Branching out in a hot housing market

Jane Wells Correspondent • Profile • E-mail

As home prices in hot markets across the nation continue to grow, it’s getting harder and harder to find affordable opportunities. As a result, home buyers are looking in areas they wouldn’t have even considered five years ago. And even in such neighborhoods, cheap isn’t really all that cheap.

Take, for example, Compton and Harlem. Houses in Compton are selling for up to 20 percent more than the asking price. And values in Harlem have jumped four-fold in the past eight years.

Straight into Compton
The Haqq-Adams family knows all about skyrocketing prices, bidding wars and lack of supply. But we’re not talking about the red-hot housing market in Beverly Hills, 90210. This is Compton, 90220.

“They’re going for 10 to 20 percent over the asking price in Compton and South L.A.,” said Dana Andrews-Collings, a real-estate agent for ZipRealty.

Proof that a rising tide lifts all boats, Compton is going through much of the same real-estate mania as everywhere else. But it’s also getting a new look from investors who have overcome qualms about its reputation, seeing it as one of the last affordable places to invest in Los Angeles.

“I actually have several clients that will say ‘I want to see this property’ and we come and look and they’ve never been here before and they’re looking now because that’s what they can afford,” Andrews-Collings added.

But affordability is a relative term. The national median home price is about $210,000. That will get you absolutely nothing in Compton.

Prospective buyers include everyone from grandparents to new parents.

L.A. native Tunisia Haqq-Adams works for United Airlines, and her family is buying this home under a program in which the city cleans up and refurbishes the residence. She feels she has lucked out, after a year of searching.

“I went to properties that were little boxes, that were only 605 square feet. People are on the property ... stacked this high with people that want to purchase that property,” Haqq-Adams said.

School cafeteria worker Wanda Holden and H.L. Jackson are in their 60s and looking to buy for the first time after their rent went up 50 percent overnight.

“Well it would be great to have a house to call your own, so nobody can say get out,” Jackson said.

They figure they’d better buy now before they’re priced … straight outta Compton.

“Someone said on TV the other day that in about a week the prices should start falling back down,” he said.

But will he act?

“I’m afraid because if we wait too long it’s out of the question and if we get something and are not satisfied, we’re stuck, so what do a poor man do?”

Andrews-Collings says many of her buyers are investors looking to flip the houses for a profit or rent them out, though it’s getting to the point where rents may not be able to keep up with a landlord’s mortgage payment.

MORE FROM CNBC TV

CNBC TV Section Front

CNBC: Two economic bubbles defined his life CNBC: Google searches for mobile edge CNBC: Coke looking for the next real thing CNBC: GE in talks to spin off NBC Universal Battle over wages brews at Wal-Mart CNBC report: Ultimate Fighting CNBC Special Report: As Seen On TV Special Report: Cruise Inc. Buffett: The economy has ‘fallen off a cliff’ CNBC on the new black overclass CNBC TV Section Front   Add CNBC TV headlines to your news reader: