Should You Invest in Buying an Old or New House in LA?
Should You Invest in Buying an Old or New House in LA?
If you’re just dipping your toes into the real estate market, it can be confusing as to whether buy an old or new house. Here are our recommendations.
In 2016, real estate sales for existing homes were at their peak levels in 10 years. This has led many investors and prospective home buyers to want to get in on the action of a highly lucrative market.
However, the existing home sales trend has also led to speculation on what is the best overall return on a real estate purchase. For prospective buyers in Los Angeles, it’s important to understand there is a major difference in buying an old or a new house.
Before you start looking at prospective purchases it’s wise to narrow your search. Choose the type of investment that appeals to your overall financial strategy. Take these items into account and you’ll make the right choice.
Development Costs and a New House
Development in Los Angeles is a difficult task in many cases. Developers use tools like virtual staging and walkthroughs to secure down payments on properties. This allows them to begin the tasks of marketing as soon as possible.
Anyone who has ever been involved in a home construction project knows that prices often go over budget and timelines slip as construction takes longer than planned.
When you add up the costs for marketing, land, construction, and finishing the project there are a number of pricing considerations that can affect the cost of new homes.
With low inventory in Los Angeles, there is a benefit to a new home being exactly what you were hoping for. But beware of higher prices for lower value as new homes include the development costs as well.
The Allure of New Homes
Many homebuyers are attracted to new homes because they believe new construction means fewer risks with repairs. Unfortunately, this isn’t always the case.
While an existing home could have repair needs up front, you have the benefit of knowing the structure and foundation have been sound for the life of the home.
This isn’t always the case with new homes. Plus, when it comes to fixtures and amenities there is a chance that developers have put in cheap products to finish the property.
You may not need to repair things right away but these fixtures could be more prone to failure and repairs in the short term.
Los Angeles Development Difficulties
Anyone who lives and works in Los Angeles knows that our corner of the universe is unique in a variety of ways. But when thinking about an old versus a new house in Los Angeles the issues with development should be forefront in the mind of a buyer.
While developers try and make new home purchases as appealing as possible the truth is that development is difficult in Los Angeles.
These difficulties are often passed on to buyers in terms of costs and headaches. In Los Angeles especially there is difficulty in finding new home development projects that will work for the best overall value.
New House Inventory
The development issues in Los Angeles may equal higher prices when it comes to purchasing a new home. The other issue with development in Los Angeles is that the inventory of new homes is low in comparison to other parts of the country.
Development has slowed in Los Angeles even while home prices soar. The 3,850 homes permitted in the first quarter of 2017 put LA on pace for fewer new homes developed this year than last.
Since new house inventory leaves something to be desired it is often a better bet in Los Angeles to purchase an existing home.
Understand the Neighborhood
Like every other facet of real estate, it is impossible to make blanket assumptions about one category of investment over the other. Great values exist in every sector of real estate for the strategic buyer.
Many home buyers have opted for commercial investments to fund their own living accommodations. And while existing homes provide a greater inventory in Los Angeles there are neighborhoods that change the return on your investment.
A good example of a high potential investment opportunity is in Venice. With the proximity to the promenade and Venice Beach, Venice may be an ideal development opportunity for the right buyer.
Whether you opt for new or existing homes in Los Angeles, the neighborhood should be of major consideration. You may find the opportunity when near coveted neighborhoods or landmarks can help you make a better decision.
New houses are built with consumers in mind. The marketing, development, design, and selling strategy is created before work starts in most cases.
Tailored to the fluctuations in the market, new house developments have a list of interested buyers because they are built to generate interest and attention.
In many cases in Los Angeles if you are interested in a new home development there is a line of people waiting behind you. This makes negotiation impossible.
On the other hand, existing homes are generally placed on the market by motivated sellers. Rather than seeing those necessary repairs as a negative, these imperfections can allow for a successful negotiation.
If making the most of your investment is a goal then having some ability to negotiate is a must. Existing homes allow that ability to work with a buyer to find the best outcome for both parties.
Find The Right Property For You
Many buyers are so intimidated by the Los Angeles real estate market it has become impossible for them to purchase the property they want without expert insight and professional advice. In one recent case, a new subdivision of 10 homes had a list of 400 interested buyers prior to hitting the market.
With that level of competition and rising prices, it’s more important than ever to have help you can trust.
Our customers love Lyon Stahl because we help them find the perfect properties for their immediate needs, as well as for their long-term financial goals.
Just as every home is unique, every family and home buyer have unique financial goals for the near- and long-term. Let Lyon Stahl help you find the best investment and the right home to achieve your financial goals.
Get the help you need starting today. Contact Lyon Stahl now to find the right property for you.