Los Angeles Housing Value Reality

OK, let’s talk some tough reality about real estate values, Los Angeles.

If you bought residential real estate in 2008, 2007 or 2006 in California, your property is most likely worth less than what you paid for it. (This happens to be true for most locations between the Pacific Ocean and the Atlantic Ocean, too.)


That goes for good neighborhoods and bad – Beverly Hills or Pacoima.

And if you didn’t have a large down payment on your house, your property is quite likely worth less than what you owe on the property.

(Sigh.)

This is precisely why our economy has collapsed. (Heavier sigh)

OK, so let’s deal with this reality. How long will it take until you get back to the break even point?

It won’t happen this year.

2010? Probably not.

2011? Maybe.

Our best hope for this year is that housing prices in Los Angeles stop going down.

Then, it will take some time for housing values to get back to where they were in 2006 and 2007. Time measured in years – not months.

I say this because if you are trying to sell your house, you need to be realistic about what it’s worth. If you’re not realistic – and you really, truly do need to sell your house – you are simply going to lose money by holding out hope that you can sell for more than the market will bear. This is not the market to “hang on.” This is the market to cut your losses.

And many agents who want to list your home will not tell you this truth.

They will prey upon your hopes. They will tell you that you can sell your house for more than reality. You will probably listen. And then you will have to cut the price on your home. But that price cut won’t be enough. And then you’ll have to cut more. And maybe that price cut will be enough, but probably not. And you will end up selling your home for less than you could have in the beginning by pricing your home smartly and aggressively.

Again, this is not the market to stubbornly hold to what you “need to get” from your home. This is the market to get what you can.

You don’t have to believe me. But there are many other people who didn’t want to believe, and they ended up getting nothing for their home.

Am I trying to scare you?

Yes.

I also believe there are smart things you can do to improve your chance of selling your house, to sell your house sooner, and yes, to get more money for it than you otherwise would.

It involves first and foremost: Confronting reality with a competitive pricing strategy. Then, it involves a smart marketing plan that gets more people in to see your house. Finally, it involves savvy but not stubborn negotiating. All these things are what I help you do.

Finally, if you’re in a buying mood, there is a bright side if you’ve got money. The massive declines in home values mean there’s some bargains at a time when interest rates are really low. Some people are starting to notice this and take advantage. From Business Week (1/27/09):

But in the worst markets, including Miami, Phoenix, Los Angeles, San Diego, and Las Vegas, the year-over-year price declines—though deep—have remained relatively flat since the summer. A wave of foreclosures has depressed prices so much in those markets that investors and other first-time home buyers have moved in to scoop up bargains. According to a survey released on Jan. 26 by the National Association of Realtors, sales of existing single-family homes jumped an unexpected 7% in December from November's seasonally adjusted annual rate.

It may even be a smart move to sell a smaller house and buy a bigger one. The hope is that you can get enough of a bargain on the bigger house to more than make up for what you’re losing on the smaller house.

But first and foremost, you have to be realistic about the value of what you’re selling.