Simon says: "There is a battle out there."
Simon says: "There is a battle out there."
Published in the Santa Monica Daily Press
There is a battle out there. It's not between the forces of good and evil. The fate of the world is not dependent on it's outcome. It's between sensationalistic journalism and real estate sales people trying to get their listings sold.
Some people think real estate agents have everything to gain from telling people it's always a good time to buy. These same people have forgotten that we are subjected to the same market forces as everyone else. If the market isn't paying what we are asking for a property, we have everything to gain from being able to explain to our sellers that now is a good time to reduce their asking prices. We make our money when a property sells, not when it doesn't.
From 2001-2005, the real estate market in Los Angeles was red hot. Still, throughout this period the newspapers were warning people of an inevitable collapse. Every other month the "crash" was right around the corner. The media seems to have the most to gain from negativity, while salespeople have the most to gain from optimism. I spend my days accepting this and make my decisions based on what works for me at the time.
No one knows what the future holds, no matter how brilliant they think they are. Your home is something you experience everyday, it's not a commodity like a stock or bond purchased for it's ability to rise in value. It's an emotional experience that you feel everyday. It's a refuge from the strains of the outside world. It's an expression of who you are and how you like to live. And, at the end of the day, it may help to remember that coastal California has appreciated around 9% a year for the past fifty years. U.S. property values have gone up about 6% a year since the end of World War II.
I do most of my business in Santa Monica and Brentwood. In these areas, the lower end of the market has been hit around 3-5% in depreciation since last year. This is taken from my personal experience. Real estate isn't like gold or potatoes, every property and transaction is different, and I am sure different agents in different parts of the city have a different story. I can find statistics to back either a negative or a positive view of the local market. Basically, properties I could have sold for 1 million last year seem to be going for a little less this year.
The more expensive a property is, the less depreciation it appears to be experiencing. This has a lot to do with the profile of the buyers in these different markets. A lower end or younger buyer with less savings can't weather a tumble as well. They also tend to be more susceptible to media hype because they lack the experience of older and/or more sophisticated buyers. First time buyers are getting ready to make a big leap into the largest purchase of their lives-- hearing on the news that the real estate market is in shambles is pretty scary. It's enough to get many of them off the diving board and back into their rental properties.
Agents are getting better at listing properties at the right price. A lot of sales are closing at prices where after the tax savings, the expense of owning the property is the same or less than renting. So, yes, at the right price, it is always a good time to buy. To buy for immediate appreciation, well that's another story. No one knows where the top of the market is, or where the bottom of the market is.
It now looks like if you bought in the past year or two and need to sell now, that wasn't a great buy. If you are living in and enjoying your property right now and have no plans to move in the very near future, you're good. If you bought your property in 2001 and need to sell now, you're going to make a lot of money. Remember, when a market hits it's bottom or it's top, no one knows it's happening until after it's happened.
A general rule of thumb for buying and selling real estate is buy and sell in one year, you lose money. Buy and sell in two years you probably break even. Buy and sell in three years you will break even or make money. This takes into account a 6-7% transaction cost.
Simon Salloom is a local Santa Monica and Brentwood based REALTOR with Coldwell Banker. www.WestsideSimon.com
Published in the Santa Monica Daily Press
There is a battle out there. It's not between the forces of good and evil. The fate of the world is not dependent on it's outcome. It's between sensationalistic journalism and real estate sales people trying to get their listings sold.
Some people think real estate agents have everything to gain from telling people it's always a good time to buy. These same people have forgotten that we are subjected to the same market forces as everyone else. If the market isn't paying what we are asking for a property, we have everything to gain from being able to explain to our sellers that now is a good time to reduce their asking prices. We make our money when a property sells, not when it doesn't.
From 2001-2005, the real estate market in Los Angeles was red hot. Still, throughout this period the newspapers were warning people of an inevitable collapse. Every other month the "crash" was right around the corner. The media seems to have the most to gain from negativity, while salespeople have the most to gain from optimism. I spend my days accepting this and make my decisions based on what works for me at the time.
No one knows what the future holds, no matter how brilliant they think they are. Your home is something you experience everyday, it's not a commodity like a stock or bond purchased for it's ability to rise in value. It's an emotional experience that you feel everyday. It's a refuge from the strains of the outside world. It's an expression of who you are and how you like to live. And, at the end of the day, it may help to remember that coastal California has appreciated around 9% a year for the past fifty years. U.S. property values have gone up about 6% a year since the end of World War II.
I do most of my business in Santa Monica and Brentwood. In these areas, the lower end of the market has been hit around 3-5% in depreciation since last year. This is taken from my personal experience. Real estate isn't like gold or potatoes, every property and transaction is different, and I am sure different agents in different parts of the city have a different story. I can find statistics to back either a negative or a positive view of the local market. Basically, properties I could have sold for 1 million last year seem to be going for a little less this year.
The more expensive a property is, the less depreciation it appears to be experiencing. This has a lot to do with the profile of the buyers in these different markets. A lower end or younger buyer with less savings can't weather a tumble as well. They also tend to be more susceptible to media hype because they lack the experience of older and/or more sophisticated buyers. First time buyers are getting ready to make a big leap into the largest purchase of their lives-- hearing on the news that the real estate market is in shambles is pretty scary. It's enough to get many of them off the diving board and back into their rental properties.
Agents are getting better at listing properties at the right price. A lot of sales are closing at prices where after the tax savings, the expense of owning the property is the same or less than renting. So, yes, at the right price, it is always a good time to buy. To buy for immediate appreciation, well that's another story. No one knows where the top of the market is, or where the bottom of the market is.
It now looks like if you bought in the past year or two and need to sell now, that wasn't a great buy. If you are living in and enjoying your property right now and have no plans to move in the very near future, you're good. If you bought your property in 2001 and need to sell now, you're going to make a lot of money. Remember, when a market hits it's bottom or it's top, no one knows it's happening until after it's happened.
A general rule of thumb for buying and selling real estate is buy and sell in one year, you lose money. Buy and sell in two years you probably break even. Buy and sell in three years you will break even or make money. This takes into account a 6-7% transaction cost.
Simon Salloom is a local Santa Monica and Brentwood based REALTOR with Coldwell Banker. www.WestsideSimon.com
posted by Simon at
1:34 PM
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