Understanding the Real Estate Market of Pasadena
Good decisions are based on good information. Congratulations to Local Einsteins for assembling this book of valuable information for buyers and sellers. I hope that my insight in our local market will be helpful in making good decisions for its readers.
Previews Estates Director
Coldwell Banker Residential Brokerage
What to Know Before Buying a House in Pasadena
1. About the Area
Pasadena was one the original communities developed in the Los Angeles basin in the 19th century. Settled by families fleeing the cold winters of the Midwest, Pasadena was originally known as The Indiana Colony and was ultimately incorporated in 1886, the fourth city founded in Los Angeles County. The word Pasadena comes from the Chippewa Indians, meaning “Crown of the Valley.” Pasadena, often referred to as the “Crown City,” is situated at the base of the San Gabriel Mountains and is the sophisticated epicenter of the western edge of The San Gabriel Valley, the other “valley” of the Los Angeles basin. Pasadena is only 10 minutes from downtown Los Angeles, yet has a distinct personality and unique appeal.
At the turn of the 20th century, Pasadena was a thriving winter resort with large hotels dotting the hillsides around the area. Wealthy patrons would take the train from the east coast to arrive in this lush oasis filled with orange and palm trees. It was not uncommon for the visitors to stay several months at a time. These same visitors eventually built “winter homes,” large estates that reminded them of the wonderful houses they had visited in Europe, especially Mediterranean style properties that matched the Southern California climate. The origins of the Rose Parade came from a local club, The Valley Hunt Club, whose members would tie flowers to their carriages and parade down Colorado Boulevard celebrating the glorious weather on New Year’s Day. Today, Pasadena’s tree lined streets are familiar to new residents, as Pasadena neighborhoods are constantly used for movies, television shows and commercials. Pasadena has been used in lieu of filming in many different parts of the US, including New England, the South, the Midwest and even Beverly Hills Father of the Bride, Beverly Hills Cop, Bugsy, Chinatown and Transformers are just a few of the many movies filmed in Pasadena’s neighborhoods.
2. Benefits of Living Here
Pasadena is a historic community, known for its many distinctive neighborhoods and architecturally significant homes. As a local agent specializing in Pasadena, I am able to guide a buyer in finding the type of environment they are seeking. I have lived in Pasadena for over 35 years and have either lived in and/or sold properties in all of its many wonderful neighborhoods. Each area has a certain appeal, such as adjacency to shopping and entertainment, proximity to hiking trails and outdoor activities, or closeness to Los Angeles and the San Fernando Valley and the entertainment industry businesses. Some neighborhoods have a combination of each of these categories. From Old Pasadena to the Playhouse District and Shops on South Lake, Pasadena offers world class restaurants and shopping, state of the art movie facilities, including our own I-Pic theater (one of only a handful in the country), and galleries featuring some of the most renown artists in the world. Pasadena is the host to the world on New Year’s Day with our home town festivities known as the Rose Parade and Rose Bowl Game. Yet, people flock to Pasadena throughout the year to attend many various events at the California Institute of Technology, The Pacific Asia Museum, The Norton Simon Museum, The Gamble House, The Pasadena Museum of California Art and the numerous tours of our architecturally significant homes that are open to the public for various charity events. The Pasadena Symphony and Pasadena Pops provide world-class entertainment during the year with special guest artist and guest conductors. The Pasadena Symphony performs at the wonderful Ambassador Auditorium and the Pasadena Pops does outdoor dinner concerts at the Los Angeles Arboretum. Outdoor activities include state of the art swimming and diving at the Rose Bowl Aquatic Training Center, used for Olympic and NCAA training. There is the Arroyo Seco Archery Range and Fly Casting Ponds for the sport enthusiasts and numerous hiking options and equestrian trails in the area.
Pasadena has more seasonal weather patterns than Los Angeles. Its proximity to the San Gabriel Mountains creates cooler winters and warmer summers. It also has higher annual rain fall amounts. The Arroyo Seco, the natural wash that runs through the western edge of Pasadena, has an even more pronounced climate, which is why the original neighborhoods of Pasadena were built along its edge. The Arroyo was the source for water, building materials and food for the early settlers. The cooling nature of the ravine keeps the neighborhoods cooler than the rest of the community. During the rainy season, November through March, it is not uncommon for a light dusting of snow to be seen along the mountains above Pasadena. This event gives residents the opportunity to see palm tree lined streets sitting below snow covered peaks. The migration to our area has been in large part due to this wonderful Mediterranean climate and perfect weather for enjoying outdoor activities. I remind new residents that the patio and outdoor entertaining areas of homes should be considered additional living space.
Pasadena and the Hancock Park area of Los Angeles were thriving communities at the turn of the 20th century, long before Beverly Hills and West Los Angeles had been settled. As a result, Pasadena has one of the highest percentages of significant architect designed homes in Southern California. Wallace Neff, Reginald Johnson, George Washington Smith, Sylvanus Marston, Paul Williams, Myron Hunt and Charles and Henry Greene are just some of the many celebrated architects who were commissioned to design the many homes found in Pasadena.
People are drawn to Pasadena’s mature landscaping and charming neighborhoods such as Madison Heights, Linda Vista, San Rafael Hills, South San Rafael, Annandale, Hillcrest, Caltech, Chapman Woods and Hastings Ranch. Pasadena also has several “Landmark Districts.” These are neighborhoods that have architecturally specific themes such as Prospect Park, Bungalow Heaven, Historic Highlands, Orange Heights and Washington Square. These neighborhoods contain a high number of period homes that have tremendous architectural details. Not all are large estates, many are wonderfully designed more modest period homes from the early 20th century.
Pasadena has seen a number of buyers coming from the greater Los Angeles area, especially those seeking a more traditional neighborhood with tree lined streets and sidewalks close to shopping and restaurants. Pasadena has less traditional neighborhoods, as well. There are several areas that are more rural in feel, set in the rolling hills on the western edge of the city. In general, Pasadena’s architecture includes homes designed with elements from various eras, including: Victorian, Craftsman, Mediterranean and Spanish, English, French Country, Mid Century Modern, Traditional and Contemporary. There is something for every level of sophistication and esthetic preference.
5. My Buying Expertise
Having lived in Pasadena for over 35 years and representing clients in the sale of hundreds of homes in the area, I have firsthand knowledge of the city and the many neighborhoods that comprise it. I have experience in representing buyers and sellers in the many areas of Pasadena. I can give insight on previous home sales that will provide a good comparative analysis for a property that my buyers are interested in pursuing.
When entering into an escrow, sellers will often ask their agent if they had ever had any transactions with the buyer’s representative. A positive experience and reputation for being fair and honest will sometimes be the deciding factor for a seller to choose one offer over another. As a local real estate agent, my relationship with other local agents provides an advantage for my clients. Having a realistic understanding of current market conditions gives my clients insight into what is expected from them in the home buying process. The seller and their agent will value an offer written by someone who represents clients in the area and thus, knows how to write an offer with the customary conditions and terms. As each area does vary, an out of area agent or one who does not work on a regular basis would not be as fluent in the customary practices of Pasadena real estate transactions. I bring the experience to the transaction that will keep the process moving forward and get the escrow closed, ultimately the goal for both the buyer and seller.
6. Common Buyer Questions
Buyers looking to purchase in the Pasadena area typically ask:
· Does living in an older home require additional responsibilities? When buying an older home, it is necessary to understand how it was constructed. Older buildings were often made with materials not found today. Any home built prior to the 1931 Long Beach Earthquake are built very differently than homes afterward. The building standards of today are very different to what would be customary of an earlier time. Buyers should put these different methods into perspective to understand how houses were constructed at that time.
· What are the city requirements when renovating or restoring a property? Pasadena has a commitment to maintaining the character of its homes and ultimately, of the neighborhoods where they are located. The city wants to be certain that any improvements are done to code to ensure the health and safety of the owners and their neighbors. Permits are required for updates and additions. The City of Pasadena has a user friendly web site that explains the process.
· What is a landmark district? Landmark districts were a joint effort of the Pasadena Heritage Organization and the City of Pasadena to designate specific neighborhoods that have a high percentage of older homes that were significant to the history of Pasadena’s early years. The districts are located throughout Pasadena and have voluntary homeowner associations. Membership and participation is completely voluntary, but the design review of home’s exterior updates must have approval through established guidelines of the individual districts, while working with the city permit office.
· Where are the shopping and transportation centers? Pasadena has several shopping districts, including small independent shops that provide a hometown feel for our area. The Gold Line light rail has several convenient park and ride locations throughout Pasadena. It is an easy way to get around Pasadena or go into Los Angeles and connect with the Subway for farther destinations.
· How do I get tickets for the Rose Bowl parade and game? Anyone can come to the parade, it’s just getting a seat! You can bring your own and sit along the parade route down Colorado Boulevard. Grandstand seats are sold through ticket agencies and the best seats go very quickly. Seats for the Rose Bowl game are divided between the two schools playing that year, but some tickets can be obtained through a lottery that the City of Pasadena holds or through ticket agencies.
7. Getting an Edge Through Preparation
Having represented clients in hundreds of escrows in our area, I prepare my client for the possible scenarios that they would encounter in writing an offer on a particular property. I have the first-hand knowledge to supply them with background on the house, the neighborhood and recent activity of other similar properties that have recently sold in the neighborhood. I also will prepare the client on what to expect in a seller response, or counter offer, to their original terms of their offer.
8. Golden Rules of Buying
The golden rules of buying property in Pasadena are:
· Always purchase a home in a neighborhood that has historic desirability or is trending in that direction.
· Always consider how long you will likely live in the home and buy the property that most closely fits your needs for that period of time.
· Always look for the upside potential of the property. Can it be worth more by improving it through remodeling, additions or upgrades? If the house is as good as it can be, then the only potential increase in value would be through natural market appreciation.
What to Know Before Selling a House in Pasadena
1. A Moving Market
To truly understand the present, we must understand the past and that information will help us predict the future. The housing market is a moving object and we can only guess where it will go, but if we have a sense of history, it will make it a much more calculated guess. When I prepare a market analysis for a potential seller, I select only the applicable homes that have recently sold, are in escrow or are currently on the market. I first give the seller an overview of the market in general and then their specific neighborhood. Even though Pasadena is a smaller city (approximately 148,000 residents), it has distinctive trends by neighborhood and even streets and blocks. The more specific the data to the seller’s home, the more accurately we can project what the appropriate list price should be. The pricing strategy will then set the stage for a successful marketing effort, resulting in the best price for the market.
Sellers will be dealing with a very sophisticated buyer, who has a tremendous amount knowledge about the area’s recent home sales. They most likely have been in those very homes and have firsthand knowledge of their condition. When you price a new listing, a seller must be guided to select a price that is perceived as both fair and represents a good value. The value quotient is very important. A buyer wants to feel that they are investing in good value. If there is a positive mind set going into the negotiations, a buyer will feel more comfortable in going higher than the list price.
2. Uncover the Unknowns
When planning a timeline and strategy to list a property, I like to explore as many unknowns as possible with the seller. If we are able to do any customary inspections, city required conditions of sale or general preparations in advance, it allows the seller to anticipate what issues might arise during escrow. The following are areas you should explore prior to putting your home on the market:
· What is the activity in your specific neighborhood? As a community of custom homes, there are not a lot of truly similar homes in a neighborhood. The “apples to oranges” comparison is very tricky. In other communities, there are tracts of homes all built by a single builder that are truly the same. In our area, the agent must have the historic perspective to have seen each of the homes used in a comparable analysis, as they will vary by design and finishes.
· What additional information about your neighborhood could affect the sale of your home? This includes historic designations or restrictions for the house or neighborhood, as well as other city requirements. In Pasadena, the city requires an Occupancy Inspection for health and safety related issues. The inspection can reveal violations that the inspector will call out to repair/correct. I always suggest to get this inspection competed prior to the house coming on the market, in case any previous room additions or remodeling were done without permits or city approval.
· What are the planned traffic routes or government eminent domain issues? Having knowledge of local city planning trends and historic issues is extremely important when selling a home.
· How will seasonal selling trends impact you? Pasadena has specific times of the year that are historically the most active periods for buyers to purchase homes. The highest number of transactions occur between March and June. They represent approximately 50% of the annual volume. The next busiest time is mid-September through mid-November, representing approximately 30% of the annual volume. As the markets are cyclical, these do change slightly, but generally speaking, the best time to sell your home is before summer and before the holidays.
· If your home doesn’t sell right away, what should you do? If a home doesn’t get an offer in the first three weeks it’s on the market, then something is not connecting with the market. It could be a floor plan challenge, adjacency to a busy street or that the price is not positioned correctly. At the end of the day, it is always about the price. At the right price, every property will sell!
3. My Selling Expertise
Successful negotiations are the result of a “win/win” approach. Both the seller and buyer need to feel that they have accomplished most of their goals. To guide clients, the agent should understand the terms and conditions prevalent at the time of the negotiations. The client must understand what is happening in the marketplace with other properties and how that will impact buyers bidding on their home. I will always get as much background on a buyer from their agent when I receive an offer. Who are they? Where do they currently live? Why are they moving? Have they made offers on other properties? Have they been in escrow for other properties? If so, what happened that caused the escrow to cancel? Selecting the right buyer will establish a positive climate for the escrow period, resulting in a successful close.
It is my goal to prepare a seller for possible issues that might arise during the sale process. I always want to minimize any confusion on the process and their role. Typically, sellers do not go through the process of selling their home very frequently, so the process changes with new forms, regulations and requirements that have been put in place since their last sale. Minimizing the disruption to my clients normal routine is my goal. I request that sellers complete disclosures and paperwork in a timely manner, to avoid any eleventh hour problems. Selling your house can be a huge time commitment if not done correctly and I want to remove the burden of the process from them, so they can continue their life as usual. Having disclosures and inspections done in advance will also provide the information to buyers before they write an offer and certainly, during a counter offer period. The more comfortable a buyer is with a property in advance of opening escrow, then the more likely the transaction will have a smooth and successful result.
4. Common Seller Questions
Sellers in Pasadena often ask the following questions about the sales process:
· How much money can I get for my house? The market will determine the value of a property. The most recent sales in the neighborhood will help set a listing price, but the buyers looking at the property will ultimately determine the final value in the purchase price.
· How quickly will it sell? The first three weeks a property is on the market is the best opportunity to get the highest and best price. With an aggressive marketing campaign and exposure through showing appointments, the property should have maximum visibility and get the top price the market will bear.
· What do I need to do in getting it ready for the sale? Focus your home’s interior so that the buyer is seeing the property and not the possessions. Edit furniture, counter top items in the kitchen and baths, and any other items that are not used on a regular basis.
· How much flexibility will I have in negotiating the terms and price? The negotiations will always favor the party that is control of the market. In a seller’s market, when inventories are low and buyers are competing, a seller can request certain terms and have a very accommodating buyer pool. Conversely, in a buyer’s market, the sellers might have to make concessions.
· When do I know that it has really sold? Actually, not until the day escrow closes! For all intents and purposes, once the buyer has removed all their contingencies, the seller should feel comfortable that the sale with go through.
5. Getting a Selling Edge
Looking very carefully at comparable properties that have recently sold or are currently on the market will give you a fair assessment of the current market conditions. If you agree to price your home with sense of value, meaning at a fair price but not at the top of the price range, then the market will usually respond with buyers competing for the property. The competitive aspect of the process could increase activity, resulting in multiple offers.
6. Seller Successes
Below are the stories of some of the clients I have helped successfully complete the sale of their Pasadena property:
· I received a call from a client that I had represented in the purchase of their home a few years ago. They were thinking of selling and buying a larger home. We discussed the value of their current home and what their goals were for their new home. We created a strategy for the two phase process, the marketing and preparation for the sale of their current home and the process to find their new home. On both sides of the process, preparation was necessary to ensure that we could orchestrate the timing of these two concurrent transactions. We discussed a few projects for their current home, primarily freshening the landscaping and some touch-up painting. A few pieces of furniture were edited out, making spaces seem larger, and the removal of items from countertops in the kitchen and baths created clean surfaces. I always remind my clients, if you are selling your home, it means you are moving; so don’t delay the moving process, which includes editing items that you will either not keep or will need to packed. You can’t start too soon! On the purchase side, get your financing process started as soon as possible. Get your loan broker the updated bank statements and current tax returns as soon as possible. This will be a precise timing related transaction between the sale and purchase and you cannot be prepared too early.
The timing for the sale was finalized and their home came on the market. They had great interest in the property, resulting in a multiple offer situation. One of the terms that I encouraged buyer’s agents to include in offers was the option for the sellers to remain in the property after the close of escrow. This option would allow the sellers to coordinate the sale of their home and the purchase timing for their new property. This “bridge” would give them the assurance to wait until the contingencies had been removed by the buyers of their home and then, they could make an offer on a new home. It would also allow them to move directly into their new home and not move to a temporary location until escrow closed on their new home. We had begun the search process on their new home even before the current property came on the market, so they knew which neighborhoods were preferable and the status of homes currently for sale. The narrowing of possible candidates for a new home is important, as it gives a more clear search for their next property. When reviewing the offers for their current home, the option of remaining after the close of escrow was as important a financial consideration as the price, if you calculate the additional cost of moving, temporary housing and other related expenses. This option actually created a value that made the accepted offer more desirable, even without it being the highest price. They accepted an offer, escrow was opened and our goal was to get the buyer’s contingencies removed as quickly as possible. Working through the many components of inspections, appraisals and underwriting, I was able to assist the buyer’s agent in getting all the necessary information for their clients to move forward and remove the contingencies.
During this time, my clients and I continued their new home search, and once their current escrow was moving forward, they felt comfortable in pursuing a home we had seen previously. Their offer was accepted and escrow was opened on their new purchase. They now began the process that the buyers of their current home had just completed. Fortunately, all of their preparation with their lender served them well and the underwriting process for their purchase did not miss a beat. They closed escrow on their current home and were able to stay an additional thirty days until their new home closed escrow. They even had a buffer of a week so the move was more manageable. These types of transactions require a tremendous amount of planning and constant monitoring along the way.
· After living over 30 years in their home, my clients decided to move up to Northern California to be close to their daughter and grandchildren. The decision to move is always more difficult when the property has had many years of wonderful memories. The emotional aspect of leaving makes the transition even more stressful. We discussed the process of what would be done in preparation for the sale and I would stop by on a regular basis to answer questions and check on their progress. Once the house was ready to come on the market, they were very concerned about the showings of their home and I assured them that I would be there for every appointment. There is always a personal connection with one’s home and a sense of emotional vulnerability. Protecting my clients from major disruptions in their lives is one of my primary goals. When they received offers and finally accepted one that met their goals of price and terms, we then worked through the inspection and appraisal challenges. At all times, I shielded my clients as much as possible, working with the buyer’s agent to come up with a solution, discussing the proposals and taking the process to a mutually agreeable solution. A successful escrow was completed and my clients are now very happy living close to the grandchildren. They were very appreciative of my efforts in making a difficult transition as easy and stress free as possible.
· I received a call from a couple who had decided to relocate to the east coast and were selling their home in Pasadena. The wife and children had already relocated to their new home and the husband was staying on to finish projects to get the house ready for the sale. I spent several weeks working with the husband to monitor the progress and once the house was ready to come on the market, he left to join his family. After he left, I coordinated the customary inspections from the City of Pasadena and a wood destroying pest company. There were items that needed correcting in both reports and I assisted the sellers in getting these items addressed in their absence, meeting the service providers at the house and monitoring the repairs for the sellers. The property came on the market and I kept the sellers apprised of the developments through daily updates on the real estate caravan day, showing appointments and the subsequent open house. The property was very well received, garnering multiple offers. I coordinated the negotiations for the sale via long distance with the sellers, creating a comparison spreadsheet for the sellers to see the terms of each offer. After issuing counter offers and ultimately deciding on the best set of terms, they accepted an offer. Escrow was opened and I again kept the sellers apprised of the inspection, appraisal and loan issues. Negotiating at its best is sometimes stressful, but doing it via conference call can be difficult, especially when dealing with issues that need to be resolved. Good communications make good transactions and my sellers were very involved in the process, even without physically being here. The escrow successfully closed and my clients were able to sell their home from 2000 miles away. They are now enjoying their new life on the east coast and are very pleased with their home selling experience.
7. Golden Rules of Selling
The golden rules of selling a Pasadena property are:
· Choose the right representation.
· Be clear about your goals and express them to your agent. You create a team with your agent and the more clear the seller’s objectives are, the easier it will be to meet them.
· The market will determine the ultimate value of any property. Once the market speaks, be prepared to listen.