Many sellers want to know that the home they loved for many years will be sold to someone who will love it as much as they have.
A Beginner's Guide to Buying a Home in Los Angeles
Now the second most populous city in the nation, the Los Angeles metropolitan area not only boasts 75 miles of coastline, mild winters, and a vibrant arts, culture and entertainment scene, but also professional opportunities galore: Long home to entertainment giants such as Disney, Universal, and Warner Bros—and more recently the locale of choice for Facebook, Google, Apple, and a slew of other “Silicon Beach” tech startups—the “city of angels” is justifying its reputation as a young person’s professional and social paradise each and every day.
And real estate prices reflect this. The median home price in Los Angeles is $646,300—nearly three times the national median—and its metro-area encompasses 28 cities in which the median home price tops seven figures. Five others are expected to join that list by mid-2019.
This confluence of high demand, low supply, rising prices, and a bustling job market sets up unique—but not by any means insurmountable—obstacles for first-time homebuyers.
Ready to leap over the hurdles between you and your dream L.A. pad? The following primer can help set you up for success.
Understand the Geography
Los Angeles basks in 264 days of sunshine per year, on average. So it’s no surprise that real estate west of downtown and along the city’s beachy corridor is in high demand.
The cost for resale condominiums built along Santa Monica, Venice, Manhattan Beach, and other highly-desirable coastal beach towns can easily top $1,000 per square foot. Those in the market for a single-family home in the same areas can expect to pay two, three or even four times that.
Nevertheless, there are a number of newly-gentrifying areas that may interest first-time buyers seeking single-family properties without the sky-high “beach living” price tags. Just north of the city, for example, you will find communities such as Echo Park, Atwater Village, and Mount Washington where you can enjoy both distinctive “vibes” as well as relatively lower prices.
Insider Tips for First-Time Los Angeles Homebuyers
Homebuyers in an ultra-competitive market such as Los Angeles will want to garner every advantage they can, including:
Working with a lender before you start house hunting. Most sellers are unwilling to accept even the most attractive offer without a pre-approval letter from a well-regarded mortgage financer. In the Los Angeles-area, it’s not uncommon to be bidding against all-cash buyers. That means it is up to the buyer to assure the seller their financing plan is rock solid and unlikely to fall through during the settlement process. The best time to open a conversation with a lender is before you begin shopping for your home.
A pre-approval letter further allows the buyer, seller, lender, and real estate agent to all get on the same page, financially. This helps you, as the buyer, to accurately set your expectations and your real estate agent to narrow the search down to homes that fall within that range.
Remember, though a 20% down payment is typically considered optimal to avoid having to take out private mortgage insurance, in a hot market a good rule of thumb is the larger the down payment, the more seriously the seller is likely to consider the bid.
A high-quality lender can help a buyer understand the appraisal process, meet a quick settlement date, be prepared with fast turnaround counter offer letters, and check all mandatory contingencies and county settlement requirements off their list.
Your lender can also help you determine the most advantageous financing program for your individual needs. For example, an adjustable rate mortgage may be an effective choice if you plan to trade up in a few years. On the other hand, a 30-year fixed may make sense if you plan to stay put for the long-term.
Get closely acquainted with your real estate agent. Your agent will be your tour guide through the city, zeroing in on the areas that best suit your needs and budget. A seasoned agent will understand the ins and outs of the neighborhoods you want to pursue and be prepared to offer trenchant, specific advice throughout the buying journey.
Many sellers want to know that the home they loved for many years will be sold to someone who will love it as much as they have. You and your agent can work to develop a strategy that lets them know you do. Effective tools include a personalized letter or even a small gift.
In Los Angeles specifically, a realtor can also advise you regarding increased earthquake-related down-payment requirements for buildings constructed of brick or that have tuck under parking structures.
Take a breath. A search can sometimes span several months and it’s not uncommon for a first bid to be rejected—an important fact to remember as you navigate the competitive Los Angeles home buying landscape.
In the end, shopping for a first home is an exciting proposition, but it’s not without its challenges, particularly in the high-demand Los Angeles-area. Still, with a little forethought, planning, and know-how, you may soon find the home of your dreams.