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Housing Tracker is predicting a trend of -23.9% for Los Angeles area home prices and Homepredictor.com is prognosticating a 21.7% drop in prices for the Los Angeles area. Many economists are predicting that housing will not rebound in 2009. But how do you know what your area will experience?
Whether looking at Burbank or the San Fernando Valley, if you have followed real estate home sales for any amount of time you know that neither gains nor losses are ever uniformly distributed throughout a city or county. Certain areas experience the majority of the gains, other areas will experience more of the losses and it’s not always easy to predict.
The reason for homes in a particular area to be hit hard on the up or downside depends on many factors. From a macro economic standpoint things such as level of unemployment, industry strikes, bank lending standards, ie loose or tight, whether interest rates are headed up or down and how many businesses are entering or leaving an area all play a major role. On a micro level, you need to consider the accessibility of an area to transportation and jobs, condition of houses, specifically condition of the home being sold, curb appeal etc. Is your area undergoing gentrification or is it deteriorating?
Price is the one thing that sells in today’s market, but having said that, I have worked with several buyers who preferred paying a little more in order to get more of a turnkey or move in ready house.
If you are thinking about or need to sell your home in today’s market, be prepared to compete with the vast numbers of foreclosures on the market and :
Be prepared to do a pre-sale home inspection to avoid surprises when you are in escrow.
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Fix items that buyers will want fixed, or be prepared to negotiate the price down during escrow. Anything safety related such as electrical issues, foundation issues, roof repairs etc. will become a reason to negotiate a credit.
If you are a home buyer there are the obvious considerations:
Getting pre-qualified so you know how much home you can afford.
- Doing your homework on different areas so you can focus your home search.
- Condo vs. House…..consider association fees and proximity of neighbors.
Then there are the not so obvious discussions:
If you are married or purchasing a home with a partner make sure you are all on the same page regarding issues such as how much work you are willing to put into the home to fix it.
- Will you hire someone or do the work yourself.
- Are you ok with doing the work over the span of several months or several years?
- Are you willing to make the time commitment required to fix the house while living in it? Not everyone has the patience to handle the turmoil of a remodel with grace.
- Who will be in charge of getting the estimates, making actual decisions on paint, counter tops etc.
- Do you have a process in place to accommodate the flow of information and more importantly, settle disputes.
My point in bringing all of these issues up is that in today’s market, sellers have to compromise. Sellers are compromising on price, having to make certain repairs and buyers are compromising on condition of property, to a point. If it’s an all out bargain most buyers will come out from the sidelines, evidenced by the myriad of multiple offer situations we’ve seen over the past few months. But with so many properties on the market, and more foreclosures coming online it’s important to know your market and pricing.
There are both bargains and overpriced properties out there, it’s important to know the difference and your parameters before you decide to purchase or list your home.
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Having been been through 4 down and up cycles, the one thing that has been very consistent in each market. The predictions were always.....always wrong. The dot com bust expect California to bust in 2001. Instead, Austin gets nailed.
This is normally our worst month of the year. Since January 1st I have received 5 contracts. I have no clue if this a fluke or not, but something very odd is going on.....Heavy activity. Here is why you should be careful about not putting all of your marbles into these predictions. It is impossible to predict human behavior. You can have all the rationale behind predictions, but humans will do what humans want to do. Be cautious, but odds are 100% that the prediction of the upturn will be wrong. Logic says that you will be down for another year. Take a look at Vegas' stats. Foreclosures in November were at 34 per 1000; December....14. Something is going on......
Thank you for commenting Tim, I could not agree with you more!
No one has the magical crystal ball, there are so many factors that contribute to housing prices, some referenced above, that it's hard to know how good or bad things will end up!
An - some good points raised here about todays market, and things are always worth repeating since folks seem to forget about how important some of these questions and issues area. Your point about the local nature of real estate is so important - market conditions can vary dramatical from one town to the next and within towns as well. Gathering as much data as possible from a knowledgeable REALTOR like yourself will make one a smarter buyer or seller.
Jeff