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Investors flip over Highland Park homes

Renovators are giving makeovers to distressed Highland Park properties, then reselling them to young professionals priced out of nearby Echo Park and Silver Lake.

March 10, 2012|By Alejandro Lazo, Los Angeles Times
  • Roberta Berthold bought this house in Highland Park last June and remodeled it for resale. The listing price is $464,900.
Roberta Berthold bought this house in Highland Park last June and remodeled… (Anne Cusack / Los Angeles…)

Much of the real estate market is still stuck in deep winter, but Highland Park is showing signs of spring.

Investors have descended on this and other communities in Northeast Los Angeles, snatching up bargain-priced Craftsman homes located within an easy distance of downtown. It's an echo of the housing boom, only this time speculators are drawn by the crash in prices.

Attracted by an abundance of foreclosures and aided by interest rates near record lows, renovators are giving distressed properties a makeover. They're then reselling them to young professionals priced out of nearby Echo Park and Silver Lake, who are finding Highland Park's bike lanes, Metro Gold Line stop and sidewalk culture a welcome respite from the automobile.

PHOTOS: Flipping Highland Park houses

In the process, the neighborhood of working-class Latinos and art-loving bohemians is being transformed into an outpost of hipster cool. Yoga studios, design firms and galleries are sprouting near Mexican grocery stores and auto repair shops.

The changes are stirring a debate not loudly voiced since the boom days: Is an influx of wealthier neighbors a good thing?

For Adam L. Bauer and his brother Logan, the answer is an unequivocal yes. They took the plunge into Highland Park last year, pooling their money to buy a three-bedroom bungalow on a quiet street for $494,000.

GRAPHIC: Highland Park gentrification

One recent morning, as the sounds of a jackhammer nearby echoed in their newly refurbished kitchen — replete with ebony-stained hardwood floors — the brothers sat and marveled at the fast pace of change.

"We've been here since May, and in a two-block radius there have probably been eight homes done," said Logan, a writer and lifestyle and wellness consultant. "It's nice that there is still a place where artists or families aren't priced out of buying a home. And a house that is a good size, that isn't a shoe box."

Steve Jones, the principal of development firm Better Shelter, sold Bauer his home and has redone 20 homes in Highland Park and an additional 15 in other parts of Northeast Los Angeles. He believes development in Highland Park is on an upswing.

Highland Park's affordability and somewhat undiscovered status have given it a certain cachet among the hipster set. LA Weekly's Pop-Ed blog recently dubbed Highland Park the new cool neighborhood "for those who are 'over Echo Park.'"

"There is a large inventory of homes to be polished, or flipped, or what have you," Jones said. "Given the realities of what homes cost in L.A. for a first-time home buyer, they are willing to invest in the future."

Investor activity has picked up in Highland Park in recent months, and throughout Northeast Los Angeles. Absentee buyers purchased 29.1% of the homes sold in Highland Park, 18.6% in Eagle Rock and 25.4% in Glassell Park and Cypress Park during the fourth quarter of 2011, according to real estate firm DataQuick. In January, DataQuick said, investors bought 2 in 5 of the homes sold in Eagle Rock and Highland Park and 1 in 5 of the homes sold in Glassell Park and Cypress Park.

Because many of those homes are bargain-priced foreclosures, that interest has yet to translate into a big jump in median home prices. And annual sales throughout Northeast L.A. have remained flat since 2009.

With a median home price of $308,250 in the final three months of last year, Highland Park remained the cheapest of the northeast neighborhoods. Eagle Rock's was $425,000 and the Glassell Park and Cypress Park area's was $362,000.

When it came to median price per square foot, Highland Park's was $287 in the fourth quarter of 2011, up 1.2% from the same period a year earlier, while Eagle Rock's was $319, down 1.4%, and the Glassell Park and Cypress Park area's was $298, down 8.7%.

Eric Toro, a real estate agent with Prudential California Realty in Glendale, said he believes Highland Park still has a way to go. Still, he said he's heartened by a recent influx of new businesses.

"You don't see as many vacancies as you did before," he said.

Settled in the late 19th century, Highland Park is one of the oldest communities in Los Angeles and has a long artistic and architectural heritage. Homes in the American Craftsman style of architectural design took root around the Arroyo Seco and pervade the neighborhood today.

In the 1960s, the area experienced white flight and many Mexican American families moved into the neighborhood; it remains heavily Latino today. Gang violence plagued the area for decades, with the notorious Avenues gang claiming parts of Highland Park, Cypress Park and Glassell Park as its territory. But in recent years, violent crime has declined citywide.

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