Real Estate Realities
LOS ANGELES—Sellers received some good news the other day when the U.S. Commerce Department announced that the number of home sales in November rose by 4.4 percent over a year earlier or to the highest level since April 2010.
Moreover, sales in the six-county Southern California area increased by 14.2 percent through November over numbers from a year earlier, according to DataQuick, an industry organization that tracks Real Estate data. It’s the kind of growth that industry professionals have been seeing throughout much of the year, which gives sellers hope for continued improvement in 2013.
For those looking to boil it down further, it’s a market that’s steadily improving with increased value for properties due to low inventory for those still looking for that perfect home. It’s the proverbial win”“win situation”¦ or is it? As a homeowner, some may ask “is this the right time to put your home on the market or should you wait for additional improvement?”
The answer is that if you’ve been wanting to sell this may be a good time to sell if you’re trading from a high priced market to a lower cost market such as if you’re retiring from Los Angeles to Palm Springs your costs are going to go down and your dollar is going to go a lot further. The market, like the economy, is nowhere near where it was four years ago or even further back. The fact there are fewer homes for sale and still depressed prices, shows that improvement is slow and still subject to corrections from time to time. So if you decide to wait, you’ll be waiting for a while. Delaying selling your home for say, six months, will make very little difference in the long run and will simply postpone your investment plans into the future.
As a seller you can make your move and take advantage of the market and what’s out there. No one has a crystal ball that will tell you how much the market will improve in the next year or so. But this 14.4 percent growth rate may not sustain so we must keep in mind that we still have a short supply and greater demand for properties.
There are many reasons for the market’s improved outlook. Some involve the fact that some neighborhoods are going through a cycle where more properties become available. Such is the case with the Fox Hills area of Culver City. It’s neighborhood that was created back in the 70s and was snatched up immediately by buyers. But now, it’s over 30 years later and these property owners are leaving the area for retirement communities or their heirs are selling their properties.
There are always properties coming on the market for one reason or another, for instance like foreclosure, relocating for retirement or work or the passing of a loved one. All neighborhoods have their cycle and Fox Hills is just one example.
Factors like incredibly low mortgage rates as well as increased optimism by investors about the economy has helped spur the market, but more still needs to be done to increase its momentum, but it will come in time.
Getting momentum to a Real Estate market that’s been pummeled by a bad economy these last few years has its challenges. It’s still suffering from lack of inventory due to the decline in foreclosures from government pressures, the difficulty in buyers to procure loans the lack of movement of workers between geographical areas, i.e. people aren’t getting jobs in other cities as frequently as they used to so they’re not putting their homes up for sale as often.
As things improve, we’ll also see more younger members of the work force getting into the market who in turn tell their friends and co-workers who will be encouraged to take advantage of the market recovery. It’s the optimism of youth that is a great driver to the market which leads many to purchase their first home.
Needless to say, I’m optimistic about 2013 and beyond. In fact, I have already written two offers for properties that I would like to purchase. I’m in real estate for the duration and I'm a firm believer that values will increase for the duration and that return on investment will be as great as they always have.
David Rosenfeld is a Real Estate broker and president of Advantage Real Estate, a Real Estate and investment firm in Santa Monica, and a Rotary Club member. He has more than 20 years experience in commercial and residential property investments and financial counseling. He can be reached at firstname.lastname@example.org.
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