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REAL TALK ARCHIVES

Summer 2011
Are You In It to Win It?


Winter 2010
The Canary that Swallowed the Elephant!


Spring 2010
Mental Equity VS. Dollar Equity


Winter 2008 Fast Forward!   


Summer 2007 Beckham Has Arrived!   


Summer 2006 Vertical... At Last!    

ARE YOU IN IT, TO WIN IT?

If you have been reading the LA Times recently looking for an update on the Real Estate Market you may not know which way is up. One headline says 'Luxury home Sales jump 21%' and the next headline says 'High-end Sellers Lower their sights!' Well, which one is it? Are they just headlines looking for readers? It is the equivalent to those articles about diseases, where you read the list of symptoms and you are sure that you have the disease! Depending on how you view the real estate market, you determine which article fits your truth...Real Estate is still going down, write a low offer, or if you have your house listed, you are con- sidering raising the price! The reality is that both headlines are accurate for different areas of the market and for very different reasons. Those are general statements, of course, but they express the confusion and lack of consistency that we are experiencing in the market-place. It is very difficult right now to take the accurate pulse of this market. There are bursts of energy in different locations and at different times. For sure there is no generalizing here.

2011 started out so-o-o-o slowly. Brokers were running around saying, 'Is it over, AGAIN?" There were so few sales and Buyers seemed to be lukewarm to the process again. No one was taking our calls! Brokers questioned if we had exhausted the buyer pool in the last half of 2010 when the market picked up steam and was so very active that the recovery was measurable. Were all the good deals gone? There was some truth to that premise, at least for the moment. Let's take a backward glance at this so we can gain our perspective. As January 2010 began, and Brokers were going on listing appointments, Sellers were trying to list their properties at pre-crash prices, not yet understanding the im- pact of the 2008 market debacle. There had been so few sales in 2009, Sellers continued to reach back to 2008 to find firm ground. There simply had not been enough sales in 2009 to really find an accurate range for most properties. 'Stabbing in the dark' or 'guessing' was pretty much the two methods used to price a listing. As a result of this, most everything was listed too high. As 2010 progressed two things occurred. First, price reductions, and then sales. Then the cycle re- peated itself with more reductions and then more sales. This began a trend that I call bouncing along the bottom of the market. Things were beginning to stabilize! The second half of 2010 in terms of units sold leaped forward as sales racked up in all the price points and all locations. Armed with closed escrows and reported sales prices, Brokers and Sellers had a better chance of positioning listed properties in the price range that properties belonged in. Once that started to hap- pen, Buyers came back in stronger than anytime post 2008. Was it a surge? It was indeed, but it had a short life. Musi- cal brokers, a game played only in down markets, began to play all over town. In musical chairs, when the music stops, one chair is gone and someone is out of the game. In musi- cal brokers, it is when the broker asks for a price reduction and the Seller switches agents, instead of giving the price reduction!So what happened January, February and early March of this year? Where did all the buyers go? It seemed incongruous that the Dow was over 12,000 and people were not responding with their check-books. Buyers had stepped back on the curb. People were confused and timid. Although the market had gained strength in units sold, the Buyers still needed reassurance that the market was not going down again in value. In April, the New York Times declared "that real estate remains one of the most troubled sectors of the economy." The truth is, prices had come down, but not below MARKET VALUE. It created a new vocabulary for agents and their Buyers and Sell- ers. Clients wanted a VALUE BUY... no stealing, but a "Value Buy." Brokers need to "prove value" to Buyers and Sellers in order to make a sale. As soon as Brokers were able to prove value, Buyers started to come back in. It was beginning to sink in...we had a new NORMAL. The inflated numbers leading up to 2008 simply were not attainable and would not be for many years to come. That singular realization was not bringing our market further down, but was actually the stabilizing force.

As I review the comparable sales at this moment to write Real Talk, the fascinating thing is that there was nothing happening, almost nothing, until mid-March when the market took off in whirl of activity. Now from each Westside location there is an overwhelming amount of action. In Beverly Hills, $5 Million Dollars and above price-point, there are 16 closed transactions through May 15th and there are 7 transactions pending thru June 5th! In Bel-Air there are 11 closed transaction through May 1st and there are 4 pending transactions thru June 1st. Brent- wood has finally come to life. There were no sales in January, 1 closed sale in February, 1 in March and 4 closed sales in April. There are 4 set to close in June! Buyers have come back in to all the locations because they can measure price stability. More accurate listing prices coupled with price reductions have cre- ated more confidence for Buyers in making a purchase. This is the key to making deals.

The question is, if there are sales and the market has picked up, will the market go up? The answer is clear. Not for awhile and here is why. There is still too much 'market time' for listings. The time period between the listing date and the selling date needs to shorten. Then once the cycle of market time is short- ened, the Buyer's pace will quicken. The market will then pick up. As I said in my last Real Talk, we still have a lot to go through in our evolving economy. As this goes to print, the Dow has dropped below 12,000. Everyone is watching those numbers. They are indicators and they reflect the actual economy, although the Westside has been somewhat insulat- ed compared to other areas.

The market has spoken. There is tremendous opportunity out there for Buyers in all price points. I closed two $20+Million tranactions in the first week of May, one in Beverly Hills and one in Holmby Hills. Also, one of Bel-Air's most famed ad- dresses sold at the end of April for $40+M after being on the market for 10 years. There are also two sales pending over $40Million Dollars right now!

With all the 'Idol' fans out there, the message seems really clear. If you have a dream, go out and try to make it happen. If you want to have the house of your dreams, start writing offers. If you are one of those real estate internet junkies do- ing searches late at night looking for your dream houses, be persistent ---This is your moment! Get out there and become a player!
Looky-loos are passé--- deal-makers are in! ARE YOU IN IT TO WIN IT?