Looking for the Hot Spots

Real estate in Los Angeles is a dynamic game, swayed by easily quantified factors that include the prime lending rate, the number of houses for sale and the number of buyers looking in any particular season. Less easy to understand, however, is the changing nature of neighborhoods. What makes one neighborhood’s values skyrocket while another area languishes? What are the signs that a community is about to catapult from dump to destination?

As recently as the mid-’90s, now-popular areas of Los Angeles such as Venice, Carthay Circle and Silver Lake were considered “off the map” for home buyers contemplating a significant investment in residential real estate. They had reputations, deserved or not, for crime, graffiti and noise, and their low real estate prices reflected that reputation.

Properties in these neighborhoods today are from 60% to 75% higher than their prices five years ago. It’s not unheard of for houses to sell within 24 hours, after receiving multiple offers. If buyers had known then where those neighborhoods were headed, and how quickly they were going to get there, their attitudes (and their addresses) might have changed.

The factors that make a neighborhood appreciate are not entirely different from the factors that all buyers look for, according to Keven McConnell with DBL Beverly Hills.

“Buyers are always looking for convenient access to major thoroughfares, jobs and shopping,” he said.

But beyond these basics there are reasons both practical and intangible that attract buyers to certain communities.

“Buyers are returning to older neighborhoods instead of looking into areas farther away. They’re tired of traffic, tired of long commutes,” McConnell said. “But they’re also looking into neighborhoods where the homes have interesting architectural details, the kind you can’t find in newer houses. This trend is happening not just in Los Angeles but nationwide.”

Architectural qualities such as colorful bathroom and kitchen tiles, stained-glass windows, decorative light fixtures, even telephone nooks, are attractive amenities to buyers who may not have grown up with these once-common features.

Ironically, many houses have been “preserved by neglect” because owners lacked the necessary funds to update them over the decades, so they still have the features that now make them more valuable.

One such neighborhood is Wilshire Vista, a historically middle-class African American neighborhood north of Pico Boulevard near La Brea Avenue. The demographic mix of the area has become more varied in recent years as young families and single professionals have moved into the neighborhood.

In September, McConnell client Todd Neuman purchased a 1935 Spanish-style fixer-upper for $295,000 in Wilshire Vista. Neuman, though exhausted by the rigors of fixing up his 1,800-square-foot, three-bedroom house, is encouraged by the sale of a slightly smaller one (1,500 square feet) just three doors up from his. The selling price was $430,000, $135,000 more than Neuman paid just two months earlier.

Though the quality of local schools has typically been a critical factor for home buyers, not all experts agree that good schools are an important component of neighborhood transition.

According to Marshall Reddick, real estate educator and former professor of business and economics at Cal State Los Angeles, “A good school system is ideal, but many of the people moving into marginal neighborhoods are yuppies or singles without children. It’s a classic chicken-or-the-egg scenario. Do good schools turn an area around, or do the home buyers moving into an area push for better schools?”

Henni Bouwmeester, a Realtor with DBL Los Feliz, agreed: “The people moving into marginal neighborhoods are often singles, young professionals and gays. A good school system isn’t their highest priority. And families with children who are considering these areas are likely to send their kids to private schools.”

One of the most frequently cited qualities that areas in transition have in common is reduction in crime. According to Reddick, “If people are afraid of crime in their neighborhood, they’ll put up walls or gates or they’ll buy a home somewhere else. But through increased police enforcement or visibility, you’ll see an increase in prices.”

The presence of police substations, community policing on foot or bicycle and organized neighborhood crime watches all have a positive effect on an area’s property values by alleviating the perception that a neighborhood is a risky investment. Another factor influencing a change in an area’s home prices is a simple change in the name of a neighborhood. Bryan Ridgley, a Realtor with Re/Max in Studio City, says, “Thanks to a lot of community interest, the residents in Valley Village petitioned the city of Los Angeles for a name change, separating their area from North Hollywood. Valley Glen did the same thing, to distinguish itself from Van Nuys. Prices here range from $200,000 to $300,000. As a result of the name change, home appreciation in these areas has been about double that experienced in the surrounding area.”

Ridgley expects a San Fernando Valley neighborhood now known simply as Lower Van Nuys, where home prices hover in the low $200,000 range, to be next in line for a name change and a subsequent rise in prices.

Ridgley also advises home buyers to look for evidence of houses being renovated.

“Smaller homes with recent add-ons, like an upper story or an additional bedroom, or even new landscaping, are good indications that an area is improving,” said Ridgley.

Construction companies, landscapers and other contractors often put signs in their clients’ frontyards advertising their services. These are important, visible clues that residents are investing in the appreciation of their houses, and by extension, the entire neighborhood.

Another important consideration is the type and quality of businesses in a neighborhood. Cafes and restaurants with outdoor patios “give a spontaneous, encouraging lift to people when they’re looking at a neighborhood,” said Ridgley.

Coffeehouses in particular seem to be harbingers of a neighborhood on the rise. Bohemian cafes, art galleries, record stores and antique shops are often the first new businesses in areas experiencing gentrification. Over time, these cafes and independent businesses may give way to nationwide corporate chains, such as Starbucks.

“The trick,” Ridgley said, “is to find these neighborhoods before market researchers from big corporations discover them.”

For affordable houses in neighborhoods expected to appreciate rapidly, real estate experts point to areas north of downtown Los Angeles. Examples cited by area Realtors include Eagle Rock, known for the larger homes popular with young families, and Highland Park, with its wealth of affordable historic homes.

In nearby Mount Washington, secluded homes with views on large, wooded lots were originally built as cabins for hunting forays into the neighboring hills. (Parents hunting for a good school district will be pleased with the excellent reputation of the Mount Washington Elementary school.)

All these neighborhoods have easy access to downtown, Glendale and the studios surrounding Burbank. Home prices in this region range from $150,000 to $290,000 but are beginning to increase rapidly.

Glassell Park is also close to downtown and the freeway network. Despite its proximity to these urban amenities, the area features quiet, tree-lined streets, and many of the houses have canyon and city views.

“Like Mount Washington, Glassell Park may, however, be too secluded for buyers used to an active social lifestyle,” cautions Bouwmeester, who adds that the seclusion has kept prices in Glassell Park between $190,000 and $229,000.

West Adams is increasingly recognized for its spectacular collection of underpriced Craftsman bungalows in an area convenient to downtown, USC and several commuter routes. Like Highland Park, the neighborhood benefits from a Historic Preservation Overlay Zone, which protects the area from aggressive or inappropriate architectural remodeling. Prices for Craftsman houses in West Adams are still surprisingly low; a 2,000-square-foot house in good condition can be found for $250,000 to $300,000.

Architectural character, a comfortable demographic mix, attractive residential streets, convenience to jobs, shopping and the all-important cafe seem to be the factors that all these neighborhoods possess, making them the up-and-coming areas considered next in line to experience the popularity (read: prices) found in Los Feliz, Carthay Circle and other up-and-gone neighborhoods.

Perhaps the most important factor for home buyers, however, is far more individual.

“The area has to be one that feels good to them and to their friends,” said McConnell. “It has to feel ‘cool’ to them.”

And to Starbucks. But get there first.

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Marc Lallanilla is a Los Angeles-based freelance writer.