You would think if you had $6 million to spend on a house in the Hollywood Hills that you could buy anything. Not necessarily. Nor $1 million. And if you’re a first-time home buyer looking for something in the $500,000 price range in the Westside of Los Angeles, you might as well just forget it.
No, if you want to buy a house in the Westside of Los Angeles right now, you still might not find what you like at any price. Buyer frustration is growing and it’s not pretty. There’s still fierce competition for a great house no matter what your price range, and the price per square foot keeps rising–yes, that ugly calculation.
Despite the prognosticators and the naysayers, it’s still a hot market if you’re in the buying mode here on the Westside of Los Angeles. There’s still a shortage of well-priced inventory, and demand far exceeds supply.
And to make matters worse, just this week Cendant published a study showing that the top seven of our 10 hottest (and priciest) real estate markets are here in California, with La Jolla–where the average price is a cool $1.7 million–leading the pack. I don’t even want to ask what you get for that measly amount.
So what’s a buyer to do? Not write a low-ball offer on a house they think is overpriced? Compromise their wish list? Waive their inspection? Doesn’t every home buyer out there at least deserve a timely counteroffer from these sellers?
It wasn’t much of a surprise when my husband received a counteroffer that had taken two days to obtain from a seller who recently had a $50,000 price reduction. It excluded the potted plants. “The potted plants?” I asked. My husband said there isn’t even an oven in the house. And in spite of his very qualified and enthusiastic buyers, the seller is now thinking of renting the property rather than price concede. The seller is firm on the idea that prices have and will continue to rise.
So how can you advise friends and family who haven’t bought and are looking to buy now? “Well, when the market tanks next year,” they all begin. Tanks? I can barely breathe.
“Are those Hummer tanks like they use in Iraq?” I ask. “The ones that Sen. John Kerry made reference to in the debate last week as being short in protecting our troops?”
“No,” they reply. You know, like when prices go down.
What can you say? They deserve to own a home. They work hard and they are sick of overpaying for rent and not getting a tax deduction. They are sick of their take-home pay being less by not owning. You can’t blame them for being mad and wanting in.
“I’m going to save until I can afford something better,” one friend said. “At $650,000 you can’t get anything.” Aren’t we all counting on interest rates rising after the election? Won’t that make real prices go up on a monthly basis? Is the fever that’s floating the local market the conundrum of real costs going up no matter what? Can you leap into a swimming pool with no water in it and expect to float?
I tell them all the same thing: the story of how my husband and I walked out of escrow in January 1995 with barely $17,000 after owning on a house that had appreciated more than 50 percent in the late 1980s and were lucky to get out with our shirts on. (We had invested more than $100,000 in improvements.) I tell them how we bought in 1995 after that house had been on the market for more than a year, abandoned with earthquake damage and scored a “great deal.” Etc., etc., etc. I tell them that they too can be in on the “winning” end of a real estate transaction–get in the game, stay there long enough and you too will see it all, and hopefully even win.
After all, “Comedy is tragedy plus time,” as Woody Allen so perfectly put it in the film “Crimes and Misdemeanors.” So like any other market, only time will tell.
Julie Brosterman is a consultant to the real estate technology, mortgage and servicing industries. After she spent 15 years in the title insurance industry, the Internet “spoke” to her and she has never looked back. She lives in Los Angeles and can be contacted at firstname.lastname@example.org.
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