Holidays to Start Early for Potential Playa Vista Sellers, Buyers: “Memo Not Received”
Having recently been through three multiple offer situations for one buyer client and finally securing the third and best property over the weekend, it is clear that this is not a healthy real estate market. Sellers have not been in a position of power like this in 7 years and now wield their long-relinquished power like a pretty girl at a dance, eliciting unreasonable prices on mediocre properties that would have sold for $100K less only a year ago. Luckily my buyer was very qualified, and this, with some savvy buyer agent tricks, and sage advice, we were able to tie up the best property at under market value, while other hopeful purchasers failed, or worse, succeeded in tying up uninspiring properties at prices where the buyer with the winning bid would hardly be considered a winner.
The biggest culprit in this challenging Playa Vista real estate market is lack of inventory. This acute inventory shortage has been caused by sellers sitting and waiting while their equity, which for many years has been too low to make selling attractive, quickly returns. Move-up sellers are nowhere to be found because there is nowhere to go. There is a minimal level of distressed properties, and the ones that are out there, generate considerable interest, driving up any discount in the list price to a new, higher market value. Many potential sellers I have talked to see no pressing reason to put their home on the market, especially during the holiday season, as they see waiting as the road to higher prices.
As for buyers, it is no secret why the demand is so high, affordability and pent up demand being the two largest factors. This is changing, however, as even with lower interest rates, buyer affordability has fallen almost 10 percent since its peak, and will continue to fall. This will ultimately create equilibrium in the market as sellers come off the fence with the return of their equity, adding to supply, and fewer buyers can afford what they once could, reducing demand. In my opinion, this sick market is only temporary, but don’t expect it to be a passing phenomenon; the rush to get properties before interest rates go up and prices go up more will keep demand strong and prices rising for a while longer.