Getting Onto the Property Ladder in Venice: High-Cost Market Tests Affordability, But Owning By the Beach is Better than Owning the S & P 500 by a Country Mile
Most long-term residents of Los Angeles aspire to climb onto the property ladder at some point. And when they do, the usual tough decisions prevail: “I don’t want to leave the area I’ve come to love, but I can’t afford it”, “I don’t want to have to downgrade in terms of space and I get so much more room by renting”, “If I’m going to buy, I want some outdoor space”, “Will I build some equity in this place over the next few years”… The list goes on and invariably sacrifices will have to be made.
However, with interest rates at 39-year lows (around 4.5%), and with so much distress in the housing market, there are excellent buying opportunities out there. If you are in a stable job, can put down a modest deposit (as low as 3.5% for an FHA loan), are prepared to pay a premium in rent and want to make that all-important step onto the first rung of the ladder, then read on.
First, consider the chart above. In 2000 the median sale price for a home in Venice was $409,000. Even after the real estate gyrations of the past few years, the median price of a single family home year-to-date in Venice is $975,000. That's an increase of 138% over the decade. Long-term renters in Venice may have had affordable rent for the 2000s (and renting does have its advantages), but they missed out on owning their roof over their head, and benefiting from among the most superior investment returns around. Consider that the S & P 500 has delivered a loss of 15% over the past decade (1365 on 10/29/2000 and 1165 on today.)
First up is 126 Vista Place, a picture-perfect Venice Beach bungalow nestled away on a quiet walk street between Main and Pacific. In this blogger’s opinion, these walk streets trump those that head down to the beach by a country mile by virtue of the fact that you don’t get the tourist traffic and there are fewer drivers using Speedway as a rat run. This property is on the market as a trust/conservatorship.
The price has been reduced to a very reasonable $699k. Considering similar properties can often go for around $800-900k, this is quite a bargain. Granted, it could do with a little TLC, but it has a gorgeous little front yard, a good-sized porch, and plenty of parking out back. Having numerous friends who live in the neighborhood and love the walk streets, I know this would be considered a very appealing first-time buy. For not too much more than your rental costs, you could segue into owning a similar-sized home within the same neighborhood and start building equity. There isn’t much room to expand this home, but if you’re sold on Venice, want to maintain the style in which you’ve become accustomed, then I think this one is for you!
If you’re already in expansion mode, check out 1157 Lake Street, a substantial 4 bedroom, 3 bathroom property one block south of Rose and between Walgrove and Lincoln. At $989,000 it’s competitively priced (with 2,000 square feet across a lot size of over 5,000 square foot, it works out at around $500 per square foot of living space) and it has a spacious, light and well-proportioned feel to it. It’s a “flip” with beautiful hardwood floors throughout, a new roof, freshly painted interior and exterior, a garage converted into a spacious den, and new asphalt on the driveway. It’s also a two-story home, which is fairly unusual within this price range. Whilst a million bucks is still a lot for a first-time buyer, you’d be spending around $5k a month to rent a similar single family home.
Unfortunately, whilst this property is close to the outdoor space of Penmar Park and public golf course, it is also under the flight path of Santa Monica airport. Whilst no commercial jets fly out of SM Airport, the noise of those small private charters can certainly distract your swing! However, if you want a piece of real estate, if you can drag yourself east of Lincoln, and you don’t mind the noise of George Clooney’s private Lear jet flying over your house, then this one could be just the thing for you.
I've blogged about it before, it’s been on the market for a while. Again, it’s a good “starter pack” to get your foot on the ladder and with a great front porch and plenty of yard space, it’s a perfect way to play house. It's not got great light in front, and the rooms aren’t too well proportioned, but at $685k it’s a pretty good price. Compared to 1157 Lake Street, you get a lot less "bang for you buck", but if "location, location, location" is your priority and you’re paying around $2,500 per month in rent for a similar style of cottage, then this is definitely something worth checking out.
As I mentioned at the beginning, I’m making some pretty wide assumptions for ye reader: you’ll need to be able to put down a deposit, qualify for a loan, and have a stable income. Unfortunately, gone are the days of mortgage payments being similar to rent. However, if you can stomach an increase in monthly outgoings and you’re ready to pounce, then there’s rarely been a better time to get on the housing ladder.