Archive for March, 2008

Finding Value—the tip of the iceberg

The current soft market is illustrating one of my long held principles as a realtor:   value, as indicated by a property that goes up the most in an “up” market and down the least in a “down” market, is not purely a matter of location.

While prices on the Westside in general and Santa Monica in particular are holding up better than other parts of Los Angeles County and the rest of California, it’s instructive to pay attention to details.   The very best properties, the tip of the real estate iceberg, assuming they have credible listing prices, are still selling quickly, some even with multiple offers.

But if that three-bedroom house is on a busy street it will take longer to sell, and at a disproportionately lower price, than its uncompromised neighbor two blocks over.   That two-bedroom condo with less than 900 square feet of living space will be a much more difficult sell than the one in the same neighborhood with more than 1,200 square feet, even though the latter has a higher asking price.

There’s a line of conventional wisdom about real estate that says one should buy the worst property in the best location one can afford.   I disagree.    If you put all the properties in an area on a 1-100 scale, I recommend not buying any home at 25 or below.   Don’t buy on the busy street, don’t buy the excessively small, don’t buy the house across the street from a fire station.   Instead, if building and sustaining value is among your top priorities, find a home that doesn’t have any of these incurable defects.

Contrariwise, if you really need “bang for the buck,” getting some combination of larger/newer/nicer, then these homes with the incurable defects are exactly the properties you should look at.  But remember, the “deal” you get on the front end when you buy is the same deal you will have to give on the back end when you eventually sell.   You’ll be able to meet your daily needs at the cost of reduced appreciation.

As your realtor, I can help you understand and weigh these trade-offs.

March 30, 2008 at 3:44 pm Leave a comment

UCLA Anderson School Forecast & Santa Monica Real Estate

The most recent (March 11) UCLA Anderson School economic forecast suggests that the California economy will remain weak but not slide into recession. Full report here: UCLA Anderson School Report

There is a chicken-and-egg relationship between the state of the economy and the real estate market: a weak real estate market is a drag on the economy and concerns about the economy lead to a weak real estate market. I have long been of the belief that consumer confidence is no less than second to interest rates as a gauge of activity in the real estate market and right now that confidence seems shaky.

As a Santa Monica realtor, I’m seeing the number of transactions in the first three months of the year drop roughly 50 percent compared to each of the past four years.

For buyers, at any rate, the situation is not bleak: I just represented Buyers getting an accepted offer on a 2-bedroom condo within walking distance of Main Street for less than $500K…a year ago, that couldn’t have happened.

For more on the Santa Monica real estate market, click on the Santa Monica Homes link on the Blogroll at the right of this screen.

March 19, 2008 at 8:31 pm Leave a comment


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