Why Southern California Is Among the Hottest Real Estate Markets

Realtor.com just released their list of the hottest real estate markets in the country for July 2017. Many cities in California are on this list. In fact, California makes up more than half of the top 20! This is great news for Southern California real estate investors. In this blog, we take a look at why Southern California is among the hottest real estate markets in the country.

Realtor.com’s Hottest Real Estate Markets List

Here’s the list from Realtor.com:

  1. Vallejo, CA
  2. Kenniwick, WA
  3. San Francisco, CA
  4. San jose, CA
  5. San Diego, CA
  6. Stockton, CA
  7. Columbus, OH
  8. Fort Wayne, IN
  9. Sacramento, CA
  10. Detroit, MI
  11. Dallas, TX
  12. Colorado Springs, CO
  13. Yuba City, CA
  14. Fresno, CA
  15. Waco, TX
  16. Modesta, CA
  17. Denver, CO
  18. Ann Arbor, MI
  19. Santa Cruze, CA
  20. Santa Rosa, CA

Why Southern California is Among the Hottest Real Estate Markets

We’ve written about the hot real estate market in Southern California before. Why does it continue to be in demand? First, Southern California weather is ideal for many. Who doesn’t like warm weather year-round? Secondly, the area is known for its many great companies. Technology is a booming industry and many technology companies are located in SoCal. These companies attract new residents from across the country. Prices are high in major metropolitan areas, so the demand for homes in surrounding communities continue to rise. Lastly, like many areas throughout the country, inventory is low in Southern California (relative to demand). Thus, home prices are driven upward as buyers to compete for few listings.

Real Estate Investors Rejoice

Most people think that a down market is best for fixing and flipping properties, but experienced Southern California real estate investors know that a hot market is much more beneficial. Investors don’t really compete for the same type of listings as typical buyers would purchase, therefore a hot market doesn’t severely impact the selection of fix-and-flip properties. It does, however, greatly impact the return on investment when investors go to resell properties.

It’s truly not surprising to those of us who live and work in Southern California that it is among the hottest real estate markets. This latest ranking is merely confirmation that opportunity abounds in SoCal. If you weren’t sure whether to invest in California real estate, you may be missing out on some great returns. Contact us to learn more about how you can take advantage of this hot market. With our real estate investment partnerships, you don’t need any investing or real estate experience. We take care of the hard work for you.

Mortgage Insurance Details For Southern California Properties

Mortgage insurance (MI) is typically required by mortgage providers to protect them from losses if a borrower fails to pay their loan. When the lender attempts to relinquish a house, they are usually not able to to obtain the full amount remaining, so the purpose of insurance is to cover the loss. MI applies when home owners are financing greater than eighty-percent of the sale price of the home. There is generally a lump sum premium due at settlement and recurring fees calculated from a percentage of the amount of the loan. Mortgage insurance details for Southern California properties and recommendations on getting rid of MI fees are offered below.

Impact of MI on Monthly Payments

Mortgage insurance fees vary depending on the mortgage program. Home owners should consult with a loan officer to receive sample rates and analyze the impact that it will have on recurring mortgage payments. Rates may also change at times, so be sure to obtain current figures when you are starting the process of buying a home. Once you obtain a mortgage, the mortgage insurance amount for that specific mortgage will be the same for the life of that mortgage. With certain programs, you may receive a refund of a portion of the up-front MI charged if you pay off the loan within a certain time frame.

Recommendations On Getting Rid Of MI Fees

Recurring MI payments will usually be removed when the mortgage is paid down to 78% of the beginning property value. In an improving real estate market, you can also order an updated appraisal (from a company approved by the lender) to confirm that the price of the property has grown and that you have therefore achieved the 78% mark earlier than expected. There may be exceptions, so review your loan documents for information.

Mortgage Insurance Details For Southern California Properties

Most borrowers are not able to provide a 20% down payment and subsequently cannot avoid mortgage insurance. By understanding how MI is handled and ways to remove it sooner, home buyers may avoid paying more MI than needed. Our hope is that you found the above information on Mortgage Insurance Details For Southern California Properties useful and can use the recommendations on getting rid of MI fees. For additional details on this and related topics, contact Matthew Rapoport at Homes, Inc.

Why You Need a Comparative Market Analysis For Southern California Real Estate

A comparative market analysis (CMA) is an evaluation compiled by a knowledgeable listing broker to figure out the potential price of a piece of real estate. It is different from an appraisal, which identifies the specific price at a given time. It is important that home owners understand how a comparative market analysis is prepared. This article discusses why you need a comparative market analysis for Southern California real estate.

How a Southern California Comparative Market Analysis is Compiled

The market value of a dwelling is driven by buyer demand. Because the real estate market changes constantly, the best way to estimate current value is to look at recent sales. Active homes on the market are not accurate reflections since it can not be predicted what they will ultimately sell for or if they will get sold all. When preparing a comparative market analysis, listing brokers make an effort to locate similar-styled homes and in similar areas. It is not always possible to locate close matches, so changes are traditionally made to reflect differences. Age, living area, enhancements, and other factors are noted. Not all home repairs result in added value and the dollar value of adjustments do not often equal the amount paid for them.

Why You Need A Comparative Market Analysis For Southern California Real Estate

A CMA report normally provides a range for price rather than an exact price. Where a property falls within that range is based on the number and quality of competing real estate on the market and your time restrictions. If you have a little time in which to sell your home, your pricing must be more aggressive (at either the low end or even less than the estimated range). This is especially true if there is an abundance of real estate on the market. In general, the higher you list a home, the more time it may take to sell. In markets where competition is sparse and your property is extremely desirable, you might have the advantage of pricing at the high end of the range. A skilled agent can assist you with this decision and provide valuable advice. Incorrectly pricing a home can lead to loss of critical time and money, so refer to the knowledge of real estate agents and the undeniable information in the CMA report.

I hope that you found this overview of why you need a comparative market analysis for Southern California real estate useful. For additional information on listing real estate for sale, read the other blogs on this site. To receive a complimentary comparative market analysis, contact Matthew Rapoport at (213) 334-4141 or [email protected]

Common Southern California Real Estate Investment Mistakes

Real estate investments can be among the most complex investment decisions, but they also provide some of the most promising returns as well. Naturally, there is always a lot of interest in real estate from both new and seasoned investors. The key to making it a success is following best practices and avoiding common Southern California real estate investment mistakes. Here are a few…

Assuming that Every Property Will Be Profitable

Not every property will be a good investment,… plain and simple. It is important that you select investment opportunities carefully. If the numbers do not work out, don’t force it. Home buyers often get desperate in their search for a home due to their timelines and the fast moving market. As investors, you have the luxury of being selective.

Not Performing a Thorough Analysis of a Property

Every property is unique and complex. Aesthetics are only one piece of the puzzle. It’s important to be thorough in reviewing different aspects of a property. Failing to do so is one of the most common Southern California real estate investment mistakes.

  • Zoning
  • Conformance to Building Codes
  • Previous Permitted (or Unpermitted) Work
  • Neighborhood Features
  • Marketability Factors
  • Additional Liens
  • Past Pest Issues
  • Condition of Major Systems
  • Signs of Latent Defects

Sellers may not always be aware of or forthcoming with information, so having the ability to track down this information on your own is critical. Failure to complete proper due diligence will lead you to overpay for a property, which will undoubtedly impact your bottom line.

Underestimating Renovation Costs

Renovation costs can span such a large range depending on the type and extent of a project. Beyond what you expect to complete, there is always the added complexity of unexpected issues along the way. Underestimating renovation costs is one of the most common Southern California real estate investment mistakes that you can make. Unfortunately, there’s no foolproof approach. It comes down to experience. If you personally do not have a good knowledge base, it would be wise to obtain assistance from someone who does!

Not Hiring Professionals

A common misconception is that doing everything on your own will save money. Although this may apply to some types of renovation work, it certainly does not apply to all. Some things are done better and/or more quickly by experts. Hiring the right contractors can save you valuable time and prevent costly mistakes.

More Thoughts on Common Southern California Real Estate Investment Mistakes

The most valuable asset that you have when investing in real estate is experience. It is through making mistakes that we learn how to invest better in the future. That learning curve can be a bit painful (and expensive) though. Many investors are eliminating that learning curve by partnering with local experts. At Homes, Inc., we utilize vertically integrated capabilities, employ a diverse and experienced team, and leverage our resources to deliver anticipated results for our investors. Learn more about why you should partner with Homes, Inc.


The Effect Of Overpricing Your Southern California Real Estate Listing

The real estate market is improving, which is wonderful news for home sellers. Escalating prices give prospective buyers more confidence to buy, which produces more buyers and more competition. This type of market often causes overpricing, which is not a good idea in any market. Here is the effect of overpricing your Southern California real estate listing.

How Home Price Related to Marketing Time

It is well known that list price and the time it takes to find a buyer are linked. Overpriced homes remain listed longer for many reasons. First, the higher the price, the fewer the buyers. Additionally, high priced homes make lower-priced listings look even better to buyers. So, overpricing basically helps your competition. Lastly, home buyers are more scrutinizing in higher price ranges. Higher prices should be warranted by differences in upgrades or buyers will bypass it.

Longer Marketing Time Can Determine Sale Price

Another proven pattern is that longer marketing times lead to lower selling prices. Buyers form a negative view of houses that do not sell quickly. They suspect that things must be wrong with the house (and not simply that the price was the problem).

An additional factor is that as a seller, you will probably make price reductions as time passes. Even if you bring it to the correct range, the damage will have already been done. Buyers submitting offers at this stage will typically present lower prices than they otherwise might have. In the end, your home will sell for less because it was overpriced initially.

The Effect Of Overpricing Your Southern California Real Estate Listing

The effect of overpricing your Southern California real estate listing is lost time and less profit. It is that simple. Even if the market is on an incline and bidding wars are occurring, this is not the opportunity to overprice. The first few weeks of a home entering the market are the most important. This generates the most interest, increases demand and yields the highest price. Get help from an experienced real estate professional who knows the current market and proper pricing approaches to ensure that you do not unintentionally overprice.

Southern California Home Remodeling Advice

There are many things to consider when planning a home remodeling project. You must decide on features, materials, colors, etc. You will also want the work to withstand wear and tear tp make your investment worthwhile. Below are a few Southern California home remodeling advice to aid in planning your next home project.

1. The Internet as a Resource

There is an abundance of tools on the Internet. Refer to sites such as houzz.com for samples. This specific website allows you to look through pictures of beautiful designs. Search for photos by room or space and bookmark specific ones for future reference.

2. Browse through Various Color Combinations

Color can be a good thing, but use them wisely. Determining how you want to use a room will facilitate your color options. If you wish to create an energetic kitchen, you may want to select a bold red or yellow and then coordinate it with a neutral color. To impart a soothing feeling, consider lighter blues or greens. Some sample brochures use differing colors and include images of rooms using those color schemes.

3. Exhibits & Show Rooms

View products in person whenever possible. You can assess the quality of materials and its utility in a real application. Try to actually evaluate items, wiggle the parts, and visualize how it will be used in your renovated space. This can validate your selections or alter them altogether.

4. Keep Resale in Mind

When future buyers visit your property, it is important that they can envision themselves using the space. Using features that are not appealing to the masses or are not easily changed can negatively impact your resale value.

5. Choose Long-lasting Materials

Since you are investing in your property, you should as well make a long-lasting one. Durable materials will show less damage, need less maintenance and remain in good use for a longer time. Choosing products that will remain in good condition beyond the time you list your home for sale will lead to a better return.

The above Southern California home remodeling advice are a good starting point for your renovation project. Speak with your custom remodeler or design professional for specific recommendations and ideas. Take your time, perform your research and have some fun!

Updated Limits For FHA Loans In Southern California

The Federal Housing Administration (also known as FHA) changes their loan limits yearly. If you are buying a home in the near future and would like to to use an FHA loan, it is essential to be familiar with what these limits are and how they might fluctuate. For this year, in many areas, the limits have gone up to reflect rising home prices. Here is an overview of the updated limits for FHA loans in Southern California.

Definition of FHA Loan Limits

Loan limits are maximum loan values that comply with an FHA loan. The loan value is not equal to the purchase price. For instance, if you find a house for $ 200,000.00 and your down payment is 3.5 percent , then your loan value comes out to $ 193,000.00 .

How Are FHA Loan Limits Calculated

FHA loan limits differ by market. Median real estate values are compared to limits for national conforming loans. Conforming loans comply with the Fannie Mae and Freddie Mac rules and may be sold to secondary mortgage markets. FHA takes 65% of the limit for conforming loans as their floor in low cost markets. Low cost markets are those where 115% of the median property sales price is lower than 65% of the conforming limit. For high cost markets, the limit may reach 150% of the limit for national conforming loans. High end communities are those where 115 percent of the median real estate value exceeds 150% of the limit for national conforming loans.

Updated Limits For FHA Loans In Southern California

The loan range is between $271,050 and $625,500. Thus, in no case will it go less than $271,500 or exceed $625,500. Both the low and high limits are the same as the previous year, but many cities fall in between and will thus notice an adjustment for 2016. Additionally, there are specific limits for specific property types. In improvingmarkets, the FHA loan limits changed significantly for 2016. This will enable buyers to better compete for homes for sale and up their purchase price.

Los Angeles, Single Family 636,150
Los Angeles, 2-family 814,500
Los Angeles, 3-family 984,525
Los Angeles, 4-family 1,223,475

You can find specific limits at https://entp.hud.gov/idapp/html/hicostlook.cfm.

Why Is It Important to Understand Updated Limits For FHA Loans In Southern California

It is necessary to know your max purchase price during your property search. Purchasing a home beyond the max may require you to put more money at closing or require you to research another loan alternative. For example, if the loan limit in your market is $ 425,000.00 and you have 3.5% down, then your price limit is $ 440,414.51 . Purchasing a property for $ 449,222.80 will mean another $5,648 at closing to cover the difference. If you do not have it, this can be a big problem. Don’t forget that the max purchase price might not be exactly the same for every community that you are considering. It is helpful to know what they are while you are looking for a property.

Popularity of the Venice California Real Estate Market

Venice is one of the hottest real estate markets in Southern California. In fact, over the last few years, the popularity of the Venice California real estate market has grown dramatically, making it one of the highest priced communities in the state. Here’s a look at the many reasons why Venice has become so popular and what investors should consider when buying or selling.

The Community of Venice California

Venice is a neighborhood within Los Angeles and is well known for its beach and boardwalk. It has morphed from being strictly a tourist attraction to a popular hipster community complete with boutique shops, fine dining, and various forms of arts and entertainment. There is so much to do in Venice that it’s attraction is no surprise.

A Look at the Venice California Real Estate Market

With so few housing options and almost no new construction alternatives, even the smallest housing units in the Venice California real estate market are demanding top dollar. According to Realtor.com, the median list price of homes for sale is $2.4 Million. Here’s a graph from Realtor.com showing the pricing trends over the last few years.


According to Trulia.com, the average price of 1 bedroom units is just under $1.5 million. 4 bedroom units average over $2.1 million. Rental rates are not any more affordable at roughly $6,900 per month.

Is Venice California a Good Investment Market

Hot markets like Venice California aren’t necessarily easy to buy into, especially with high demand and low inventory. For investors, such markets are ideal for flip and fix properties. Since the Venice California real estate market consists of mostly aged homes (rather than new construction), opportunities do exist. Properties needing extensive repair tend to deter typical home buyers. However, keep in mind that the purchase price will still be higher than in other communities where you may fix-and-flip. However, the key is the after-renovation value. If you work the numbers properly, you can still earn a significant return on investment from homes in Venice.

Investors looking to purchase and retain properties as rentals can expect consistent demand for rental units. However, given the high cost of homes in the area, cash flow analysis should be carefully reviewed. Additionally, it may still be a good idea to target homes in need of repair as they offer the most potential for equity returns.

Some investors avoid high end markets, however, all markets provide great opportunities if you know what to look for and make smart decisions. If you’re new to real estate investing in Southern California, consider partnering with Homes, Inc. We have local knowledge and extensive experience to maximize your return on investment.