If you are looking for a home in Los Angeles, you might feel like you’re facing an overwhelming task. Take the home buying process step-by-step to ensure you get your dream home without all the headaches.
Check out these six tips for buying a home in Los Angeles.
Homes in L.A. are expensive. The median price for a home was $650,000 in November. These high prices are partly due to L.A. simply being an attractive location for many wealthy buyers. But it can also be blamed on the lack of new construction in the area. This is forcing more competition for fewer homes.
If you’re thinking of buying a home, first figure out which type of home you are hoping for. In Los Angeles, your options include:
What type of home you choose will drastically impact how much money you need to have on hand. For example, if you go for a traditional single-family home with a median price of $650,000, you will need $130,000 for the down payment and upfront costs.
Conversely, if you get a vacant lot, the possibilities are nearly endless. You could build just about anything there, customizing your home as long as you have the cash for it. But that would be a significant monetary investment.
Despite the cost, people are still building new homes. In the next 50 years, it’s estimated that at least 17 million acres of forest will be lost forever due to development and urbanization.
When buying a house, your costs come from a lot more than just the price of the house itself. You will also need to deal with banks, real estate agents, inspections, and more. Factor these extras into your costs so you don’t get surprised by the final price tag.
One thing you will probably need no matter what type of home you get is a loan. Private lenders and hard money lenders will shape their real estate loans based on the value of the property you buy. So if you are buying a pre-built house that might need some fixing up, you will get a very different loan than if you were building a brand new house.
This process is going to take time. Lots of time. Be patient during your home buying process. Trying to rush things will only lead to frustration.
You may need to look at lots of houses and housing options before you settle on what’s right for you (and your budget). But even if you strike gold on your first time out and find your dream home, there will still be some waiting involved in the process.
For example, the average loan process takes 60 days from when you fill out your application to when you close the loan with the bank. And that’s not the only thing you may need to wait for. There are also inspections and approvals and all sorts of negotiations that need to happen during the home buying process.
Keep your options open. If you find that trying to buy a home just isn’t working out, stay open to renting.
You can also rent temporarily while waiting to see if the market shifts or if something opens up. If your rent is $2,000 per month in Los Angeles, it will take about six years for you to break even on renting in comparison to buying. This gives you plenty of time to decide.
No one knows your financial situation better than you. Be honest about how much money you can spend and what you want to find in a home.
And don’t forget about all the financial obligations you have in life. When you buy a home, things like taxes and bills won’t disappear. If anything, they will get worse. Income taxes alone are half of federal revenue at $1.688 trillion, while just one-third, or $1.238 trillion, is from payroll taxes. That’s not chump change. Don’t forget about things like your income taxes when you’re thinking about also having to start paying property taxes.
The time of year can have a surprisingly big impact on your ability to buy a home in Los Angeles. In general, autumn and winter are the best times of year to get a home in L.A. If you can buy during those times, you will find that you have less competition from other buyers in the market.
Conversely, if you have to look during summer and spring you will find a lot of other buyers who you have to compete with. This can make it extra challenging to get the home you want.
Although many people see it as a distant fantasy, owning a home is a possibility for many L.A. residents. If you’re tired of renting in the city of angels, try following these tips. Homeownership rarely happens immediately, but you can get there with time, patience, and good planning.
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