Los Angeles Mortgage Seekers Flock to Affordable Downtown Condos
According to the L.A. Times, Erica Helphand and Sawnia House are the types of buyers making downtown Los Angeles one of the area’s strongest real estate markets, for a simple reason:
It’s in their price range.
“If we could afford a Craftsman in Venice, hands down we would move there, but that’s not an option,” said Helphand, 35, who lives with House in a rental in Culver City.
They toured more than a dozen condo projects last weekend and liked what they saw. Even as most of the Southern California housing market is stuck in a rut, downtown L.A. appears to be one of the few bright spots.
And that helped Los Angeles County stay strong in February, with a median home price that was up 7.8 percent from February 2006. With California housing prices leading the nation, many areas of the state have seen demand fall through the floor.
Not L.A. County, which saw the biggest year-over-year percentage gain since July.
Sales of units in the seven ZIP Codes that comprise downtown nearly doubled from a year ago to 148 closed transactions in the three-month period that ended in February. The transactions don’t take into account deposits made by would-be buyers staking claims on units still under construction.
In the three months, more new units were available for sale compared with the year-earlier period but the number of deposits taken has been hard to pin down.
“The [doubling in transactions] is significant because it shows that demand exists,” said Jim Perabo, a California mortgage broker. “The total number of units on the market for that period increased and sales didn’t slow.”
With some newer units starting as low as the mid-$300,000s, downtown L.A. is now attracting middle-class, salaried workers like Helphand and House, as well as suburban homeowners rich with home equity looking for a weekend getaway or a first home for their college-age children.
In fact, downtown’s image as a livable place probably had its best year in decades. But at the same time, not everyone is sold on downtown.
Christina Yu and Christopher Camargo, renters in Long Beach, visited about a dozen condo and loft projects to learn firsthand what downtown has to offer.
“It wasn’t that long ago that the alleys were filled with derelicts and drug addicts,” said Camargo, who expressed doubts that he’d be willing to get a California home loan to live in such an area. “If I’m going to pay $700,000 for a place, I would think it would have a view of the ocean, not someone else’s living room.”
In general, the Los Angeles housing market has shown slightly more resilience than other regions thanks to its status as the biggest county. At the same time, county home sales fell 11 percent to 6,300, the fewest transactions for a February since ‘97.
The rate of decline picked up from January, when sales fell 6.9 percent from a year ago, but was an improvement over mid-2006, when sales were falling at a 25 percent year-over-year pace. L.A. County’s median price, which has been virtually flat for a year, is $520,000.
The outlook seems hazy. Tighter home mortgage lending standards and slower appreciation will still keep many would-be buyers on the sidelines, even if interest rates remain steady and the economy continues to produce jobs.
Downtown mortgage brokers say they’re busier than ever answering queries from potential homeowners, but are also more worried because fewer first-time buyers will be able to qualify now.
“The days of [no money down mortgages] are over,” one said, adding that about 20-30 percent of the first-time buyers he meets with would be unable to buy without improving their credit standing and coming up with a down payment.
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