We are extremely pleased with the recent sale of our house. Klein Real Estate handled every aspect of the transaction from guidance on property preparation to extensive marketing and advertising to quickly locating a highly qualified buyer and guiding the escrow process to a successful conclusion. They exceeded ALL of our expectations. We would highly recommend Larry, Esther and Laura to anyone considering selling their home.

LA’S WESTSIDE REAL ESTATE EXPERT LARRY KLEIN SAYS OWNERSHIP IS IMPORTANT KLEIN SAYS MORE NEEDS TO BE DONE TO FIGHT FOR MORTGAGE INTEREST DEDUCTIONS & TO STOP THE INCREASE OF TRANSFER FEES TO SALES

West LA Real Estate veteran Larry Klein says in order to bring back the housing market in Los Angeles realtors representing buyers and sellers should speak out about the recent articles suggesting that long term leasing of a residence is a viable and preferred alternative to owning.  “Leasing may be good for those individuals, whose lives are currently in flux – out of work, relocating, restructuring personal relationships or, lacking financial capability and/or having poor credit.  However, reduced home ownership adversely affects society at the community level as well as the individual.”

Klein says while owning apartments he enjoys the fruits of leasing the cost to tenants is more formidable than they may realize.  “Tenants are sharing the costs while building no equity in the property,” says Klein.  “Reduced ownership results in a lowering of concern for the community because many tenants feel that rather than address local concerns, if they aren’t comfortable they can always relocate on short notice.  Ownership of one’s home fulfills the basic need for family shelter and results in pride of ownership and self worth.  When approached properly (as a long term commitment and investment in the future as opposed to a get rich quick proposition) home ownership, if not abused, provides a hedge against inflation and a nest egg for retirement.”

The Westside realtor says Federal Reserve Chairman Bernanke’s comments last week emphasize the problems of inflation.  “It has been my recent experience that there is currently plenty of purchase money loans available to buyers and I don’t believe it is necessary to pump more money into the system or to create new tax incentives to purchase.”  Klein thinks a fight is needed to bring back the market. “It is mandatory that we do all we can to stop the assault on home ownership. “We must stop a further reduction of the mortgage interest deduction and the increasing of transfer fees upon sale. The government should be making potential buyers aware of the benefits of long term ownership and educating them on the types of reasonable purchase loans available.”  See www.kleinlistings.com and our weekly blog for up-to-date real estate market news.

Klein Real Estate founder Larry Klein talks with veteran reporter Bob Jimenez, host of L.A. Business Today, to discuss the state of the local real estate market, why Westside housing prices are more resilient than other parts of Southern California, the reasons why it’s sometimes better to lease than to buy, and the mental checklist every potential home buyer should consider before making the plunge into home ownership.

Although the segment is currently airing regularly on the City of Los Angeles’ Channel 35, it’s also available on demand on the show’s Web site (please note that viewing it requires Windows MediaPlayer).

You can view the entire show by clicking on the video link to the right or the L.A. Business Today logo below. If you want to just watch Larry’s segment, it begins at about minute 13:40.

IN LA SHOULD YOU RENT OR BUY NOW?  LARRY KLEIN PRESIDENT OF KLEIN REAL ESTATE LISTINGS GIVES SOME SOUND ADVICE

This is an ongoing question with potential new homeowners and existing owners considering selling and relocating.  There are no hard and fixed rules to determine which would be better but there are guidelines to help make the decision.  However, it must be remembered that the final decision should be based upon the future plans and needs of the individual.

The decision parameters to be considered include: desired location and type of residency; anticipated length of residency; loan availability, rates and terms; financial income security; availability of purchase money funds and; income tax savings.

Currently the price of homes combined with loan interest rates are the most favorable for buyers that they have been in the last 15 – 18 years.  However, if a potential buyer is new to the region and unfamiliar with the surroundings renting for six months to a year is a good option.  This will allow time to learn about neighborhoods, schools, traffic patterns, transportation options and access to shopping, recreation facilities and places of worship. Potential buyers, during this rental period, should also consider what type of housing ownership would be best for their lifestyle – a private single family house with a yard and garage, a more secure condominium community with amenities (pool, spa, tennis court, gated community, etc.), or a multi-unit property (usually 2-4 units) that provides some income to offset the cost of ownership.

It is important to realize that in the current economic climate prices, although significantly lower than in the past 3-5 years, will still fluctuate.  Buyers should not consider purchasing if it is the intent to own the property for only 2-3 years; unless they are willing to risk some loss of net value upon sale.  Remember, even though the property may not decrease in value it still has to increase approximately 7% to cover the costs of sale if the buyers are to break even.  It is strongly recommended that potential buyers have a long-term occupancy plan; at least 4 years or more intended occupancy.  Of course, fate sometimes gets in the way of the best of plans but as long as the buyers plan ahead they have a much higher probability of enjoying and profiting from their residential purchase.

Unless potential buyers are fortunate enough to be able to purchase property for all cash one of the most important considerations is the ability for them to be able to not only qualify for a purchase loan but to also continue to make payments on the loan, real estate taxes, property insurance, utilities and property maintenance.

Stated another way, it is necessary for the potential buyers to have reasonable job security and to be confident in their ability to maintain their income or have sufficient financial reserves to weather a financial downturn for at least 6 months.  One of the ways to help insure this is to not necessarily purchase at the maximum affordable price.  It’s usually better to be able to enjoy other things in life and not be “house poor”.  A diet of spaghetti and popcorn can get pretty boring rather quickly.

In some cases buyers have more that adequate income to support a purchase loan but lack funds for an adequate down payment.  Twenty percent (20%) or more of the purchase price is the industry acceptable standard for a favorably priced loan.  There are programs for buyers with as low as 3% down payment but they come with baggage (extra costs) that significantly increase the initial cash purchase needs the monthly payment outlay.  The increased costs include mortgage insurance and higher loan fees and rates.  The increased initial cash requirements include impounded amounts for real estate taxes and annual homeowners insurance.  The increase to the monthly payment results from impounds paid monthly for real estate taxes and insurance.  It is recommended that buyers have 20% or more of the purchase price as a down payment; sometimes this means waiting and saving (while renting) or getting gifts from relatives and/or using funds available from retirement programs.

Significant to the rent or buy decision is the fact that the government wants people to own their homes; it’s good for community and neighborhood stability and individual self-worth.  The current income tax deduction for mortgage interest and real estate taxes is a major component in calculating the impact for buying.  In many cases, due to these deductions the net annual cost of home ownership will be lower than the cost of renting.  It is important that potential buyers review the tax implications with their CPA or tax consultant to ascertain the true financial impact.

In summary, it should be understood that in most cases of reasonably short occupancy and limited availability of financing renting is a viable and desirable alternative to buying; but, for the long term, if the potential buyer is financially sound, home ownership is most likely the best course of action.  To compile desired information in support of making the decision (market prices, loan rates, proximity to schools and services, etc.) contact a local Realtor. We at Klein Real Estate are ready, willing and able to provide the information necessary for you to decide to rent or buy.

See www.kleinlistings.com for our weekly blog with up-to-date real estate market news.

Beacon Economics and one of West LA’s most formidable business voices, the Graziadio School of Business and Management at Pepperdine University, gave Klein Real Estate and others an economic forecast for the second quarter of 2011.  Although the forecast was cautiously upbeat, it still recognized that the recovery is fragile and subject to future unanticipated events.  The economists at Beacon are particularly concerned about housing impeding a rebound in jobs, as companies looking for skilled workers have a hard time bringing them to this region because of the high cost of our real estate.

As Realtors with an expertise on LA’s Westside, the concerns of business in relation to bringing jobs to the region are paramount to our work to help sellers, buyers, and investors looking for property management to be successful in this precarious housing market.  West LA is one of the most desirable regions for real estate in the world. We agree with the fact that there is a disparity between housing prices in the major metro areas such as Los Angeles, San Francisco, Palo Alto, San Jose and San Diego when compared to metro areas in the heart of the U. S.

However, Boston, New York, Chicago, Miami and other large industry-based areas all have this problem.  As a result, suburbs develop as bedroom communities to provide reasonably priced housing. This is true and evident in Los Angeles, where housing prices in San Fernando Valley, Palmdale and the Inland Empire all provide reasonably priced housing. The problem, of course, is the commute (both in terms of time and cost).  Typically, the commute is managed by either off-hour travel, periods of work from home (telecommuting), use of public transportation, and less expensive travel (i.e. smaller cars, car pooling, etc.).  An alternative to the commute has been downsizing to less expensive housing closer to the work source.

The lure for employees to accept these additional costs and inconveniences is both related to the temperate climate and higher incomes available in this area.  There are many programs available to employees to offset the additional costs, such as car and van pooling, modified work schedules (four day/ten hour versus five day/eight hour work days, early start/finish times, late start/finish times), special real estate loans to qualified employees, and other financial incentives.  These programs, along with higher than average salaries, have been successful in the past.

The general argument against the payment of higher salaries and financial incentives is that the end work product is more expensive than if produced in other locales.  However, companies eventually realize this, and in their efforts to compete, relocate to local areas of high availability of qualified employees at lower cost to the companies. This growth/expansion cycle has been generally acceptable and ongoing in the Los Angeles/Southern California area since pre-World War II, and Klein Real Estate expects they will continue; provided, of course, that there are jobs available.  The City of Los Angeles has also responded by providing incentive packages to lure businesses that pay good salaries to our city.

We look forward to seeing how this new work to secure companies with good job growth potential will affect our real estate sales on the Westside.  For more information on our areas of expertise, please visit www.kleinlistings.com.