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West L.A. Land

The blog from Klein Real Estate

By Laura Klein | Agent in Pacific Palisades, Los...
  • Is the long-delayed return of real estate finally here?

    Posted Under: Market Conditions in Los Angeles, Home Buying in Los Angeles, Rent vs Buy in Los Angeles  |  April 13, 2011 9:54 PM  |  399 views  |  No comments

    There’s an interesting cover story for the April 11th edition of Fortune magazine entitled “The Return of Real Estate,” which has been getting a lot of attention lately. Although there’s certainly been no shortage of articles predicting more price declines or years of housing in the doldrums, this one stands out because it was written by Shawn Tully – the same guy who was writing about a decline in the U.S. housing market as early as 2002.  Whereas Tully thought prices would be adjusting within the next year or two, it actually took another five.

    But today, with homes now more affordable than they’ve been in years and with new housing construction at the lowest levels since records have been kept, the Fortune article is now promoting the following:  “Forget Stocks.  Don’t Bet on Gold.  After Four Years of Plunging Home Prices, the Most Attractive Asset Class in America is Housing.  It’s Time to Buy Again.”

    By tapping research from a Texas-based company called MetroStudy, which tracks new-home inventories for 65% of the U.S. market, Tully argues that record low construction levels have quickly reversed the supply glut – eventually leading to higher prices.  In addition, the national price decline of 30% since 2006 – and as much as 55% in the hardest-hit markets – means that in many areas it’s now cheaper to own than to rent.  That’s the point at which renters start to look at homeownership again with a different attitude.

    Of course one big concern remaining is that of available credit: with tighter credit standards for mortgages, it stands to reason that housing demand is lower.  But economist Mark Zandi of Moody’s Analytics (and who is also a popular expert reporting to Congress) thinks that lenders are simply returning to the credit standards in effect before the bubble period.  Says Zandi in the article, “We saw prices rising with fundamentals in that period, and it will happen again.”

    So what’s that mean for a higher-priced region such as the Westside of Los Angeles?  Two things:  (1) Since there was so little new construction relative to the overall housing stock even during the “bubble” years, we didn’t see the same level of over-building rampant in the Inland Empire or Las Vegas or Phoenix; and (2) Although there are certainly foreclosures in Westside communities, the relatively low level of these homes versus these overbuilt markets means that only a moderate increase in demand will quickly absorb this inventory.  And after that, prices should stabilize and begin to trend up again in line with inflation.

    Want to read the entire article?  Pick up the April 11th edition of Fortune magazine or simply click here for an online version.

  • February 2011 Westside L.A. Home Prices by Community

    Posted Under: Market Conditions in Los Angeles, Home Buying in Los Angeles, Home Selling in Los Angeles  |  April 13, 2011 9:50 PM  |  253 views  |  No comments

    These days, it’s very easy to get caught up in the media’s reports of what home prices are doing nationally or for a metropolitan area such as Los Angeles.  But that doesn’t mean home prices in your specific area are matching those of the rest of the city, and for luxury areas on the Westside, they often perform in a separate league of their own.

    As of February 2011, Dataquick is reporting that while the median sales price of all homes countywide – including new and existing single-family homes and condominiums – remained unchanged from February of 2010 at $315,000, prices in various Westside areas fell by as much as 39% (Malibu) or rose by nearly 11% (Marina Del Rey).

    However, one important factor to keep in mind is that median prices – which define the midpoint at which homes are selling – can fluctuate wildly depending on the number of sales recorded.  So, even though the median sales price technically fell by 39% in Malibu to $1.0 million, that figure was based on just 14 sales.  Similarly, the 11% increase in the median price in Marina Del Rey to $649,000 was based on just 17 sales.  If you’re shopping for a home in Malibu, that could mean that your choices have become more affordable, whereas Marina Del Rey has become slightly more exclusive.  Or, depending on the home you’re looking to buy or sell, these median prices could have little or no bearing at all.  They’re simply an index.

    For those areas in which there were more sales, the market seems to be close to flat or starting to improve.  In Santa Monica, that means a 2% decline in the median sales price to $779,000 based on 39 sales, whereas in West L.A. the 119 sales yielded an increase of nearly 10% from February of 2010 to $615,000.

    Want to know what current asking prices are for active listings?  Give us a call at Klein Real Estate and we’ll be happy to help you negotiate the statistics!

 
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