Prices rising, sales declining, says L.A. Times

Today's L.A. Times headline was Southland Home Prices Surge, but Sales Plummet.  Hey, welcome to my world! Click here for the article.  Here are some of the article highlights:

"The market for high-dollar homes is hopping, with sales on the rise and buyers launching bidding wars. But sales of low- to medium-priced homes have plummeted during the same period — with many potential buyers priced out.

Housing affordability is really taking a bite out of the market," said Leslie Appleton-Young, chief economist for the California Assn. of Realtors. "We haven't seen this issue since 2007."

and

"...declines came even as sales of high-end homes increased. Sales of homes costing $800,000 or more grew 12%, while sales of homes costing less than $500,000 fell at twice that rate.

So if it seems like a case of "the rich and the rest," it is. 

If you are even remotely considering selling your home in the next two years, it's a good idea to start your preparations now.   Nobody knows how long this market will last.  Please call me to discuss the procedure, your home's value, and the near future.

2007 N. 6th in Burbank is sold, we think.*

The serious fixer property that I listed in the Burbank hills sold in a last-minute bidding war on Wednesday.  I never thought it would happen.  It has been listed since November.  Although we had many all-cash offers from qualified buyers, we didn't get close to the price the sellers would accept until last week. 

Then, the activity got heated and there was a lot of drama. Potential buyers began to bid against each other in small increments.  Seventy emails were sent and received about the offers on Wednesday a.m. alone.  Old offers rose from the dead.  Some players withdrew their offers and left the playing field only to reinstate their offers later in the day.  Friendships and professional relationships were skewed (well, mine with some of the other agents).  Buyers were unhappy.  Sellers were unhappy.  There was weeping, wailing and gnashing of teeth (okay, I'm exaggerating).  But at the end of the day, it sold for a price acceptable to the sellers and buyer, and we all either drowned our sorrows or celebrated, or both.

*This is a probate and all heirs (there are several) need to okay this.  They probably will, but you never know.  Stay tuned.

Cutest house of the week, in Echo Park! But my clients didn't get it. Bah.

This is 1801 Bellevue in Echo Park and it's the cutest house I saw this week.  It's a rehab/flip, and it's adorable.  It has 3 beds, 2 baths, a den, a separate studio, and an oversize garage plus a front and back yard.  It also has been really well-staged, and I'm crazy about good staging.  I know that some people don't care for Echo Park, but this street feels really safe -- it's a cul-de-sac at both ends.  Recently, the community has attracted many buyers who like both the traditional family housing stock and the urban feel.  Plus, the city is re-doing Echo Park Lake.

Enough about how great this is.  Here's how our transaction went.  Or didn't go.  The house was listed at $499k. It received 10 offers right away.  One was from my very well-qualified buyers.  Unfortunately, the bidding went up to (and maybe passed) $550k and the sellers took another offer.  Damn. Damn. Damn.  My buyers are disappointed but will live to fight another day.  I'm disappointed, too -- this is something I would have bought if I were (much) younger and wanted the neighborhood!

2845 N. Lincoln has closed over asking; maybe 30 times is the charm

My listing at 2845 N. Lincoln in Burbank closed yesterday. This modest 3+1 was marketed as a light fixer and is in the excellent Jefferson elementary school district. Yes, it closed over full price -- it listed at $489,000 and sold for $520,000!

We listed it at $489,000 not because we wanted a bidding war but because that is what the comparable sales indicated the home would likely sell for. The sellers and I were very surprised to receive six offers immediately, with all but 2 offering over full price. Three of the four offers were for conventional loans with 20% down, too.

Were we worried about the appraisal? Oh yes -- but the appraisal came in at $520,000. Was I worried because Bank of America was doing the loan? Yes, but they actually managed to fund it more or less on time without too many screw ups.

And it was an incredibly smooth escrow, thanks to the sellers, buyers, buyers' agent, and our escrow officer. The buyers had made offers on 30 other houses before they got this accepted! I bet they have something to teach us about patience.

Burbank Leader on bidding wars

Today, the Burbank Leader picked up the story about artificially-low listing prices and the bidding wars they generate. Here's a quote from the article: "Markets are most tight with moderate- to low-priced homes, or about $500,000, with some agents luring multiple shoppers with artificially low postings and forcing bidding wars that can drive up totals by tens of thousands of dollars, Realtors said." See my previous posts on this subject.

Prediction: While I think we've hit the bottom for most San Fernando Valley real estate, I don't see that we'll have a real acceleration in prices. I do think we may have more inventory, or at least properties staying on the market longer, in July and August.

Buzz of the week: low inventory and price-to-entice marketing strategies

My colleagues and I have been discussing two main issues this week. The first is the shortage of homes for sale, in every area, in the $700k and under price range. The only stuff out there is either geographically undesireable, a fixer or ridiculously overpriced. Sounds like my dating life when I was single.

The other issue is the deliberate underpricing by some Realtors in order to create bidding wars. Here's how it works: a Realtor lists a home $50k or more below the comparable sold properties, does no marketing, and quickly gathers multiple offers which bid each other up for the "great" deal. The properties always go over the (under) listed price. Who benefits? Primarily, the Realtors, who spend no money marketing the property. Who loses? The seller, who gets a fast sale but no real marketing. Who knows what kind of great deal the sellers would get if a house is truly exposed to the market? And future sellers lose, too, because now there is an artificially manipulated future market, based on these new listing comparables. But the biggest losers are most buyers, who couldn't afford a market-priced house to begin with and have no hope of getting the seemingly-great deal. Buyers tend to lose heart after trying to buy and not succeeding. So if you're a buyer, if the deal seems too good to be true, it probably is.

A colleague tells me he thinks there may be a Burbank Leader story about this strategy soon, which has been frequently employed by a local team lately. Update 5/8/09: This strategy is now being applied to some not-yet-approved short sales, with the following language in the MLS: "We will accept best offer after (usually 13 days), open escrow. You inspect then we submit for bank approval." Whoa! This will get a lot of people exited about and spending their energy on about a property that may not even be able to "go" short sale! Once again, if the deal seems too good to be true, it is.