A brief pep talk to buyers.

As a real estate broker in one of the affordable and rapidly gentrifying neighborhoods of Los Angeles, I have the duty to be the truthsayer to my newbies about what to expect from buying a property in this day and age. I was just emailing this tidbit off to a buyer, and I thought it was too good to omit from the public eye.

The real estate market is hyper-competitive right now. (It usually is in LA). The only way to even have a shot in the lower price ranges is to get there right away when something becomes available. That's our job as Realtors, to bring you the top properties. But if you want to actually get one, you're going to have to get there right away and write a strong offer (i.e. over asking price with a good down payment). We can lead a horse to water, but we can't make them drink.

We know the homebuying process can be daunting, but the reward for going through this gauntlet of heartbreak and frustration is that prices are finally reasonable and within reach. For everyone who qualifies for a $300,000 mortgage, it becomes a question of if they will ever to be able to afford a home in LA if they don't get it now. Everyone who qualifies for only around $300000 in mortgage should strike while the iron is hot.

So don't give up, and when things come to you do go take a look. You'll be happy you did.

Man these REO's are going fast.

It seems to me that the East Side market is heating up in proportion with the weather. I've written 8 offers in the last 10 days for 8 different buyers on 8 different properties and not one of them has yet been countered or denied or even responded to. WTF are you loss mitigator/asset manager types doing all day long??.

Some of these banks are getting the hint that to sell a property quickly you need to underprice it and let it get bid up. When writing offers over asking price as is necessary on nearly all of these underpriced REO's, the question becomes how high to go. No one wants to drop more than necessary even for a great value. The way it seems to be occuring is that the bank will take a certain number of offers and let them all put in a highest and best offer in a silent auction for the property. This is a fiendishly clever strategy because no one knows where the bid is at, buyers can be made to bid against themselves blindly. A rich man once told me that auctions are a great way to sell something, not so good for buying something. Food for thought.

The price of real estate in most areas (sorry, Silverlake) is about what it was in 2001. I'll see all you bargain hunters out there...

Rent-versus-own balance shifting

As home prices continue to drop, the rent versus buy equation keeps changing. From "Renters lose edge on homeowners" Wednesday in the Wall St. Journal:

Now, after two years of rapid home-price depreciation, the relationship between the cost of rental payments versus after-tax mortgage payments is tilting toward ownership in a number of metropolitan areas.

Over the past 18 years, after-tax mortgage payments have averaged 26% more than rent payments, according to Green Street Advisors, a real-estate consultancy based in Newport Beach, Calif. In 2006, at the height of the housing bubble, mortgage payments reached as high as 66% more than rent payments. But by the end of 2008, average monthly rent for the largest 50 metropolitan areas was $1,045, compared with after-tax mortgage payments of $1,300, assuming a rate of 5.5% on a 30-year fixed mortgage. That means mortgage payments averaged just 24% more than rent payments, the narrowest gap since 2001. ...

In Los Angeles, for example, mortgage payments averaged 60% more than rent payments between 1990 and 2008. Now, those payments average 30% more than rent.

"We're not saying on an absolute basis that it's cheaper to own a home, but on a relative basis ... owning is looking much more attractive than it has in a long time," said Andrew McCulloch, a Green Street analyst. While the shift doesn't mean that renters will rush to buy homes soon, "it's not a 'no-brainer' anymore if they're going to rent versus own," he said....

Carla Zeineh, 22, and her husband recently began shopping for a home in Irvine, Calif., and discovered that with a 5% mortgage rate, her monthly payment on a $350,000 two-bedroom home with 20% down could be less than the $1,800 month that they pay in rent on their two-bedroom condo.

Between the $8,000 first-time home buyer tax credit from the stimulus package and the $10,000 incentive for Californians to buy newly built homes, the rent-versus-own tipping point may not be far off for some.

I've got two properties for buyers right now that will both cost less than $1400 monthly including tax and insurance. Both are within 10 minutes of Downtown L.A. and 15 minutes from Silverlake or Hollywood. The time to buy is here.