REAL ESTATE NEWS
Make money or lose money? When we’re talking about investments, it usually boils down to winning or losing. The title of this post is comprised of the actual words typed into Google search by an L.A. Loft Blog reader: should i buy condo downtown los angeles investment #dtla #condo #investment
This question has often been asked verbally as well to Downtown L.A. real estate agents. This post will attempt to answer this complicated, personally variable question because it is a key point about Downtown LA lofts and condos.
Let’s start with the latest headlines, the economic analysis of Downtown condo investments, along with the future growth potential for the area.
We’ve seen the most DTLA investment mistakes made during the tops and bottoms of markets. A mistake is often made by buying too high, and also by selling too low. When an investor does both, they lose money.
Real estate is a long-term play, so it’s difficult to learn quickly when the action now happens slowly. The average homeowner now moves only once every seven years on average. The average investment play is just a bit faster, with just as much variation as many investors flip within 6 weeks, while other investors hold for eternity as their dynasty.
One important investment lesson, which I have learned first-hand, applies to every kind of investment. If the investor might need the money to pay bills or anything else, the investor often needs to sell high, pay bills and then buy the next investment low. Buying low and selling high is a key theme in investing, perhaps the highest of all investment advice. It correlates to another primary theme: “Don’t lose money.”
For renters, the questions, “Should I buy a Downtown condo?” is a bit more cut and dry. If the alternative is paying high rent, and the investor plans to stay for many years, then the answer is almost always “Yes.” For an investor seeking profit, the investor much first look at their own needs as well. Those who invest in Downtown Los Angeles tend to also enjoy living in or frequently visiting Downtown LA.
Downtown Los Angeles residential real estate has recently shot up around 6% to 12% per year. This rapid growth is over for now. Experts are forecasting growth closer to 3% for the area. Some of the most economically astute real estate professionals are forecasting negative growth and decreasing home prices over the next few years.
The L.A. Loft blog correctly predicted rapid growth way back in 2011. The L.A. Loft Blog today predicts slow growth for many investors, and losses for some between 2019 and 2022. We also expect more periods of stagnation nationwide based on results in Japan and other areas after macroeconomic policies of Quantitative Easing. Due to its big infrastructure investments, growth trends including continued urbanization and diverse economy, Downtown Los Angeles shall enjoy more frequent real estate rapid-growth periods than the rest of the United States. This growth will be somewhat limited by political forces that have a negative impact on business, such as relatively high taxes and increasing homeless / addiction effects.
The key reasons why DTLA is an increasingly valuable place to visit and live are the same reasons why the area is a superior investment. The city center has offered superior growth in the form of overall neighborhood improvements from massively improved transportation infrastructure, macro trends towards urbanization, along with growth-friendly new laws like the Adaptive Re-Use Ordinance and Mills Act. Numerous other improvements have created a super long-term growth opportunity for Downtown Los Angeles as the number of new residents has shot up tremendously. We must warn that the growth of new residents has diminished recently. December 2018 and January 2019 brought the lowest number of Downtown real estate transactions since 2008. DTLA real estate is now a long-term investment play.
Take a look at the L.A. Loft Blog’s recent posts about urban investments and economic news. Because the U.S. is near a long-term economic cycle high, there will likely be bumps in the road over the next few years. Over the long term, Downtown condos shall remain a superior investment for many years or decades to come.
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Copyright © This free information provided courtesy L.A. Loft Blog and LAcondoInfo.com with information provided by Corey Chambers, Realty Source Inc, BRE#01889449 We are not associated with the homeowner’s association or developer. For more information, contact (213) 880-9910 or visit LAcondoInfo.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.