los Angeles. Beverly Hills is on the other side of the street. It’s a peculiar area which local realtors call Beverly Hills PO because the 90210 zip zone actually spills over into some neighboring areas of Los Angeles. We attended L.A. schools. Still, the particular L.A. schools that we went to are fairly decent.
I feel your pain, bleach. Big time. My husband, Spiny Norman, and I are also looking to buy a house. We’ve been pre-approved with a letter of guarantee for a loan of up to $500,000.00. I look at that number and it absolutely stuns me. We should be able to buy a freaking mansion for a half a million freaking dollars.
Well.
Not only can we not buy a mansion, we can’t even buy a house. Period. Nor can we buy a townhouse. Or a condo. Nothing. nada. Zilch. At least not anywhere in the entire South Bay (particularly South Redono Beach). Our real estate agent keeps calling us and telling us he hasn’t forgotten about us, but there is absolutely nothing on the market (and I’m talking about a mere 2 bedroom home with at least a 1 car garage and washer/dryer hookup in the unit (as opposed to community laundry room facilities)). That’s it. Those are our criteria and there’s Not. A. Single. Home. On. The. Market. Since. Late. February!
Nothing.
It sucks!
And like you, I just know we’re going to get screwed by either missing out on these amazingly low interest rates, or buying something now and having it depreciate by 30% before we’re in it even a month. Argh!
I didn’t see the article, myself, but my boss said the L.A. Times ran an article a couple weekends ago about why the housing market is so stalled here now. Apparently people are holding onto their homes, even though they know they can make a fortune on them, because they don’t want to get stuck “buying up,” only to have their new house fall in value below what they had to pay for it.
So Spectre of Pithecanthropus, while I can’t give you professional real estate advice, my layperson’s advice would be, if they have someplace already available to move into, or are interested in “buying down,” sell now while it’s still a seller’s market. People are desperate for homes here and there’s very little available. I wish them the best of luck!
Good God Shayna, that’s just bizarre - half a million dollars and nothing. Guess our money isn’t good enough for them, hmph. I hope you and Spiny Norman can find something! Pretty soon, LA home buyers will have to look into multi-generational 100-year loans (like they have in Tokyo) in which little 900 sq ft 2BR condos will eventually be paid off by the grandkids.
For what it’s worth, I use this site to browse for places in LA county. I had to register (it’s free) but I put in fake information so their agents don’t bug me. What’s nice about the site is that I can browse all of the homes in my area that are listed on the MLS (the ‘master list’ of real estate, formally available only to agents). You may already know about it, but if not, it’s worth a look. I did a quicky search for Redondo Beach and saw, let’s see, six properties less than 500K. One is at 200 S Catalina #307, RB, if that helps.