Despite pandemic worries and mandated shutdowns that heralded the New Year, the Eastside market continues to surge ahead. Local real estate agents expect another good year. But there are several factors at play that will determine if the market will remain robust or slow down.
Overall, the California housing market ended 2020 on a high note with sales strong in December according to the California Association of Realtors. In the greater Los Angeles area, the median price of single-family homes sold in December hit $625,250, up 13.7% from December 2019. The number of sales increased by 31.6.% (A breakdown by neighborhood can be found at the bottom of this story).
As in the past year, low inventory of homes on the market coupled with low interest rates are fueling the movement, especially since so many families that working and studying at home want to upgrade for more space.
“For sellers, it’s a great market,” says Cherryl Weaver, an Eagle Rock-based real estate agent with RE/MAX. “Multiple offers are pushing prices even higher since there are not that many houses out there.”
Prop 19 Factor
Weaver is watching how Prop 19 may affect the housing inventory, especially in Northeast Los Angeles. The proposition protects senior homeowners who want to sell their current home and downsize but may have been reluctant because of incurring higher taxes. As of this year, those 55 and over can move anywhere in California and still retain their original property tax.
“I personally know of a dozen older residents who are in an old family house, 2,000 sq. ft. and they are only living in a portion of it,” she says. “But they won’t move because they love the neighborhood. Change is hard at that age.”
Still, the lure of moving closer to children and grandchildren could open up possibilities. Kurt Wisner of Atwater Village-based C + K Wisner Real Estate Team also envisions scenarios of older residents choosing to downsize and relocate around their current neighborhood. He cites an example of a 55+ year old couple selling their multi-level home in hills of Silver Lake to buy a one-story home in Atwater Village.
“They originally purchased the Silver Lake home for $500,000 back in 1998 and now sell for $2,000,000 and purchase the Atwater home for $1,500,000. Their tax basis stays at $500,000, about $6,500 a year, and not based on the new purchase price of $1,500,000 which would be $18,750,” he explains. “They also reap the benefit of the capital gains exemption and are not taxed on their $500,000 profit since that limit for a married couple is up to $500,000. It’s a big win/win.”
What will spring bring?
Wisner is anticipating a robust spring. “April, May and June used to be the typical ‘good times’ to sell,” he says. “Now there isn’t a bad time, maybe just a bad week.”
The media reports of Californians leaving the state is just hype, says Wisner. “There’s not been an exodus out of the state. We are not seeing it.”
But maybe families are moving around the state or their city.
Weaver has experienced some movement out of Northeast Los Angeles into the current market hot spot, the San Fernando Valley where buyers are getting more space at a lower price. She had one NELA client with two kids who were struggling in their current home since everyone was at home working and schooling. They eventually moved to Sunland.
“They got the size of house they wanted, more space, with a huge front and back yard,” she says. “It was something they couldn’t have gotten in Northeast.”
What’s on the horizon?
While there is plenty to celebrate, the industry looks down the line at some possible storm clouds.
Many struggling homeowners have been able to defer payments and avoid foreclosure during the pandemic. Another nationwide deferral on mortgage payments was just granted until the end of June but eventually those homeowners will have to pay up.
“What happens when those loans are due?” said Weaver. “They are just kicking the can down the road,” she says. “People not paying their mortgages now could be a factor in how the market could possibly turn in the near future.”
Here is a breakdown of December sales by Zip Code from Corelogic:
Atwater Village + Silver Lake North (90039)
- Single-Family Homes Sold: 19
- Median Sales Price: $1,195,000
- Change from Dec. 2019: 27.2%
Boyle Heights (90033)
- Single-Family Homes Sold: 2
- Median Sales Price: $523,000
- Change from Dec. 2019: -19.6%
Boyle Heights South + East LA (90023)
- Single-Family Homes Sold: 3
- Median Sales Price: $365,000
- Change from Dec. 2019: -36.2%
Cypress Park, Glassell Park & Mt. Washington (90065)
- Single-Family Homes Sold: 30
- Median Sales Price: $905,000
- Change from Dec. 2019: -5.2%
Eagle Rock (90041)
- Single-Family Homes Sold: 23
- Median Sales Price: $900,000
- Change from Dec. 2019: -4.1%
East LA (90022)
- Single-Family Homes Sold: 7
- Median Sales Price: $495,000
- Change from Dec. 2019: -3.9%
East LA + City Terrace (90065)
- Single-Family Homes Sold: 9
- Median Sales Price: $630,000
- Change from Dec. 2019: 36.4%
East Hollywood (90029)
- Single-Family Homes Sold: 7
- Median Sales Price: $910,000
- Change from Dec. 2019: 7.4%
Echo Park/Silver Lake (90026)
- Single-Family Homes Sold: 22
- Median Sales Price: $1,248,000
- Change from Dec. 2019: 7.2%
- Single-Family Homes Sold: 32
- Median Sales Price: $685,000
- Change from Dec. 2019: 8.3%
- Single-Family Homes Sold: 48
- Median Sales Price: $952,000
- Change from Dec. 2019: 27.8%
- Single-Family Homes Sold: 16
- Median Sales Price: $735,000
- Change from Dec. 2019: -4.9%
- Single-Family Homes Sold: 24
- Median Sales Price: $1,816,000
- Change from Dec. 2019: -2.1%