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Monday, July 28, 2014

Eastside Property: “South of Sunset” may no longer mean a bargain when it comes to Echo Park home prices

Photo from Redfin.com

Many Echo Park home buyers often begin their search in the north end of neighborhood in the Elysian Heights area before sticker shock sends them heading south for affordable alternatives.  But even a location south of Sunset Boulevard may no longer offer a refuge for those seeking lower Echo Park home prices. Case in point is a two-bedroom, Spanish Colonial-style home on Kent Street west of Echo Park Lake. The property, which features a  living room  “with views to the mountains, hardwood floors, beamed ceiling, wood burning fireplace and a picture window,” went on the market for $729,000 on April 5, according to Redfin.

That’s unusually high for this or any other part of Echo Park. Only two other single family homes between Echo Park Lake and Alvarado Street have sold for more than  $500,000 during the past three years, according to Redin.  While many buyers would shy away from paying that much for a house south of Sunset, at least one buyer was not. The  $729,000 house on Kent went into escrow in only eight days. Let’s see if this sale goes through.

17 comments

  1. Frankly, we’re in a bubble driven by extraordinarily low inventory, and the usual high demand for L.A. Housing. Silver Lake/Echo Park seem to be really badly hit by this situation. To make matters worse for the average Joe and Jane, my realtor friends have been telling me that a lot of the sales are all-cash. Foreign investors and east coast trust fund babies make up a big bulk of that group, because L.A. still seems like a bargain to them, and the weather is great most of the year.

    So the question is, what’s going to happen when the inventory really loosens up and the all-cash offers peak and decline? I think you may hear a ‘pop’ … but maybe not, if lending rates remain so low. There’s a lot of folks like me who may want to move for a better home, more room, whatever, but these prices simply mean that we can’t afford another home, even with the presumed bump in the sales prices of our homes. So we’re sitting tight and refi-ing.

    • I love hearing those “pops”! Popping means reality. None of these houses are worth anywhere close to what they’re being offered for.

    • “East coast trust fund babies…”? Really?

      Funny how Angelinos get so defensive and have to throw in an East Coast dig when none is necessary. You don’t have trust fund kids or real estate investors in Sunny California? You’d rather see real estate prices drop thru the floor than have somebody from New York or DC buy a house and renovate it?

      Silly.

      • Show’s what you know.. it’s actually Angeleno…

      • I assumed that was a reference to the “East Coast couple” that paid $922,000 for the re/in:Hab¡t flip on Lemoyne Street.

      • “You’d rather see real estate prices drop thru the floor than have somebody from New York or DC buy a house and renovate it?” YES. Btw, for all the tough-talk of east-coast transplants they are among the most sensitive and whiniest demographic in SoCal. As if browbeating “soft Angelinos” isn’t a favorite pasttime of these customarily mean girls.

      • Fair enough. So why don’t YOU, as a card-carrying charter member of the Angelenos Club, buy this house? What’s stopping you? Could it be the lousy pay one gets in LA compared to NY or DC?

  2. It really depends where you are south of Sunset because it’s all really a fun place to live, north or south, as long as you’re close.

  3. Touting stories like this, especially with headlines like on this one, seems only designed to scare people into paying more and more for less and less.

    In fact, the latest median price figures for a single family house in the 90026 zip code — half of which is Echo Park, the other half is Silver Lake — now is $475,000. And, if Silver Lake presumably gets a higher price than Echo Park, then Echo Park would be lower than $475,000. But if one went by the reporting on Eastsider, you would think the median in Echo Park is more like $700,000 or $800,000!

    Its easy to ASK for a rediculously high price, but not so easy to actually get it. Gee, the guy in the house next door to me spent five years listing and trying to get $1.1 million of his house. In the end, he finally sold it last summer for $$449,000!

    And yes, even these prices are bubble prices. Even the Los Angeles Times ran a story on Sunday pointing that out. This area is showing all the signs of a definitive bubble, which is not just normal supply and demand, unlike most every place else. Bubble ALWAYS burst — its just a matter of when. Certainly, when mortgage rates start going up — and to get back to normal, they will be going up by 4-5 points! — that will be when, and that is expected next year. Any buyers at this time should be VERY defensive, VERY careful. Don’t get crazed by other people making dumb moves in a bubble — they will be big losers in relatively short time.

  4. It’s all relative. I have the same house but 3 bed-room, in City Terrace and seriously just as nice. It’s valued at 255k, 100k below what I paid for it. The only thing is, my home doesn’t have the Echo Park zip code. And if I could, I wouldn’t pay that much cash for that place.

  5. In 1990 I paid $375,000 for a 1000 sq. foot house in Venice, 5 blocks from the beach. 6 years later I moved out of state sold it at a loss. 10 years forward, following a slight cosmetic remodel I saw it sold for $1,080,000. It all seemed crazy to me—both my loss and the subsequent sale but such is the nature of LA real estate. Areas change, salaries increase and prices and demand with it. $1000 per sq. foot is shocking, but almost the norm now in Venice. I am not sure where the money comes from, but it exists and gets spent. And I do not think Venice is full of trust fund babies. And in closing. I told a friend 25 years ago I suspected that LA’s version of Manhattan “real estate price wise”, would be from Downtown to the ocean, Holly Hills down through Culver City and its equivalent width. May come true yet.

  6. I’m not sure if there really is a bubble, sure interest rates are low and that’s adding to the prices but I can’t see a huge decline in the price of these neighborhoods if interest rates went to 5%. The banks aren’t giving out dumb loans, appraisals aren’t over inflated, if you’re waiting for a bubble pop in order to buy you might not get what your looking for. All home prices go up and down a bit but the overall long term trend is for homes to go up in value and seeing how echo park has evolved in the last few years I think these prices (not as high as this particular home) are here to stay for the foreseeable future.

    • 5%? In normal times, mortgage rates are more like 8%. So you should expect they will be more than doubling, nearly tripling from where they are now. Yes, that kind of interest rate rise will weigh VERY heavily on prices. that is a huge increase never before seen.

      And this area is already way out of whack with the housing market everywhere else, and out of sync with the local economy.

      Your idea about prices generally go only in one direction was the kind of thinking that pumped the last bubble that just brought down the world economy. Its easy to get lulled into that kind of thinking when you spend 30 years with a baby boom twisting the supply-demand balance out of shape with demand endlessly outstripping supply. But that baby boom is now moving out and will be selling. That 30-year blip is at its end now, and housing prices will go back to what they were like prior to the baby boom — meaning your presumption will not pan out, there is not only one direction to housing prices. That is, there is a double whammy coming into play, with a huge increase in interest rates, and baby boomers starting to dump the overload. Watch out!

  7. I suspect at 59, I am a little older than most posters. I grew up around EchoPark/silverlake but when I was 13, I wasn’t buying houses….
    In 1989 I bought 2 buildings – 4 units and a 10 unit in the Sunset Junction neighborhood. I am /was not a “trust fund baby’ either.
    I bought the 4 units for 375K (yes….and some thought it was high since ’89 was near top in that market) Then since I was broke I did ALL the work and improvements myself……and a neighbor stopped in and said (I was half my current age) “….you nice young man…buy my apartment…good deal..” I laughed and said I could baely afford what i did buy but he offered me $400 purchase price for TEN units!!! They were beat up and run down and apparently either no one wanted the work or lenders wouldn’t lend to those that did……
    He carried the loan for a 5% downpayment till I fixed it up and re-fied and payed him off 3 yrs later.
    Its worth about $1.5 million today AND the rents give me a nice life style as i approach 60 AND my tenants love me cause my rents are STILL below market as I am in soooo cheap.
    Point is; you make your deals, you play fair and in the long run you make money in cal real estate. If you look at a generational chart of prices you will note that prices triple-quadruple off extreme lows and then are HALVED off extrem “bubble” highs.
    So if bubble prices are 600K then the “burst” will take you to 300K…but the next run up will take you to 1millionish…… that’s when you sell ! (unless you really like it here)
    Its simply true but you have to stick around………

  8. LA itself is over rated

  9. why is everyone so negative all the time?
    and yet why do i keep reading the comments?
    i think i may have a problem.

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