BREAKING NEWS
NATION

Home prices soar near USC as flippers and developers rush to 'one of the best neighborhoods left'

In October, a Newport Beach investor purchased a run-down 109-year-old Craftsman home on 30th Street in the South Los Angeles neighborhood of Jefferson Park.

Five months later, the garbage was cleared out, hardwood floors restored and renovations done — with Trimar Properties selling the house for $686,000, roughly double its purchase price for a property it once viewed as a “disaster.”

The same thing happened on 6th Avenue, 28th Street and 31st Street, where in mid-August an investor sold a home for nearly $800,000 after purchasing it for $305,000 in December.

“We definitely like that neighborhood,” said Trimar principal Matt Naehring. “It’s definitely up and coming.”

More precisely, Jefferson Park and adjacent West Adams, largely working-class neighborhoods west of USC, have become some of the hottest real estate markets in the city.

Flippers are active, bidding wars are common and sales prices have topped last decade’s bubble — a threshold surpassed by only certain neighborhoods, including the Westside and gentrifying neighborhoods in Northeast Los Angeles.

With land prices sky high elsewhere and higher-income individuals moving in, commercial real estate investment is also rising, including projects from some of Los Angeles’ leading developers. The real estate blog Curbed LA even named West Adams as its Neighborhood of the Year for 2015.

“It’s one of the best neighborhoods left,” said developer David Pourbaba, who is planning a mixed-used complex on Adams Boulevard, where he can purchase land for around $80 a square foot, compared with $500 a square foot downtown.

The boom is bringing excitement among some who have long clamored for more investment in South Los Angeles. But it’s also displacing tenants and, with many of the new residents white and wealthier, sparking tension in an area with a problematic history with race.

It’s a dynamic seen across Los Angeles in recent decades as home prices have soared amid job growth and a lack of new housing, especially in wealthy neighborhoods where development faces significant resistance. Priced out of more expensive areas, especially the Westside where a tech boom is underway, young professionals are scooping up fixer-uppers and newly remodeled homes in neighborhoods they can afford.

In particular, Jefferson Park and West Adams — largely bounded by the 10 Freeway to the north, Exposition Boulevard to the south, La Cienega to the west and Western Avenue to the east — have been attractive given their location halfway between downtown and the Westside.

The two booming areas are now linked by the Expo Line light rail. And come 2019, the Crenshaw Line is slated to connect the Expo Line to a station near Los Angeles International Airport.

"Metro has been a big driver," said Teles Properties agent Robert Rodriguez. “You can walk to the Expo line and go all the way to Santa Monica.”

That’s what drew Tara Amerian-Donnelly and her wife, Stephanie, to a home near the Exposition-Crenshaw stop.

When the West Hollywood residents quickly ruled out that expensive city as a place to buy their first home, they decided they wanted to be near the Expo Line to have an easy commute — for Tara to her downtown architecture job and for Stephanie, who teaches at Santa Monica College.

So they looked at Culver City but were priced out.

“We were slowly working our way east and then we got to this house and this was charming,” Amerian-Donnelly said of their two-bedroom, 1920s home they purchased for $607,500 in February. “It’s so easy to get anywhere.”

Such added that demand is sending prices sharply higher.

The median price in Jefferson Park and West Adams hit $550,000 in the second quarter, 17.6% higher than a year earlier and nearly 1% more than the peak reached last decade, according to data firm CoreLogic.

In the past, many preservationists bought and rehabbed the majestic mansions north of Adams Boulevard, but now flippers are focusing on less-expensive bungalows to the south.

“The flipper penetration,” local real estate agent Adam Janeiro said, “we have never seen it to this extent.”

The areas have among the highest rate of flips in the county. In Jefferson Park and West Adams, 15% of homes sold in the last year sold twice in 12 months.

Sotheby’s agent Andrea Dunlop said remodeled homes south of Adams can sell north of $700,000. She said at least 60 people showed up on a recent Saturday to view an $849,000 listing for a remodeled mid-century modern that her client purchased for $360,000 last fall.

She got multiple offers over asking.

Renovators like Dunlop’s client are picking up old homes after longtime owners pass away or want out.

Sandra Semien, for example, grew up in a Victorian cottage on 36th Place in nearby Exposition Park, where her daughter lived until recently.

Unable to afford repairs, Semien said she decided to sell “the money pit” in November and had no trouble doing so.

“We had 25 offers,” she said.

In December, an investor purchased the home for $405,000, flipping it for $690,000 six months later. 

While commercial investment has been less robust, more is coming.

Last year, near the corner of Adams and La Brea Avenue, Mike Ross of hip-hop label Delicious Vinyl and designer Fred Sutherland launched Delicious Pizza, where they host live music and album listening parties. Around the same time, an art gallery, Gallery 38, popped up across the street.

Then earlier this year, Danny Henry, a 44-year-old who grew up nearby, opened his Academy of Strength and Sport gym a few doors down from Delicious, driven he said by a desire to do “good for the community,” not to cash in on the new wealth.

Los Angeles developer CIM Group has also quietly purchased several properties along Adams, including the building next to Henry’s gym, public records show.

And developer Carmel Partners, the firm behind downtown’s ultra-luxurious Eighth & Grand complex, is planning a massive development with a 30-story tower off the corner of La Cienega and Jefferson.

The project, which has drawn a lawsuit from some community members, would include 1,218 homes and up to 300,000 square feet of office, retail and restaurant space on a former radio broadcast facility. Fifty-five of the apartments would be set aside for people earning 80% to 120% of the average median income.

The upswing is spurring interest — and concern in an area where the median household income is around $30,000, well under the county median.

Ariyana and Stephan Hernandez, who are renting, said they want to invest in what they consider an up-and-coming neighborhood.

The fashion industry workers this month toured a three-unit property on Norton Avenue advertised for $795,000 and pitched as close to the “new Expo and soon-to-be-completed Crenshaw lines.” The young couple, in their mid-20s, thought they could live in one of the units and rent out the other two.

In the backyard, music played as family and friends celebrated the 15th birthday of the daughter of Misael Aquino, who rents one of the units.

If their complex sells, the 41-year-old construction worker hoped to stay, but couldn’t be sure.

“I don’t have any idea,” he said. 

For some investors, the market has simply gotten too hot. The area still has some of the highest rates of flipping, but it’s down from a peak of around 25% in 2014.

“Flipping houses just got harder and harder," said Timothy Braseth of ArtCraft Homes, who recently stopped buying homes in the area. “People are way overpaying. Everyone is trying to flip houses in Jefferson Park.”

All the investment has weighed on some longtime residents.

Sandra Pruitt, who represents Jefferson Park on the neighborhood council, said some homeowners resent new residents who they feel are telling them how to live. That includes how to maintain their historic homes and complaints over fireworks around the Fourth of July.

“It can be difficult at times,” Pruitt said. “You don’t feel respected.”

Part of that stems from the area’s history.

Jefferson Park, West Adams and nearby Leimert Park were among Los Angeles' first suburbs, and racial covenants kept the areas largely white for decades until the U.S. Supreme Court ruled racial deed restrictions unenforceable in 1948.

As middle- and upper-class African Americans purchased homes, many white residents and businesses left and in 1952, a black homeowner was bombed. The largely African American and Latino area has struggled to attract investment for decades, particularly after the 1992 riots.

Now, long-term residents are concerned they and their families will lose their place in the neighborhood as it grows more expensive.

“It’s interesting, once the color of the people changes, they want to start investing,” Pruitt, who is African American, said of developers. “We want the same kind of stuff, we want a great grocery store and they ignored this area.”

Now “the people that have lived here the longest can’t afford to live here.”

Among those being pushed out is Zoe Guillory, whose vintage boutique on Adams is near Delicious Pizza and next to Henry’s gym.

In February, the small retail and residential building where she rents space was sold to a company registered to the address of CIM Group’s Wilshire Boulevard headquarters and whose officers are CIM’s founders. CIM declined comment. 

At the end of August, Guillory and other businesses in the building received a 30-day eviction notice, which a property manager offered to extend another month for Guillory after The Times inquired about her situation. Guillory said she overheard contractors say a restaurant will replace her boutique.

“They did not give me an option to stay at all,” she said. “Why don’t you give some of the small business owners [the chance] to be a part of your plan?”

Residents of the upstairs apartments said they also were told to find new homes.

“They told me I had to go,” said Curtis Jeter, a 63-year-old who previously looked forward to living in a “better neighborhood” when new businesses opened nearby.

He left his unit in August. He’s yet to find a permanent home.

Times staff writer Sandra Poindexter contributed to this report.

 

andrew.khouri@latimes.com

Follow me @khouriandrew on Twitter

ALSO

California's job engine revs, quieting unemployment concerns

As fire danger grows, some homeowners are seeing coverage dropped

House committee launches investigation into Wells Fargo sales tactics

Copyright © 2017, Los Angeles Times
EDITION: California | U.S. & World
85°