For those who know me, they know I can talk about the real estate market non-stop for days. So far, the first five months of 2016 have been incredibly eventful, and they give us a good indication of what we can expect for home sales in the next few years. Today, let’s talk specifically about Eagle Rock real estate, and what it means for someone buying or selling a home this Summer. I have 4 thoughts:
List Price vs. Sales Price Phenomenon
“Disappearing Price Ranges”
Is This a Healthy Market to Buy In?
Tips on Buying & Selling This Summer
1. List Price vs. Sales Price Phenomenon
For those who have been watching the real estate market, they understand the difference between List Price and the final Sales Price--especially in Eagle Rock. The List Price doesn't always equal the Sales Price.
At Teles Properties, we call this “event pricing”. We strategically price the house lower than what we expect it to actually sell for, and it looks like an awesome deal. We pack the open house with people, invite a larger number of offers (usually above asking price), and the Buyers end up telling us how much they’re willing to pay.
Hint: You’ll notice I said “good properties”. Not every home will be in high demand.
In fact, when we see Hot Markets like we have in Eagle Rock, we get a lot of sellers put their house on the market to take advantage of the popularity. Most of these sellers think pretty highly of their home, price it too high, and they sit there. With any other type of pricing strategy, the Seller and listing agent have to figure out roughly what the value is, and then tell the Buyers how much to pay.
We call this “perceived market-value pricing”. This is the most common method in the rest of the country, and even other parts of Los Angeles. When the market becomes less competitive, “event pricing” becomes less effective, and Sellers switch to the old standard, “perceived market value pricing”. Then, when it heats up again, they go back to event pricing. This shift is subtle and it can take months to pick up on.
As a Buyer, it’s important to notice this shift, so you can gauge your competition with other Buyers.
As a Seller, make sure you pick a strategy you’re comfortable with because this sets the whole plan in motion. Also, don’t try this at home without agent supervision!
2. Disappearing Price Ranges
If you are looking to buy in a hot neighborhood like Eagle Rock, Highland Park, or Silver Lake, El Sereno; your price range is on the endangered species list. There are fewer homes for sale today than there were yesterday. Once those they’re gone, they aren’t coming back.
For example: In Eagle Rock and Highland Park, 3-bed 2-bath homes priced under $700,000 are disappearing. In El Sereno, $500,000.
As a Buyer, once you’re priced out completely, you either have to increase your budget or find a new area to buy in. This is why it is extremely important you do the following:
Get yourself a good agent.
Listen to them.
As a Seller, being the last house on the market in a certain price range has its benefits, so find out how much your home is worth, and make the most of the opportunity. But, also know your limits. (Stay reasonable.)
3. Is This A Healthy Market To Buy In?
Short answer, Absolutely. Overall, the trend for real estate home values in Eagle Rock is on the way up, and I believe we have many years of steady and responsible increases ahead of us. Last fall I wrote an article about the NELA Opportunity Window when prices in Northeast L.A. hit a short plateau because of an oversaturated market. These types of mini market cycles happen about every 18 months or so.
Here’s the natural progression of a market:
Supply is low and Demand is high
Prices jump like crazy
More sellers jump on the bandwagon
Supply goes up and Demand goes down
Prices stall and Sellers leave the market
Supply goes back down, and Demand goes up again
Rinse & Repeat
What The Numbers Tell Us The obvious benchmark is to look at sales prices. They are climbing. While I agree sales prices can tell you a few things about a market, the sales VOLUME (i.e. - the number of sales) can tell you much more. I'll keep this short...
Last March, Eagle Rock saw 36 new listings hit the market. The last time we saw that many new listings in one month was in 2008. But the all-time record was in August of 2005 when we saw 65 new listings hit the market. Wow! Knowing what we know about the time between 2005 and 2008, that makes perfect sense.
However, you’ll be interested to know that the FIRST time we saw more than 30 new listings in one month was back in 1998 when the market was bouncing back from the slump of the 1990s.
Also, the first time we saw 30 CLOSED sales in one month was in 1999. Interestingly, last month (May of 2016), Eagle Rock closed exactly 30. (More interesting, we never broke 40 closings in one month, even during the bubble.)
Bottom Line: If we compare this market cycle to the previous one, there are several factors that indicate we are just now coming into the equivalent of The Year 2000, and we have a very long way to go. Happy Millenium!
4. Tips on Buying & Selling This Summer
Interest rates are insanely low, Buyer confidence is up, and inventory is relatively abundant. It’s the perfect time to buy a house in Eagle Rock. If you are planning on buying this summer, I will tell you four things:
It’s hard to get a loan. Make sure you have a lender who doesn’t just tell you what you want to hear. (I have the best, by the way.)
Don’t get too hung up on “comps”. Knowing what homes sold for six months ago does you no good today.
Get out there and look at as many homes as you can.
Be realistic about what you can afford.
For my Sellers, I will tell you four things as well:
"Declutter" your house, and use a professional photographer who knows houses and how to photograph real estate. (I have the best, by the way.)
Inspect and do repairs to the house BEFORE you go active on the market. If the Buyer finds any issues themselves, trust me, they will want to hire the most expensive repairman available.
Have a plan, and figure out where you’re moving to before your home goes on the market.
Be realistic about what your home will sell for, and formulate a strategic plan with your agent.