Looking to buy our first property in Los Angeles County

12 Replies

Hope this is ok to ask a general lifestyle as well as investment questions.  My wife and are looking to buy a single family home hopefully in the next couple of months.  We're currently looking in Granada Hills, Pasadena, and Burbank with a budget of $500,000.  Any thoughts on the appreciation aspect of these 3 areas?  I would love to hear what you think about these areas for a couple in our demographic as well, in terms of quality of life (both 30, newly married, looking for a good neighborhood to start a family).  Finally, I'll ask a very broad question:  How do you feel about buying right now, in terms of the market? Do you feel like prices in general have plenty of room to grow?

Thanks in advance!

Hi Matt you actually have some great questions.

What made you pick those three cities? I favor Pasadena only because I've lived in Pasadena my whole life. Burbank prices have gone up in the last couple years and so has Granada Hills. Pasadena didn't lose too much value during the recession and is a very stable city when it comes to home values.

As far as if prices are going to go up or down. My personal opinion it will probably stay the same for the time being. Who knows what the market holds everything is just technically opinions or speculations. Either way buying a home in a good area is going to be a great investment.

@Matt Hall  

Many of the investors that you will meet on BP tend to shy aware from 'appreciation-forward' investing. Nobody here will deny the value of appreciation on an investment, but it's a tricky thing to time the market. I would recommend you give The Millionaire Next Door a read, if you have some time.

Some people on the forum disagree with this sentiment, but I also subscribe to the view that one's primary residence is not an investment. I believe that the place where you live is fundamentally a consumption activity. 

All this being said, if you still value the purchase from a 'cost-of-living' perspective, there is nothing wrong with a deal.

Despite my New York residence, I feel there are better deals for my money outside of the city. If I lived in LA, I would think much the same.

Originally posted by @Matt Hall :

Hope this is ok to ask a general lifestyle as well as investment questions.  My wife and are looking to buy a single family home hopefully in the next couple of months.  We're currently looking in Granada Hills, Pasadena, and Burbank with a budget of $500,000.  Any thoughts on the appreciation aspect of these 3 areas?  I would love to hear what you think about these areas for a couple in our demographic as well, in terms of quality of life (both 30, newly married, looking for a good neighborhood to start a family).  Finally, I'll ask a very broad question:  How do you feel about buying right now, in terms of the market? Do you feel like prices in general have plenty of room to grow?

Thanks in advance!

Matt,

My advice would be if you are really ready to buy your home, you should go for it, but realize that you should really be sure that you want that to be your home and home city for quite a while.  I think prices are fully valued in LA at this point, but on the positive side, mortgage rates are very low and 10-20 years from now you are going to be happy that you locked in such a low rate.  

It has been so long since interest rates have risen, that people don't realize that mortgage lock may become a real issue.  That means that people won't want to move, because they can't take their mortgage with them.  Probably won't be an issue until mortgage rates rise 200 basis points or more and that may be a few years out or even more.  In CA there is already a similar phenomenon in Prop. 13 and people not wanting to have a big increase in property taxes.

With the high cost of homes in LA, you don't want to pay the 8-10% in selling and moving costs, because that is a big chunk of change.  

Are you cool with the schools in these areas?  Pasadena is a great city and my one of my favorites, but it's schools are held in much less regard than say South Pasadena.

@Matt Hall

Those are all three good areas. Here are some very random thoughts.

Granada Hills is more sleepy vs Burbank and Pasadena. GH is almost entirely blanketed in single family homes. There is not a lot of commercial activity. Think classic LA suburb lifestyle. Cleaner air quality in GH vs Burbank and Pasadena. You will get the most home for your buck in GH. 

Burbank has more action and has high job growth predictions. Much busier in parts as compared to GH and the airport and Hollywood/Studios are much easier to get to. More walkable areas on average vs GH.

Pasadena is a fairly large city in its own right. JPL, Cal Tech, Kaiser, ATT, Rose Bowl there is a lot going on in Pasadena. The access to downtown LA is superior compared to GH and Burbank. The public schools are not as good as in GH or Burbank. 

I would expect Burbank and Pasadena to have better appreciation. There seems to be more demand for walkable and proximity to major employment areas. I would not expect more than mid single digits for many years to come in all of those areas however. 

Residents in all three are content with their choice. Areavibes rates Burbank 83, GH 80, and Pasadena 80. Good luck with your search. 

@Matt Hall, I agree with the comments people have mentioned. When you are ready to buy, definitely move forward. All those cities you've mentioned are great cities to raise a family. Good school districts,  safe neighborhoods, and stable market. It is your primary personal residence,  so it's apples to oranges if you were to compare it as a purely investment (investments are only based on numbers).

I ask the following questions to my clients who are young families like yours: 

1. Do you like this area? Does this area have a reputation of a good neighborhood? (schools, crime rates, etc)

2. Based on this reputation,  do you think it will have a similar reputation 5 years from now? How about in 10 years? In 20 years?

If the answers to these are yes, then it's probably a good investment. You will create a lot of memories raising your children that money can't ever buy.

I've lived in Eagle Rock for 20 years. I know Pasadena and Burbank much more than Granada Hills. I've seen how Northeast LA has changed over the years. What I can tell you is that you will not go wrong with Pasadena or Burbank.

As far as pricing, People buy in LA  county because they want to live here. Demand is always there!! History tells us that everyone in California is in it for appreciation. Even if you see a market correction, there's always buyers and investors in LA who have lots of cash to get the market back to normal. Always.

Don't get stuck In a paralysis analysis. The sooner you buy, the faster you build equity, the more wealth you bequeath your children. Wishing you the best, and happy house hunting! !

@Matt Hall  

Hi Matt,

Above @Benjie DeVera   and @Matt R.  mentioned are absolutely correct. Though 500k range in pasadena you will most likely to get the NE of pasadena, which is most likely the neighborhood you want to avoid for raising a family. I only see the NE area improve in a very long run (not short). You will have higher chance with burbank, which most likely start in 500k range.

I personally would not acquire personal resident at this moment. Thats me because I like to buy toward the low of the market. I am no guru so don't take my word for it.  Though, I would suggest you to go to RE meetings around LA Area Matt. That way you will get a sense of how the market is doing. Perhaps, even if you know somebody that is attending a seminar that Bruce Norris is hosting, the information from that meeting could be beneficial to you.

As Ben mentioned, as a homeowner, you should build equity as much as you can because that is the way to build your wealth. Then again, interest rate is absolutely low to the low, you can take advantage of that.

Thanks for all the responses guys.  

I chose these 3 areas after considering many.  I work in Burbank so I need something close by (living in Manhattan Beach is killing me).  I chose these areas to concentrate on as they seem to have the best price to neighborhood ratio .  If I'm overlooking any area, please don't hesitate with recommendations.  I thought of including Altadena along with my Pasadena search but I really don't know much about the area. Anyone?  

The schools are a big concern, with the areas of Pasadena we would probably be looking at.  The only thing that would negate that problem would be the thought of us moving elsewhere before it becomes an issue for our kids, which we're hoping to accomplish.  The plan would be to rent it out long term, if our financial situation could handle it, or sell it for what would hopefully be a small gain in the next 5 years.  I'm not all that comfortable banking on this idea as I would hate to end up dealing with paying for private schools should we want to stay or be forced to.  

Our budget looks like it will be stretched pretty thin if we go with Pasadena or Burbank which leads me to another question.  In your experience how well do the 2b/1b single family homes sell in LA county.  I have always heard that 2 bedrooms are hard to move and that 3b's are pretty much bulletproof when it comes to demand.  That might not be an option in those areas with our budget.  I see so many come and go, I wonder if this really holds true at all in L.A.? 

Thank you all again.  All of this advice is truly appreciated.

Your 3 beds/ 2 bath homes are your vanilla, cookie-cutter homes. Even if you end up with a 2/1 home, they would still be in demand when it's time to get out. You're talking about "A" neighborhoods, so there will always be demand. A 3/2 vs a 2/1 will just depend on your budget. (Personally I would pick a 2/1 in an 'A' area, than a 3/2 in 'B' area).

What I've seen clients done in the past is they settle with a 2/1 home as a starter home. Wait a couple of years, build some equity. And then when kids need more space, they "move up" to a better neighborhood on a 3 bedroom home. And, if you know 100% sure that you will move within 5 years (more kids, move up neighborhood, etc), then the ARM loan option might be a good option. If used right, you build faster equity in the first 5 years than if you were to pay a higher interest rate for 30 year fixed. This gives you better cash flow also. But if you're not sure, given the historic lows on interest rates, I would advise sticking on 30 year fixed.

Nice target area.
Burbank is great and still affordable.

@Matt Hall   welcome to BiggerPockets! Purchasing your can be exciting and nerve wrecking. Good luck. I am glad to answer any questions that you have that pertain to financing. You will have to update us to where you choose! There are many good agents on this site. You came to the right place for advice! @Vick Tasmajian  seems very knowledgable about the areas you are interested in! 

Perhaps Townhouse or massive fixer in Sherman Oaks, Studio City and Valley Village. Van Nuys has some decent homes but the schools are no bueno. Lausd has open enrollment so in theory you might make that work. Check this one in Van Nuys...this one would rent $3500 all day long. 

http://www.zillow.com/homedetails/15115-Covello-St...

@Matt Hall   . I was in the same situation 1 year ago. I was looking for a house in Burbank, Glendale and La Canada because of the good schools in this areas. 

In that price range you can get a 2/1 that probably needs some work done in Burbank. My plan was to buy a 2/1 (I didn't need a 3/2 right away but I could extend and add 1 bedroom and 1 bath a few years in the future) in a good area and put some work into it to make it the way I want it. 

If is your primary residence is not an investment, but if you plan on staying there for at least 7-10 years I wouldn't stress to much if the prices are high or low at this mortgage rates.

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