Three numbers for Los Angeles — and the thing I built
The county median gave back 2.4% in a month, the condo reserve rule changes in January, and Astraplace opens this fall.
The numbers moved toward the buyer this month, and they did it against the rate rather than because of it. Freddie Mac’s weekly benchmark sits at 6.66%, above the 6.56% it carried a year ago — and that survey predates this week. The daily index closed 6.89% on September 1, which is not near its 52-week high. It is the high, 39 basis points above where it sat last year. Prices gave ground anyway. The county median fell 2.4% in a month and 2.6% in a year. The state median slipped under $900,000, and Los Angeles is no longer priced above California — $888,120 here against $887,680 statewide.
Here is the part that does not make headlines. Los Angeles has the lowest loan-to-value of any metro tracked — 70.0%, against 81.0% nationally. Buyers here are putting roughly 30% down, which means a rate at its 52-week high moves less in this city than almost anywhere else in the country. Homes are taking a day longer than they did in June. That is not a crash. It is the first month in four years with room in it.
The leverage moved this month. Nobody announced it.
If you own or are buying a condo
The reserve rule changes January 4.
Limited Review is gone for buildings over ten units. Lenders now run a full project review on every conventional loan — the HOA questionnaire, the budget and the reserve study get read closely on files that used to pass without a second look.
Reserves go from 10% to 15%. Fannie Mae and Freddie Mac raise the minimum a building must put into reserves to 15% of its budgeted assessment income. An association is excused only if its reserve study is less than three years old and it is funding at the study’s highest recommended level. Baseline funding no longer counts.
A building that falls short gets flagged non-warrantable. From there a buyer needs roughly 20% down on a non-QM loan at a higher rate — and a smaller buyer pool shows up in what every unit in the building resells for. Boards writing next year’s budget can still get ahead of it.
One thing worth knowing on either side of a deal: HOA dues count toward qualifying you for a loan. A special assessment does not. If you are buying, read the HOA minutes for what is scheduled — and it is normal to ask the seller to cover an assessment that is already on the calendar.
If you own in a building, or you are looking at one, send me the address and I will find out where it stands.
