01
May

Los Angeles Houses for Sale: Where to Look, and How to Finance Them

Whether you are purchasing your first home or you are a seasoned hand in the real estate game, the ever-shifting amalgam of Los Angeles houses for sale can be disorienting. To find the home for you, and the investment for your needs, you need some practical insight into your own situation, and professional guidance on the most desirable neighborhoods and most workable financing options.

Los Angeles Houses for Sale: Where to Look, and How to Finance Them

Before you go in search of your dream home in Los Angeles, it is important to have a realistic view of your budget. This avoids heartbreak at having “lost” a home that was always out of reach and enables you to make practical, informed decisions.

Pricing in the Los Angeles Metropolitan Area

Single-family residences in the Los Angeles area cost homeowners an average of $650,000, while condominiums came in around $530,000. That comes out to roughly $440 per square foot. These prices are somewhat misleading in that starter homes and smaller residences can be quite affordable. These prices have a limited impact on the average cost of a home due to the abundance of palatial homes in Southern California.

Because the habitable land in Southern California is now almost entirely covered in homes, there is little additional construction to satisfy still growing consumer demand. While this factor makes the purchase price of a home higher, it also makes a home in the Los Angeles area a valuable investment you can leverage decades down the line.

In addition to the lack of space, people continue to move to Southern California. It is, after all, one of the most desirable locations in the country. This too pushes prices up and makes homes in the area a substantial addition to any financial portfolio.

Understand Neighborhood Dependence

Like most major cities throughout the United States, home prices in Los Angeles are heavily dependent on the neighborhood you are in. If you find a home in a less desirable neighborhood, you may find tremendous value for your dollar but less return on your investment when it comes time to sell. Obviously, the most desirable neighborhoods are filled with the fabulously wealthy and out of reach for most ordinary people. It’s best to look for a happy medium.

Neighborhoods like View Park-Windsor have an excellent mix of reasonably priced homes with tremendous long-term upside as many suburban neighborhoods in metropolitan Los Angeles become increasingly fashionable.

Your Home as an Investment

As we have hinted at in the preceding paragraphs, it’s important to think of each house you see as both a potential home and an integral part of your investment portfolio. For most Americans, the home they live in is their most valuable asset: an asset they count on for equity in tough times and stability in later life.

As you peruse Los Angeles houses for sale, know that while you may save money on the initial sticker price, that could cost you thousands in income as an investment decades later. It is best to defer to the local knowledge of trusted realtor to find fiscally viable options with an eye to the long-term.

Know Your Types of Homes

While there is some burgeoning diversity in the types of homes available in Los Angeles, such as co-ops, tenancies in common, and vacant lots set for the construction of a new home, most homebuyers are looking for one of three things: a single-family home, a condominium, or a multi-family home.

Single-Family Homes 

These are the most common types of homes in Southern California and the type of home with the widest variety in terms of pricing. As a rule of thumb, single-family homes are the best type of home to purchase as a long-term investment and a comfortable residence for your family, as you will have an independent plot of land to call your own.

Some homebuyers, especially those without the desire or capability to care for a plot of land, avoid single-family homes as they require you to take an active role in the maintenance of the home.

Condominiums

Condominiums are essentially apartments that you can buy instead of renting in perpetuity. Condos are an ideal investment for individuals or smaller families who prefer not to contend with the maintenance of a property, as most condominiums charge their residents reasonable monthly rates to deal with landscaping, gardening, and other miscellaneous tasks.

As we noted earlier, condominiums are also considerably cheaper than single-family homes, which makes condos a great option for younger people looking for their first home and for older couples and individuals looking to downsize later in life.

Duplexes and Triplexes

Multi-family homes, more often referred to as either duplexes or triplexes, are a strong option for two types of investors. Those with extensive family networks to keep in mind and those who hope to rent a portion of their home in the long-term. Many homeowners in the latter category simply rent one half of a duplex and live in the other as the income they receive in rent accounts for more than half a mortgage payment.

Other homeowners find multi-family homes to be a worthwhile investment as the extra space allows for older children in large families, aging in-laws, or other close relations to occupy an independent but easily accessible living space adjacent to the home of the owner.

Financing Your Home: Down payments

Mortgage applications tend to be the most frustrating aspect of home buying, especially for younger people looking to purchase their first home. This does not need to be the case. With a realistic view of your finances and your goals, you can work with a trusted realtor to find the right lender for your situation. Based on the high price of homes in Southern California, 15% to 20% down is often an unrealistic downpayment, though it’s standard elsewhere in the country.

For this reason, many lenders that work with home buyers in the Los Angeles area allow for down-payments of 10% or less depending on income and credit history. These deals are tempting, but they come at a cost. The less you pay down on your new home, the more you will have to pay down over the length of the loan. All this leaves you more exposed to additional costs in interest. While paying a big sum down immediately can hurt in the short-term, it can save you thousands of dollars.

Financing Your Home: Equity

Besides the additional interest, low down payments on your loan give you less equity. That equity–the value of your investment in the home–can be used to borrow against or finance, all of which will be more constrained with less equity.

Financing Your Home: Pre-Qualification

It’s tempting to disregard spam and junk mail pertaining to alleged “pre-qualification” for loans. Don’t let this stereotype deter you. If you can get pre-qualification from a bank or credit union with which you are familiar, do so. The mortgage approval process can be long, so a foot in the door is a huge advantage.

Financing Your Home: Flexible Lenders

If you and your family are in need of a home but fail to qualify for traditional home loans. Consider flexible lenders like the FHA, which assists home buyers with lower income and/or poor credit, the VA which assists veterans with home loans, or any of the home buying programs subsidized by the State of California or Los Angeles County.

Get the Help You Need

As you begin your search for Los Angeles houses for sale, there are a few practical things you can do right away. You can assess your budget, find the neighborhoods you like, and think about what type of home you need. From there, contact Teresa Mack. She will guide you to the threshold of your new house and help you at every step along the way.