Downey is a beautiful city located in the southeast of Los Angeles County, California. The city is known for its rich history, diverse culture, and vibrant communities. Here you’ll find a unique blend of urban and suburban living with easy access to major transportation routes, top-ranking schools, and a variety of shopping, dining, and entertainment options. It’s a place where many are looking to buy a property and make a home.
Here, we’ll highlight some of the most compelling reasons why you’d want to invest in Downey. However, as well as looking at the numerous benefits Downey provides, we’ll also examine the recent real estate market in the area to give you a clearer idea if it’s better for you to invest sooner, or rather wait for a more opportune time.
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Benefits of investing in residential real estate
Before we look at Downey specifically, let’s examine the benefits of investing in residential real estate in general.
Home appreciation
One of the most significant benefits of investing in residential real estate is the potential to generate significant returns on investment. While the real estate market may experience occasional dips, historically, real estate property typically grows in value over time. Your home will build equity on your property and once paid off, you’re likely to be owning an asset that is worth considerably more than what its value was when you bought it.
You won’t even have to wait until the property is fully paid to take advantage as equity builds continuously over time. You can leverage the equity of your home anytime you find it necessary or favorable to do so.
Opportunity to rent out
Renting out a property is one way to make a steady stream of passive income. In some cases, rental fees may cover most if not all of your mortgage payments. If not, it will still go some way to offset many costs. This can provide you with a steady stream of income that can help you pay your bills, save for retirement, or invest in other properties.
Downey has an advantage for real estate investors looking to rent out, in that it is in California, one of the highest-demand areas for housing. It is also the state with the most renters in the country. That being said, landlords in California do have some restrictions placed upon them when it comes to raising rent rates, and tenants are given a measure of protection. Landlords in California can raise yearly rents a maximum of 10% or 5% including any changes in the cost of living, the default being that which is lowest. This still allows landlords to gain considerable returns on investments made in the state.
Tax breaks
Owning real estate property provides a number of tax benefits. You can write off mortgage interest, property taxes, and repairs as expenses. If you make capital improvements, such as adding a new roof or a new bathroom, you can claim depreciation over time. You may also be able to exclude some of the gains from the sale of your property from taxes.
Buying residential land in California offers the opportunity for a reduction in taxable value. For qualifying owner-occupied homes, there is a $7,000 reduction in the taxable value according to The California Constitution. To take advantage of this significant tax break, the home must have been your principal place of residence since the first the 1st of January.
Claiming this exemption is easy with just one-time filing required with the county assessor where the property is located using BOE-266 Claim for Homeowners’ Property Tax Exemption form. You may file anytime after becoming eligible, but remember to submit before February 15th to receive the full exemption for that year.
Diversification of portfolio
Investing in residential real estate can provide diversification to your investment portfolio, helping to spread your risk among different asset classes. Stock markets are volatile and are very susceptible to political events or economic downturns. Real estate is tangible and is a historically safer option as an investment option.
Another benefit of investing in residential real estate is the control that it gives you over your investment. You can choose the property, the location, the tenants, and the rental rate. You can choose a strategy that works best for you, whether you want to flip the property for a quick profit or hold on to it for long-term gains.
Providing a legacy
What is often overlooked is that owning your own property is one of the best ways to be able to create or maintain generational wealth. A startling study found that 70% of families considered wealthy or at least very comfortable will lose that wealth within 1 generation. By the 2nd generation that figure rises to 90%. This is down to several factors but important among these are grown children needing capital to explore their financial options or to acquire their own properties.
By the time the kids are grown and ready to make their own way in the world, your mortgage taken out many years before has been fully paid or is at least close to it. The equity accrued should be significant. This allows you to leverage the home not only for your own use but also to assist the next generation in their financial endeavors.
Investing in Downey, CA
But why invest in Downey? Simply put Downey is a unique area that conveys fantastic lifestyle and work benefits. Here are some of the most notable benefits of investing in residential real estate in Downey:
Buying residential land in Downey gives you access to a host of outdoor recreational activities. Downey is home to several parks, including Wilderness Park, Rio San Gabriel Park, and Brookshire Park. There are also numerous golf courses and country clubs like the Rio Hondo Golf Club, which make it easy for families to enjoy recreational activities without having to leave town.
Downey offers a variety of indoor attractions, including numerous restaurants, shops, and entertainment venues. Furthermore, there are cultural venues such as Downey Symphony, and many art galleries in and around the area.
Downey offers a wide variety of luxury homes to choose from, including single-family homes, condos, and townhomes. There are also a number of new luxury developments currently under construction in Downey.
Downey is located in the Los Angeles metropolitan area, making it a convenient place to commute to work, visit friends and family, or have them visit you.
The robust economy is served by major industries like healthcare, education, and retail. There are a number of Fortune 500 companies, and you’ll find significant employers like Kaiser Permanente, Stonewood Center, and the Downey Unified School District. Downey’s strong economic base ensures that there is a steady demand for high-end properties.
The city of Downey has a welcoming and supportive business community. The government is committed to supporting businesses through various programs and initiatives. One such program is the Downey Economic Development Office which implements strategies and services that create an environment in which businesses can develop and prosper, while effectively retaining and expanding businesses in the community.
Real estate trends in Downey
If you had bought a home in Downey in June 2020, you would likely have paid around the median sale price which stood at $613,000. A year later in June 2021 and that median had risen to $690,000. That’s a huge year-on-year increase of almost 11%. The next year in June 2022, the median sale price jumped up again, this time to $805,000, representing a year-on-year increase of 15.5%.
It has to be mentioned that this increase took place at a time when house prices across the nation were skyrocketing. The real estate market in the US was overheating and in order to restore a more sustainable market the Federal Bank raised interest rates early in 2022. This had the desired effect of cooling the market, and in Downey, the real estate market saw a correction in its median sold prices.
From January to April 2023 house prices dipped to a low of $714,500. However, the real estate market in Downey has been showing signs of recovery. In May 2023, house prices were up again to $770,000 and in June it had reached $780,000. Throughout this time, the median listing price has remained high with sellers confident that home prices will recover and that in a sellers market like Downey, they will be able to sell for at least their listed price.
Should you invest now or wait?
As mentioned earlier, Downey is a sellers market and has been for a considerable time. The many draws of this Californian city almost ensure that there will always be more people looking to buy homes or rent in this area than there are actual properties. Even with new developments, homes will continue to retain their premium pricing and rents will remain high.
What does this mean for someone looking to invest in Downey, CA? This means that as a homebuyer, you’re very much in the same situation you were in only a few years before. Homes are priced at a premium but what you got in return was all the benefits of living in a wonderful part of California.
Waiting for house prices to drop is unlikely given the demand, the confidence of the sellers to sell at their asking price, and the recovery being shown by the real estate market.
One factor that you should keep an eye on is the rise or fall of interest rates. While no one can predict with certainty the interest rates in the coming months or years, many experts seem to agree that interest rates will remain high throughout 2023 and into 2024. Beyond that, it is difficult to speculate. This has helped keep the area a sellers market with homeowners reluctant to get a property at a higher interest rate thereby limiting the available stock on the market.
The general advice for buying a home in California is that since prices invariably rise over a sustained length of time, it’s always better to buy a property when you’re able. In fact, now may be the best time to do so in Downey, with the market just showing signs of recovery and prices likely to start rising again. The earlier you buy a property, the sooner you can start building equity.
It’s the case that the Californian real estate market is very dynamic and across the country, we’ve just come out of a very turbulent period in the real estate market. However, there is the opportunity to land some fantastic homes in Downey that will match your budget and give you the lifestyle you’ve been looking for. To help you explore your options, get the help of experienced real estate professionals who are local to the area and can best guide you to buying your ideal home in Downey, CA.
Partner with 24 Home Real Estate
Here at 24 Hour Real Estate, we have a team that is committed to providing you with the utmost care and attention to detail so that you can reap the benefits of investing in residential real estate. Led by Realtor and broker associate Michael Berdelis, 24 Hour Real Estate has facilitated over 1,500 home sales since 1999. Michael has over 22 years of experience and has held the title of #1 agent in Downey since 2002. You couldn’t find a better partner to help guide you on your buying or selling journey.
Contact us today at 562.818.6111 or email us here to take the first step towards finding your home in Downey, CA. We can also help you find the perfect property in Whittier and Norwalk.
Get in touch, we would love to hear from you.