Choosing whether to rent or buy in Los Angeles is a big decision whether you’re starting to build wealth or building up your family. Finding the right place requires you to think about a lot of factors, from your finances to where the best schools are to what the area offers you in your leisure time.
Navigating real estate in the City of Angels is no small task, which is why you should hire an experienced local agent to negotiate for you. Here are a few things to think about in advance.
To Rent or Buy in LA
When choosing to rent or buy in Los Angeles, it’s challenging to determine which is going to be better for your budget. One of the main reasons that buyers choose to own rather than to rent is because they get to build equity.
In building equity with your mortgage payments, you start building an asset that you can own forever, which will generally increase in value over time. Paying your rent every month does nothing but help to increase the value of what your landlord owns.
Buyers also get the chance to have other lending opportunities that renters don’t have. When you own your own home, you can start a small business by taking out a loan based on the amount of your home that you’ve paid for so far. You’re also able to pay for repairs to your home by refinancing or getting a home equity loan and getting some additional cash to help keep your home in great shape.
One of the best reasons to own is that home values tend to trend upward, even with some hiccups along the way. As property taxes and home prices go up, so does rent. However, only one of the two can build your wealth.
The main thing to remember is that when you own your own home, every issue is your issue. You can’t pawn off repairs onto a super or a landlord when you’re the one who plays both roles. Also, if you’re thinking of moving in the next couple of years, you might not be ready to put down roots as a homeowner quite yet.
Average Price to Rent Vs Buy in Los Angeles
The cost of renting in Los Angeles is higher than in other parts of the country. While it’s not quite as expensive as Manhattan or San Francisco, it turns out that only about 15% of rents are under $1,500 per month. Most rent prices are going to cost you more than $2,000 a month.
If you rent in East Hollywood, you’ll be paying a lower rent than in some other areas at just over $1,900 per month. If you try to rent a place in Century City, expect to pay much more, as the average rent in that neighborhood is more than $3,500 per month. This makes it very important that you have someone to help you choose a neighborhood, whether you’re buying or renting.
Across the city, you’ll find the average home valued at just over $685,000. While this is higher than the median across the U.S., you also get access to some of the greatest amenities in the country. The city has a robust public school system, beautiful public parks, and lots of fantastic events all throughout the year.
The average home price in a neighborhood like Century City is almost twice what it is in the rest of the city, at more than $1.1 million dollars. With the help of an experienced local real estate agent, you can ensure that you get something that’s within your budget in an area that’s perfectly suited to your lifestyle.
Los Angeles’s Housing Market Outlook
While you might not think of Los Angeles as a buyer’s market at the costs listed above, but the housing stock has increased in recent years. When stock increases, prices usually drop. If they outpace demand, that turns the city into a buyer’s market.
When there are a lot of options, that gives you the chance to make an offer lower than the listed price. If you’re working with a talented local agent, you’ll be able to put together a bid that’s competitive while also saving you money.
With experts claiming there could be a housing recession in 2020, it’s important to time your purchase right. Recessions are challenging to predict but market experts know when they’re looking at one on the horizon. When sellers list homes faster than buyers want to pick them up, that’s the beginning of a drop in prices at the very least.
The Real Cost of Owning a Home in Los Angeles
When you’re hunting for a home in Los Angeles, you might think that a moderate income isn’t enough. However, California and the county of Los Angeles want you to know that they want to help you finance your first home.
The Los Angeles County First Home Mortgage program allows first-time homeowners to get financial assistance to help with down payments. In order to get a fair interest rate on your mortgage, you have to pay around 20% of the price of your home upfront. Since this can be a considerable amount of money for the average Angeleno, this program can be vital to getting some people into their first home.
If you earn less than $116,000 and are seeking a home that’s under $625,000, you’ll qualify for this program.
There’s also a Los Angeles County Homeownership Program that can help with down payment or closing costs for people who make less than $62,000 a year. Loans can go as high as $75,000 and come at 0% interest.
Since you need a six-figure salary to afford a typical home, the city of Los Angeles has its own programs for first-time home buyers. Their homebuyer assistance program allows people making less than $62,000 to afford a home. Their moderate-income buyer program helps individuals and couples earning less than $116,000 get their first home.
After you find financing for your home, you also need to think about utilities and upkeep. You need to pay for water and for trash pickup in Los Angeles. If you’re moving from a place where you didn’t think about this, it might be an unwelcome bite out of your monthly budget.
Don’t Search By Yourself
Taking on the real estate market in Los Angeles all by yourself is hard. Meeting your financial goals and having the right kind of space in the right neighborhood is a delicate balance.
With the help of an experienced local agent, you’ll have someone looking out for your interests in every way. Since you won’t have to cover the commission for your own agent, as it comes out of the sale price, there’s no good reason not to find someone who knows the region well. Contact us today to connect with one of our Clever Partner Agents who can help you find the best deal possible.