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Market Conditions in 90015 : Real Estate Advice

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Fri Apr 27, 2012
Eddie A Safa answered:
I thank you all for your answers.

I am with most of you that this recovery is dependent on many factors and that this is certainly a different type of recession compared to the ones in the past 4 decades. Many questions have to be asked when we are thinking about a full recovery and price increase, such as:

1) How will the interest rate increase, that is inevitable, going to impact the real estate prices?
2) How is the shadow inventory (REO) going to impact the real estate prices?
3) How soon will the job market recover and are we going to see higher wages?
4) How will the old or the new administration, after the election, contribute to an economic growth?
5) How will Europe's economic recovery be within the next 3 years?

With all of the above and a few more uncertainties I am still certain that the real estate values will improve in the next 3 years. I base my conclusion on the amount of fiat (paper) money that has been printed by the Fed and all other world power houses. This move has already contributed to inflation across the US. We see high single digit percentage price increases across all consumer sectors. Furthermore the devaluation of the Dollar, low rate of return given by the banks to the investors and high rents (rent to mortgage ratio) are driving the market up in certain pockets of LA. Investors are looking to maximize their return by buying, rehabbing and reselling the available inventory. Eventually the inventory leveI will decline so low that we will experience an upward price explosion. I am sure many of you are witnessing the low inventory in many pockets.

My only question remains whether the upward price trend occurs within the next 3 years or, the next 5 years?

Wish you all the best,
Eddie Safa
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