After reading that headline, you are probably thinking I’m crazy, but hear me out. Keep in mind Los Angeles has caught up in home values, and in some cases even higher. For those that bought in the Los Angeles area at the height of the market and kept their homes are in a better position than those who are buying now. Here’s why:
1. They are over a 1/3 of the way done with their mortgage: Assuming they didn’t refinance at any point, they are already way ahead of anyone who buys today. They have the advantage of time on their hands.
2. They could be paying lower property taxes: When the market crashed, some homeowners contested their assessed value with the County to get a lower tax rate. That means, they are paying property taxes at a lower dollar rate than if someone buys the same house at the same price today.
3. They could shave off three years off their mortgage without dropping any more money and still pay the same monthly mortgage. Because interest rates were higher back in 2007 (in the 6% range), a homeowner could refinance into a 15-year mortgage that are below 3% interest. That coupled with the fact that a third of the mortgage is already paid off, they could refinance into a shorter mortgage, shaving off 3 years.
Crazy to look at it this way, isn’t it? The key here is real estate takes time. If you have the patience, it can come back to you better than ever before.
What are your thoughts? Know anyone who still lives in the same home since they bought in 2007/2008?
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