Los Angeles Real Estate: Hot or Not?

On Monday, we looked at what makes a property hot in Boston, so we’re closing the week with a look at a market on the other coast: Los Angeles. The big question: will we see the same trends coast to coast?

We found there really are (hot) pockets of sunshine in the Los Angeles housing market, and this is not according to my trusty Magic 8-ball. We analyzed 2,364 real estate records for single-family listings in Los Angeles County, Calif. that entered the market between Oct. 1, 2007 and March 31, 2008, and sold.Hot Pockets

We looked at the Los Angeles real estate market next because, well, you asked.

Here’s a rundown of the neighborhoods with the most listings that sold within seven days on the market; the numbers in parentheses calculate the hot properties as a percentage of the total houses that sold in those areas:

  • Beverly Center, Miracle Mile: 12 (26%)
  • Brentwood: 12 (27%)
  • Los Angeles, Southwest: 10 (12%)
  • Sunset Strip, Hollywood Hills West: 10 (11%)
  • Westchester: 9 (17%)

For the areas where there were a significant number of hot properties, we compared the listings that sold in seven days or less with everything else that sold in those areas. Our goal was to develop a clear portrait of the hot property, so our buyers would know when they really had to hop to it. And here’s what we found:

  • Beds and baths were the same for both types: there was no pattern in terms of bedrooms and bathrooms. Hot and “not” (not properties took more than eight days to sell) properties both had three bedrooms and two bathrooms. The coasts agree!
  • Hot properties are bigger, slightly: The median square footage for hot properties was only slightly larger (.2%) than not properties, but the median lot size was 3% larger. Clearly, the LA sprawl doesn’t mean buyers get more space. Boston homebuyers got 13% larger lots with pretty similar sized homes – 1,669 square feet in Boston vs. 1,735 square feet in LA.
  • Hot properties are newer: the median year built (1948) for hot properties was four years later than for the nots. Bostonians bought slightly older homes, but maybe that’s because most east coast homes are older?
    Hot properties are expensive: it turns out that hot properties weren’t exactly priced to move. In fact, the median list price of hot properties ($1.1 million) was 16% higher. And the high price isn’t just because the houses are bigger: the median dollars per square foot was nearly 16% higher for hot properties ($633) as compared to the nots ($548). The median list price of Boston’s hot properties was $459,000 … you can get two for the price of one in Boston.

There wasn’t a huge difference in the days on market for the hot areas (43) and the entire Los Angeles market (45), but, on average, the hot properties sold in almost five days (Boston hot properties sold in about 4.5 days).

The bottom line is that hot properties are slightly bigger, newer and more expensive. There are distinct areas and house types where properties still sell fast, which continues to support our reason for doing this study in the first place — the real estate market isn’t really clinically depressed; it’s more of a split personality, with the good stuff selling fast, and the rest languishing.

Did you just buy a home in one of these neighborhoods? What was your experience?

Bonus link: The Wall Street Journal reports on the heartwarming side of the housing bust. [Warning: shameless Redfin plug] Read about a couple who escaped their 100-mile, LA-freeway commute.

Discussion

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  • http://www.qzaki.com/Archive/when_to_buy_calculator.xls Matt Simmons

    A lot of people are waiting on the sidelines to buy out of fear of a 10 or 20% drop over the next few years. However, we have already experienced a double digit drop in prices. AND interest rates are often more important to your monthly payment than the amount you paid for the home. A half % increase in interest rates is about equal to a 10% drop in prices. Tomorrow’s interest rates could easily be about 1.5% higher than they are today – especially at the rate we are borrowing money from Dubai and China.

    Take a look at this mortgage calculator to determine whether now is a good time to buy or if you should wait it out:

    http://www.qzaki.com/Archive/when_to_buy_calculator.xls

  • http://sfvrealestate.blogspot.com sfvrealestate

    Re the newer/older question, yes, I do think it’s because Boston is older. The areas you discuss in Los Angeles had their big growth spurts from the late 1930s to the 1950s.

  • Red

    MATT! NO. BAD BOY. The price of a home is NOT the monthly payment. You are not renting.
    Many of the pathetic foreclosures made the same mistake, bought for too much with low interest rates. A 10% drop in the price of a home can eat your entire downpayment or put you way down in a hole, making it impossible to sell, refinance, or pull any cash out in an emergency.
    Say you bought for $700000 at 5%, no down, got an interest only loan; thats only $35,000 a year.
    Or waited, and bought for $630,000 at 6.5%, costing $40,950 a year. Sounds bad, doesn’t it? But the difference is only $5,950 a year.
    It will take 12 YEARS for the low interest rate to make up for the 10% loss in value. Most people do not stay that long in a home. Or they can get a chance to refinance at the lower rate if they do.
    Don’t even think about what happens if the $700K purchaser bought with a variable rate loan, or seller buy down rate…

  • http://www.LAHomeSearch.com LA Home Search

    this article is missing the point. You need to study the real estate market one neighborhood at a time.

  • http://www.antalyahomes.com Turkey real estate market is growing

    Come and invest in Turkey. You get more profit in a short time. :)

  • http://los-angeles-real-estate-blog.com Phyllis Harb

    Great post!!! Although, I think 10 days would be more accurate assessment (due to some Realtor’s) lag time of posting sales in the multiple listing service. But very interesting assessment.

  • http://www.creativenvironments.net Los Angeles Lofts

    Those who wait for the bottom of teh market always seem to get in the game a bit too late. Buying is a down market is intelligent, but missing the ride to the top is the worst mistake you could make.

  • http://www.cosmolofts.com Los Angeles Lofts

    If you check out Zillow these days you can actually see teh market has leveled out in the valley and teh city is starting to witness a bit of a rise. There are still going to be fluctuations, but the time to buy is here now. if only we could qualify for a loan.

  • http://www.zillowcoms.com www.zillow.com

    There wasn’t a huge difference in the days on market for the hot areas (43) and the entire Los Angeles market (45), but, on average, the hot properties sold in almost five http://www.zillow.com days (Boston hot properties sold in about 4.5 days).

  • Pingback: Flipping houses (also known as www.zillow.com | Zillow.com

  • jacckyjose

    These fluctuations, but the time to buy is here now. if only we could get a loan. Those who hope in the bottom of the market seems to be always in the game a little late. Shopping is a declining market is smart, but misses the trip to the summit is the biggest mistake you can always do.

    Real Estate Omaha

  • dacremox

    Impressive article good to read out about the Los Angeles Real Estate.I am really looking forward for more details regarding the los Angeles Real Estate…

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