Home Buying Preferences Changed by Los Angeles Foreclosures

by Peter Vernon on cities

Home buying preferences have changed due in part to the economic effects of Los Angeles foreclosures.

Now, record numbers of home buyers prefer smaller houses and properties nearer job centers. They no longer like to suffer long commutes just to be able to live in sprawling houses in farther suburbs with open spaces and beautiful views of nature.

In 2004, more Americans began to crave for larger homes. The 983-square-foot average American house increased in size to a large 2,349-square-foot structure. Ceilings also moved up, with 43 percent of new houses in 2004 built with 9-foot ceilings.

In 1997, a 4,000-square-foot house was already considered large. Five to eight years later, homebuyers wanted more space, demanding to see home construction proposals in the 6,000- to 8,000-square-foot range.

About a few years later, the heydays of housing ended and record numbers of foreclosed homes for sale flooded the market, pushing home values to bottom levels. Owners of houses bought with jumbo loans were able to hold on at the start of the foreclosure crisis, but as the recession worsened, significant numbers eventually lost their large homes to their lenders.

In the first four months of this year, the pace of Los Angeles foreclosures slowed, but the foreclosure figures are still high. Over 59,000 homes in the Los Angeles metro area were hit with foreclosure filings in the first quarter.

Another research firm, meanwhile, reported that 6,847 houses in Los Angeles County were posted for foreclosure sales in the first quarter, in addition to 15,797 homes which were put into the first stage of the foreclosure process, which is default notification.

The pace of foreclosures in California also slowed in April significantly, but the state still posted the highest number of foreclosure filings among the states. Nearly 70,000 homes were put into foreclosure, including almost 17,000 units already repossessed and counted as bank owned properties for sale.

In the first four months, California posted a total of 285,988 foreclosure filings, accounting for 28.54 percent of the more than one million total foreclosure actions filed nationwide during the first four months.

Now, borrowers are learning their lessons. They are now looking for smaller homes. Not only that large homes typically consume more energy; they are also harder to maintain. And more significantly, they need jumbo loans, which are not easily approved nowadays.

The other trend in the Los Angeles area and other parts of Southern California is the increasing preference for locations nearer to the center of the cities. Buyers now are factoring commuting time and distances into total housing costs.

Ironically, in many cases, the dearth of foreclosures in locations preferred by certain buyers has prompted them to turn to newly-built homes. These buyers initially planned to buy foreclosure homes as they were cheaper, but after losing to investors in a number of foreclosure auctions, they give up and just look for new homes.

On the whole, the economic impacts of Los Angeles foreclosures have prompted homebuyers in the area to become wiser and more circumspect consumers and homeowners.