Son of a gun . . . homes in Culver City are selling at a faster clip than expected. As of yesterday, there are 49 single family homes for sale – just slightly more than what I would call a normal inventory (usually in the low 40’s).
Despite the doom and gloom that prices are 19% lower in the past year, and that sales have slowed to the lowest levels in almost a decade, Culver City (and most of the lower Westside) remain unaffected.
Taking the trouble to run the stats from the Multiple Listing Service revealed some interesting items. Thirty homes either have sold or gone into escrow since Christmas, that is within the past 90 days. And of these 30, 15 have opened escrow in the past six weeks – meaning that sales are quickening their pace, not slowing.
Wow Times Two
Moving on to examine pricing, a close look finds that these homes sold at 97% of their asking price. Wow. That is way different than what we read in the newspapers. And of these 30 homes, more than half entered into an escrow within 30 days or less of their listing date. Another wow.
Last, and perhaps most revealing of all, is that these homes averaged a sale price of $550 per square foot. That’s barely 10% below what their levels were at the peak in the summer of 2005. So what do we make of this?
Three Out of Four
It’s pretty easy to see a true story. Of the last four offers I’ve written for clients, three of them have led to multiple offer situations, meaning that my clients were outbid. Most people thought that the multiple offer days were gone, but t’aint so. In fact, the scarcity of good homes at entry-level pricing on the Westside simply continues. There never have been enough of them, and there never will be. Everyone wants to live here, in Culver City, in Del Rey, near the beach, at something close to an affordable mortgage. And since there isn’t any new land around, and now that credit is harder and harder to come by, those who can simply snap up what’s there.
During the past two open houses I’ve sat, more than 70 groups (a family, a couple) have stopped in to see the entry level homes I’ve been selling; one on Emporia in Culver City and one on Moore in Mar Vista – both priced under $750,000. Most of the lookers were accompanied by agents (where did all of these new agents come from? They are supposed to be dropping like flies, but there they are . . . on the campus with clients, and by the signs I see in front yards, taking listings, too). And they all profess to utter the same mantra: Wait, the market’s cooling. Wait, prices are going down. But that just isn’t the case.
Now, Not Later
I always ask them how long they are going to wait? In the past few months, prices for loans have gone up over 18%. So despite some leveling of prices, there are, after all now, some homes below $700,000 for the first time in over four years, the waiting is costing the average buyer. It’s not so much the price, but the payments. And if loan costs go up 18% (from the low 5% range to the low 6% range), then the payments do too. There is no benefit in waiting.
Yes, I read that there is a credit crunch. And yes, I read that the Fed is lowering consumer interest rates while raising loan limits (and if you ask me, this is simply another recipe for disaster in the making). But it has not, nor will it, affect consumer home loan pricing. The T-Bill, which is the benchmark for home interest rates, is pegged differently than consumer loan rates, such as the prime rate. Worse, the banks have lost a fortune in their market-backed securities. So what will they do to recoup? Lower rates? Never. As long as there are scare tactic headlines in the papers saying the government is offering palliatives (that aren’t working, another column on this another day) in the form of lower rates or loan re-structuring, there will be a rush of people to borrow. So the banks take only the best ones, claiming that demand is forcing pricing up, which it is. So rates go up, not down. (Did you get that?) Yes, rates are up, not down.
Are There Signs?
Another question I like to tease buyers with is, “How will you know we are at the bottom?” While no satisfactory answer is ever uttered, the realization, for many, is that they still don’t understand the market. And sad to say, all of these newer agents aren’t explaining it to their clients, either.
So here’s the dope. We live in a high demand area, for the most part immune to area wide price gyrations. When the market tanks, we go down a little but not too much. When the market goes up, we are the first to resume the climb. Only the stratosphere is the limit. Talk to your agent, and buy while you still can. When all of this is over, anyone who buys now will be the big winner. Those who wait still will be on the sidelines.
Mark Salkin is a realtor and California attorney with more than 35 years experience in the real estate industry. You can have your real estate questions answered by writing Mark direct at realproperty@marksalkin.com. The opinions expressed are solely those of the author and not those of any real estate brokerage house or of this publication.
