What is Happening to Los Angeles Home and Rent Prices?

Home prices in Los Angeles are quickly getting out of reach for many residents, according to a new report from the California Association of Realtors. It finds that just one in four residents of LA County make enough to afford a median-priced home in the area.

The association’s Housing Affordability Index shows that a typical LA County home cost $553,330 in the fourth quarter of 2017. With property taxes and insurance factored in, that comes out to a monthly payment of $2,790 for buyers (assuming they put down a 20 percent down payment).

Given those figures, prospective homebuyers need a salary of $111,730 (based on household income) to make those payments without becoming cost-burdened—meaning that more than 30 percent of income goes toward housing. Unfortunately for most people, 75 percent of LA County residents don’t earn that much.

Historic data shows it’s gotten much harder to afford an LA home in recent years. As recently as the first quarter of 2012, more than half of residents took home the required income to purchase a home in the area. Since then, though, prices have risen dramatically and incomes haven’t quite caught up.

In the wider Los Angeles metropolitan area, a salary of $53,780 was required to buy a median-priced home in 2012—compared to $100,210 today.

The outlook is a little better if you’re a first time buyer looking for a starter house. With a median price of $470,330, starter homes in LA County are affordable to 43 percent of residents. Of course, they’ll first have to save up for a hefty $94,066 down payment (after that, payments are $2,400 per month).

Not surprisingly, the report finds that homes in LA are far less affordable than they are nationwide. Across the country, buyers need a yearly income of $50,040 to purchase a typical home (median price: $247,800). That means that buying is still within reach for 56 percent of Americans.

If only more of those affordable homes were in LA.

But what about apartments for rent in LA and the rest of the country? If you can’t afford in LA, should you look at other options in smaller cities, maybe even the Midwest? According to ABODO, a city like Minneapolis shows apartments that are renting for almost $1,200. So, how is that any better than LA, when the same company shows rents are for just a few hundred dollars more.

Renting or owning, it’s all expensive, especially in the City of Angels.

Be A Better Landlord

Rental properties are one of the best ways to earn passive income and build wealth, but “passive” is a little misleading—it can still be a substantial amount of work. However, with a little planning and dedication, you can run your properties efficiently while also keeping your tenants happy.

Treat it like a business
Successful businesses have plans and procedures that keep things running smoothly, and the same should be true for renting and managing your properties. That means committing to customer service, outsourcing work appropriately, and paying close attention to income and expenses. Don’t just assume that you’ll collect a check each month and everything else will be a breeze.

Thoroughly vet your tenants
Collecting applications, interviewing tenants, and checking references means a lot of legwork up front, but it’s worth it in the long run. Choosing the right tenant could mean going years without incident—no late payments, no legal issues, and no property damage. Choosing the wrong tenant could mean monthly calls and visits to collect late rent, expensive property damage and repairs, eviction processes, court dates, and a whole lot of stress.

Make sure your lease is rock solid
Lease agreement laws vary from state to state, so don’t cut corners—find a lawyer who specializes in lease agreements. You’ll be glad you were thorough if you ever have legal issues with a tenant.

Beware of Rental Scams

Warning Regarding Online Rental Schemes

By Wayne S. Bell, Real Estate Commissioner California Bureau of Real Estate

Issued: October 2013

In prior consumer alerts, the California Department of Real Estate, the predecessor of the  California Bureau of Real Estate (“CalBRE”) issued warnings to prospective renters about (i) imposter landlords and (ii) scams perpetrated by or in connection with Prepaid Rental Listing Services.

There are almost endless varieties of real estate and rental fraud. Some are new. Many are old, and some are just variations on timeworn scams.

CalBRE has received reports and been made aware of online rental scams (often using such Internet sites such as Zillow, Trulia, Craigslist, and HotPads), and we want to warn the public about some of the most common ones.

Included in this warning is a list of “red” flags or signs to look for, suggestions on how prospective renters can protect themselves, and reporting recommendations for those potential renters who have been victimized.

Common Scams

In most cases, the fraud involves a scammer who:

• Duplicates or “hijacks” an actual listing of a property that is for rent. 
• Creates a fake or fictitious listing for a rental property. 
• Offers for rent a real, but unavailable, property. 
• Rents a property that is in foreclosure and which will soon be sold, or that has been fully foreclosed (or is in pre-foreclosure).

In the cases mentioned above, the perpetrators do not own the properties (although they oft-times pretend to be the owners) and they are not authorized or licensed to rent the properties.

In most of these cases, the scammers collect money (usually via wire transfer) from the victims for deposits, fees and rents, and in a number of the cases obtain enough personal information, such as social security, driver license and bank account numbers, to steal the identities of the “renter” victims.

For the fraudsters, these are crimes of opportunity and they are simply taking advantage of individuals who are looking for rental housing in a tight real estate market. The perpetrators engage in these crimes (via the Internet ether) because they have found success with such scams and continue to find victims who send money and/or who provide personally identifying information that can be used by the scammers to commit additional crimes.

Please see Consumer Alert – Beware of Imposter Landlords and Consumer Fraud Alert and Warning – Prepaid Listing Services (PRLS).

Because of the anonymity and widespread availability of the Internet, an online rental scam can be started and operated from anywhere in the United States or in other countries.

“Red” Flags

While none of the “red” flags below is definitive proof of fraud, the following are warning signs of a possible scam:

• The advertised rental rates are low (many times very low) compared to other rentals in the area. Always remember the time-tested adage that if something seems too good to be true, it probably is. 
• The purported landlord or agent requests that the advance payment of rents and deposits (and possibly other fees) be made via cash or wire transfer (such as Western Union), and/or asks for personal information such as social security number, bank account information, and driver license number. It is important to note that payments made by cash or wire transfer provide little – and usually no – recourse, especially since the scammer to whom the funds are wired usually disappears and cannot be found. While credit card payments are not accepted by many landlords or property rental agents, prospective renters should – to provide an amount of self-protection – ask to pay for rents, deposits and fees by credit card. 
• The supposed owner or rental agent is either out of the country or in another State, or is in a hurry to leave California, and states that the rental property cannot be shown or toured. 
• The prospective landlord or property agent is not willing to meet in person, and/or applies pressure to complete the rental transaction as soon as possible.

Ways that Prospective Renters Can Protect Themselves

The best advice for prospective renters is to be wary, and to conduct their own diligence and investigate the person with whom they are dealing or negotiating, and the property itself. In this regard, potential renters should:

• Confirm or verify the identity of the supposed landlord or property agent. To see who owns the property, contact a licensed California real estate agent, the county recorder’s office in the county where the property is located, and/or a title company. Talk with neighbors about the property and ask who owns it, and ask a lot of questions about the rental history of the property. If dealing with a property manager or leasing agent (who does not live at the property), look them up on the CalBRE website (www.bre.ca.gov) to see if they are licensed. If they are, check to see if they are disciplined or otherwise restricted in the real estate practice that they can do. Also, check the person out on Google or other search engines, and through the Better Business Bureau. 
• Confirm that the property is not in foreclosure or pre-foreclosure. This is especially true when renting a house. The mortgage loan should be in good standing and not in default. 
• Not rent a property without viewing and touring it in person. 
• Not pay or transfer any money without reviewing all rental documents, and getting copies of all writings pertaining to the property. 
• Demand to meet and then actually meet the supposed owner or property manager in person, and ask many questions about the property and the neighborhood. 
• Work with an experienced, competent, and licensed California real estate broker, or salesperson working under the supervision of a broker. 
• Take photographs of the property. 
• Not pay anything in cash or wire transfer money. 
• Do research on what comparable properties rent for.

The essential point here is that prospective renters, in order to protect their interests, and not become a scammer’s next victim, must remain skeptical, proceed cautiously, do their own investigation of the property and individuals involved with the rental(s), and be aware of and look for revealing signs of fraud.

After Falling Victim or Becoming Aware of an Online Rental Scam

If a prospective renter has been scammed, or becomes aware of an online rental scam, he or she should immediately report the fraud and file complaints with one, more or all of the following:

• The relevant Internet provider (e.g., Zillow, Trulia, etc.).
• CalBRE if a real estate licensee is involved, or if the scammer is unlicensed and purporting to be a real estate agent. Please contact CalBRE at www.bre.ca.gov.
• The California Attorney General, at www.oag.ca.gov/consumers.
• The District Attorney, Sheriff, local police and local prosecutor in your community.
• The Federal Trade Commission, at www.ftc.gov.
• Federal Bureau of Investigation (FBI), at www.fbi.gov.
• The Consumer Financial Protection Bureau at www.cfpb.gov.

Issued: October 2013

Call Laura Key for your real estate needs, rentals, sales, purchase, investment! 310.866.8422 Search for homes NOW!

FHA Limits for Los Angeles Area

Homeownership is not out of reach. FHA limits in California are one of the highest in the country.  I have great lenders that can help you reach your real estate goals! Call me to get started on your homeownership goals!!!  Laura Key 310.866.8422

Here are the current limits for Los Angeles (as of August 23, 2013) FHA allows 3.5% downpayment over a 15 to 30 year term!

Single Family             $729,750

Duplex                        $934,200

Tri-Plex                      $1,129,250

Four-Plex                   $1,403,400

Source: FHA.com

Higher Home Prices Cool Buying Frenzy

Is all this frenzy creating a mini-housing bubble? What are your thoughts on this housing market?  Laura Key 310.866.8422

The recent rise in home prices has more investors concerned that it will be increasingly difficult to turn a profit from their rental investments. Nearly half of U.S. real estate investors say they expect to purchase fewer rental homes in the next year, according to a recent survey conducted by polling firm ORC International.

Just 10 months ago, the percentage of investors who said they intend to buy fewer homes stood at 30 percent—compared to 48 percent today. Only about 20 percent of the investors surveyed say they plan to buy more homes in the next year—a drop from the 39 percent who reported they intend to buy more homes last August.

More than half of the investors surveyed who own rental properties say they plan to hold them for at least five years or more, and 33 percent plan to hold them for 10 years or more. 

“Higher prices are reducing returns on investment and investors are responding by cutting back on their purchasing plans until conditions sort out,” says Chris Clothier, a partner in MemphisInvest.com and Premier Property Management Group. “Fewer foreclosures, rising property values, and competition from hedge funds are making it tough to find good ideals on distressed sales. On the other hand, investors are planning to hold onto their rental properties for at least eight to 10 years and realize the benefits of rising rents and low vacancy rates. Cash flow is much more important than appreciation.”

Source: ORC International

Laura Key, CBS News, Buyer's Agent, Selling Agent, 

Thinking of Selling? I have buyers who are pre-approved and ready!  They are looking in several areas of Los Angeles county!

Do you work from home? Buy your next home with your office in mind!

If you work from home, and it is time to move to your next home, there are some factors you should consider carefully before making your decision.

The flexibility afforded by a “zero-commute” combined with the skyrocketing price of gasoline has strengthened the case for full time teleworking and telecommuting. According to an Environmental Protection Agency (2004) study:

“Americans spend an average of 46 hours per year stuck in traffic. Gridlock produces more than $63 billion in congestion costs per year”

The artist community has been well acquainted with the use of work/living spaces for years, but improvements in technology have made the benefits of teleworking and occasional telecommuting more attractive to general consumers. According to the key findings form the International Telework Association & Council (ITAC) Telework America (2000) study:

“Home-based teleworkers also have larger homes, on average, than non-teleworkers; the difference amounting to about 500 square feet. The most popular place for an office in these larger homes is a spare bedroom, with the living room a distant second. The primary home telework activity is computer work (55% of total activities), followed by telephoning, reading, and—averaging 7% of the time—face to face meetings.”

As you purchase your next home, there are certain factors to consider if you need to set up a new home office:

Make sure that your high-tech needs can be met. Have a qualified electrician inspect the wiring of the house to see if the system can handle the extra power load that your home office requires. Older homes may need significant upgrades to handle the extra power, while newer homes are built with more energy-efficient systems to handle the additional power along with heating/air conditioning requirements. If you use cable, DSL or satellite internet access, check with your local service provider to see if access is available in your new neighborhood. Shop around for your telephone provider—in some cases, business service bundles may be more cost effective than regular residential service.

Designate where your office space will be. Determine the amount of space you will need to accommodate your work style and space. In many cases a spare bedroom or living room space can be used, if a formal den option is not available. If your work requires heavy telephone usage or just heads-down concentration, you may want to consider utilizing a room with a door. Doors can be closed to reduce interruptions from other family and household noises.

Plan your office blueprint to include all required furniture, bookcases, computers, fax, and printers. Make sure to allow for filing and storage space for files and extra office supplies. Lighting is critical for computer or assembly work, so make sure to allow for direct sunlight along with any specific task lighting that may be necessary. Select flooring options that will allow you to work comfortably—you may wish to go with hardwood or laminate flooring to allow for your chair to move smoothly across the floor. Install enough phone lines to cover your home, business and fax machines needs.

Is the office easily accessible? If you will expect regular package deliveries, make sure that your designated office is easily accessible to the front door of the home. This is also necessary if you will need to meet clients or visitors in your office and would like to ensure a professional appearance for your business.

Find out about local business requirements. Some cities have zoning restrictions and guidelines for work/living spaces along with tax implications. Make sure to check with your local government to determine if special restrictions exist.

Are you ready to find a home that could allow you to work from home? Or...do you need more room in the current home you own? Give me a call - lets get you started!

California Homebuyers Need Homes!

If you can't see the video from the photo please click here:  http://www.cbsnews.com/8301-18563_162-57587256/home-flipping-trend-returns-threatening-higher-prices/

Are you thinking of selling?  I have buyers! Call me and let's reach your Real Estate Goal! Laura Key 310.866.8422

Renting vs Buying in California

Thinking of buying! Now is the time! Give me a call to start the process! Laura Key 310.866.8422

Many Renters Don’t Get Security Deposits Back

Twenty-six percent of renters are denied in getting their security deposits back when they move out, a Rent.com survey finds of 1,000 renters.  Landlords cite the biggest reason for withholding security deposits was a tenant who moved out too early. Indeed, 44 percent of the renters surveyed between the ages of 18 and 24 said they broke the lease agreement early and that’s why they didn’t get their security deposit returned. Nine percent of women and 3 percent of men surveyed say they lost their security deposits due to pet damage. 

Thirty-six percent of the survey respondents said that their landlords failed to offer an explanation why their security deposits were being withheld. In some places, that’s illegal. For example, in New York, landlords are required to return security deposits -- excluding any legal deductions -- within a certain time frame. 

Landlord.com offers up a list of security deposit laws for all 50 states. 

Source: “Security Deposit Refund: 1 in 4 Renters Don't Get Their Money Back, Survey Finds,” AOL Real Estate (Jan. 29, 2013)

*No need for this to be an issue!  Become a homeowner today, contact Laura Key, Real Estate Agent.  Homeownership never looked so GOOD!

www.KeyCaliforniaHomes.com   ●  Laura.A.Key@gmail.com