From Kelly Hamon, who recently bid $47,000 over the asking price to beat out five other buyers for a cream-colored North Hollywood home:
I am going to have to tighten the budget. Maybe not get TV right away — just Netflix.
The backstory here is the return of the housing bubble to Los Angeles:
The once-in-a-lifetime mentality, fueled by a shortage of for-sale homes, is driving the Los Angeles area from recovery to frenzy, according to real estate agents and experts….Out of all homes sold in March, 91% of [Redfin’s] deals involved a bidding war. And about 10% were investors flipping a property at a profit after buying it just a short time before.
….While cash offers may have proliferated in 2012, this year has ushered in stronger competition in the mortgage market, said Guy Cecala, publisher of Inside Mortgage Finance Publications….[Banks] are setting their sights on new home buyers by loosening their underwriting standards and accepting lower down payments. Some lenders have even begun offering piggyback loans — which enable buyers to take multiple mortgages to avoid putting any money down, Cecala said.
“It is mostly something that started in the last month or two,” he said. “The good news for borrowers is that they are starting to see looser underwriting, but it is not looser underwriting across the board.”
….Leo Nordine, a real estate agent in Manhattan Beach, said he recently listed a one-bedroom home in South Los Angeles and got 49 offers….”Everybody I know is trying to do flips right now. It’s like the day trading of the 1990s,” Nordine said. “We went straight from Armageddon to speculation; there was nothing in between this time.”
I’m sure there’s nothing to worry about, though. Los Angeles is unique, after all. And things are different this time. Right?