Investors

There is an Upside to Lower Home Prices

Normally people accept the idea that lower home prices are bad because people who already own homes may have lost value in their home. However, there is an upside to lower prices. The upside is that more people can afford to by homes or can buy homes that are nicer or better located.

A recent report on the affordability of homes in California was released and shows that more people can now afford to buy a home. Affordability has to do with the price of homes available and the interest rates that people can get on home loans. We are now at the record level for affordability that was seen in 2009.

Existing home owners should also be happy that affordability is up, because it means that more people can afford to buy. Hopefully this will lead to fewer properties on the market and fewer vacant units. More people in homes means better neighborhoods. So, in the long-run the current low prices will rebound and more homes will be occupied.

Lowest Priced SFR in Granada Hills (Feb 12, 2012)

The last lowest priced single-family residence (SFR) in Granada Hills was on Lahey and was listed for $219,000. It is now showing as pending, meaning that it is in escrow. We will have to wait and see how much it actually sells for.

The new lowest priced SFR in Granada Hills, is on Chatsworth St. near Haskell. The listing states that it legally has two bedrooms, but it has an additional bedroom that is not permitted and a guest house.

This may be a good property for an investor who is willing to upgrade things and get permits in order.

Offset Tile Flooring is IN!

Square tiles in an offset pattern.

Traditionally, 12 inch square tiles are set in a grid pattern. It is also common to see rectangular tiles in a brick, or offset, pattern. A design that is becoming more common, and a nice diversion from the traditional, is using square tiles in an offset pattern.

We used this offset pattern in the Northridge remodel we are working on. It turned out very nice and, I think, provides a more interesting look than the traditional square tile in a grid pattern. This image shows the offset tile and the replacement sliding window in the background. More about the replacing windows later.

Lowest priced home in the Northridge for January 30th

Northridge is a great community that has many large employers, especially Cal State Northridge (CSUN). The

Low priced home in Northridge

lowest priced single family home in Northridge, as of January 30th, 2012, is on Malden just west of Reseda. This 2 bedroom/1 bathroom home is available for only $250,000, but there is a garage conversion, according to the listing.

In some cases these types of garage conversions can be unpermitted and may make financing difficult. Some Building departments have issues with garage conversions and require work to be “un-done” to return the property back to its original state. In other cases they require plans and issue permits if everything is up to code. However, in most cases it is not that easy. Therefore it is critical for buyers to consider the potential costs and check with the building and safety department to get details on whether something is permitted or not. You can get details about properties in Los Angeles through the online activity reports provided by LA Building and Safety, but you should still go down to the LADBS office and confirm everything.

Community Supported Agriculture and Real Estate

Given the current concern for wholesome food, many people are seeking CSA’s (Community Supported Agriculture). CSA’s are organizations that bring farmers to the people who want local, healthy food. The members of the CSA generally pay for a particular amount of time, like 6 months, and are then provided with a box of fruits and vegetables every week for that time period.

This type of organization helps users of vegetables, you and me, and farmers. The users know that they are getting fresh season fruits and veggies that aren’t shipped in from around the globe. The farmers know that they have buyers for their products and are able to deliver fresh food without the risk of changing market prices. Local Harvest has more detail about the many other benefits of CSA’s.

The link to real estate is that people are now seeking homes that are near CSA sites. This is true for buyers and renters. So buyers and investors should check on whether there is a CSA nearby.

Home inventory levels are low

Record low interest rates mean that it is a great time to get a loan. However, the other factor that comes into play when deciding to buy or invest in a home is the price level of homes. As we all know, home prices have come down dramatically in nearly every market. This is in part due to the high number of properties available for sale and the, relatively, low number or buyers.

There may be a change on the horizon. While most people do not expect home prices to shoot up any time soon, there may be more stability and possibly some minor increases in prices. This is a result of the lower levels of available homes. A recent article in the Wall Street Journal stated that inventory levels dropped by an average of 22% nationwide. Of course the amount of change in the housing inventory varies depending on the city and state, but the trend is fairly evident. If this trend continues, it should be expected that prices would increase, even if it may be slightly.

Maybe we are on the road to recovery???

Interest rates are ridiculously low

The average 30 year fixed rate for January 19th, 2012 is 3.88%. According to the Primary Mortgage Market Survey (PMMS), published by Freddie Mac this is the lowest since the inception of the survey in 1971.

To gain an understanding of what this low interest rate means, you have to think about what it translates into based upon a particular loan amount. To keep things simple, I will use a loan amount of $100,000 for this example. At a fixed interest rate of 3.88% on a 30 year loan, the payment is $471 per month.

If you compare this to the 7.00% interest rate in January of 2002 (10 years ago) you would have had a payment of $665 per month for a $100,000 loan.

Going back even further, to January 1982, the interest rate was 17.48% which translates to $1,465 per month for a $100,000 loan.

These super low interest rates and the huge drop in home prices makes right now a great time to buy. In many cases, rental costs are higher than the cost to own.

Buying in the right area

One of the key considerations for purchasing a home is, of course, location. The desirability of a home’s location differs depending on your needs. Many buyers, including investors, now consider an area’s walkability in the decision to purchase.

As people have become more aware of the environmental damage caused by vehicles and the health benefits of walking, they have sought out homes that are near amenities. A great resource to help you understand areas that you may not be familiar with is called walkscore.com. This provides you with an idea of how the location you are considering compares to other areas. It also provides you with a brief look at what is nearby.

Having the grocery store and bank nearby is a benefit to people who may be getting older and for people who like to ride a bike or walk. Using a website like this will help you determine whether a location is right for you or for the tenant you are trying to attract.

Adding value to your home by fixing up your bathroom

The Northridge remodel that we are working on had a guest bathroom that was in poor condition. The bathtub had a crack in the floor, the sink and cabinet were aged, and the toilet was not in the best condition nor was it the most water efficient.

Bathtub before repair and refinishing

In the past we have handled bathtub cracks by replacing the tub. This can be costly and time consuming. Since the crack in this one was only about 3 inches long we thought we should try to repair it. We called out some bathtub repair specialists and asked their opinions. We decided to give it a try.

Porcelain & Fiberglass Maintenance Inc. came out and repaired the fiberglass by using a fiberglass patch and liquid resin to seal the crack. They then put down non-skid texture, at our request, and then recoated the entire bathtub, including the walls. It looks great and only took a few hours. It also saved us a lot of money. Normally a new tub, including removal and installation can cost $1,500 to $2,500. This repair cost $275! They also did a thorough cleaning of another shower in the house and recommended that we not refinish it because it was not necessary. They saved us even more money by recommending this.

Bathtub after repair and refinish

Refinishing a bathtub may not be the best choice in every case, but in this case it worked out great and saved money. Make sure to get a couple estimates before undertaking any project, but be sure to get the opinions of the specialists. Don’t assume that you have to replace in every case. Many times you can refinish. It is better for the environment and usually a lot less costly.

Lowest priced single family home in Granada Hills

The lowest priced house in Granada Hills, as of Jan. 17, 2012, is listed by Keller Williams and is a 4 bedroom, 2 bathroom on Lahey. It’s a short sale with a pool that looks like it needs a bit of love. This could be a nice first home or a great investment property.

Great priced SFR in Granada Hills

The list price is $219,000, but we will have to watch it to see what the short sale gets approved at.

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