From my family to yours, I hope this article finds you well! It was a slower yet still very hot 2019 here in Los Angeles, and as it’s now 2020 I predict we are going to see a lot of activity as well as Hines that are finally realistically priced.
Now when I say I think we are going to have a hit in 2020, I recognize that we’re not going to have bidding wars and people are not selling with multiple offers. However, it’s very similar to what I’ve said in the past. We are in a healthy place where the market is still sustaining itself. It may cool off a tad more, but one thing we can say definitively is that the market is moving along strongly considering the rest of the country.
My advice to sellers for right now is this: price your home appropriately!
If you want to be foolish, go ahead and wait as prices come down a bit and go ahead and sell your property for less than it’s worth after it has sat on the market for a while.
Once again, I reiterate prices will soften a tad… Not a lot, but enough to make a difference, especially when your house has been sitting on the market since the Reagan administration. You need to be ahead of the game!
I can’t speak for other agents and I can only speak for myself, however, usually, when I’m doing very well, I find out that my colleagues are doing very well also. It’s usually very consistent and when business is hot business is hot for most everyone. On the flip side, when things are slow for me, it’s slow for other agents, too.
This past summer I started to think to myself, “the end has come, it’s time for a major correction.” I decided to let it coast and see how we did at the end of the summer, and sure enough, it was just the typical lull of the summer months.
My Prediction
The height of the market was truthfully in 2017. Some may argue 2016. However, most people didn’t pick up on that, because you still hear about all of these crazy numbers. 100 million here and 100 million there… people just think these sales over fifty million are a dime a dozen. They are not! It’s just that when a major sale happens it makes the news. In reality, there are less than two dozen homes that have ever sold for more than fifty million dollars in Los Angeles.
Since we are still getting these sales, it is causing people to continue to not be realistic and have their heads in the clouds. Thus they still pay these crazy numbers for houses. Let’s face it… these numbers were nuts two years ago… and they are still nuts now!
During the first quarter of 2020, I predict that a lot of houses that have been sitting on the market for a while will start to move. Some of these houses have been sitting on the market forever for the mere fact that the sellers have been trying to hold out.
But I think sellers are now starting to realize that this isn’t just a seller’s market. It is a buyer’s and a seller’s market.
The truth is we are not on fire like we used to be. That being said, we are nowhere near a major correction or downturn or anything like 2008. As I’m driving down Santa Monica Blvd. crossing Rodeo right now and drafting this article on my phone (hands-free of course. I am dictating into my telephone)... I am looking at all of the retail stores along with Rodeos such as Chanel and Bijan or the mega sale of the Andersons building to LVMH. All of these buildings have sold for over $100m on Rodeo.
These buildings were bought by major companies and by some very intelligent and successful people. This means that large companies and wise investors are shelling out $100 million into a building (that has terrible cash flow and less than a half a percent return on their money annually) and no one does this when they don’t believe in our economy and the markets. This gives me some credence for making my predictions about the state of the market, and the future health of the markets.
The Market is Both a Buyer’s and Seller’s Market Right Now
So what does this mean exactly?
Usually, there is a buyer’s market when there is a downturn and there is a seller’s market when the market is hot.
Currently, we are in a very comfortable spot, with properties that are valuable trading for premiums and properties that are average trading for market value.
As usual, anything that is overpriced will just sit, and the longer properties sit the smaller the chance they have of selling for top dollar.
Why I am Excited
I am very excited for the first quarter because a lot of houses that I and my clients have had our eyes on for a while, (but are just priced too high), I believe will sell for more realistic prices.
For example, one house my client likes is worth $10.5m, and I know we will be able to pick it up in the $9m range very soon here. Had the seller listed the home for $10,995,000 originally instead of $15,000,000, the house would have sold for every penny of $10.5m.
This past 4th quarter has been my best quarter in 14 years of selling real estate. That’s kind of unusual, especially given the fact that there is speculation that we’re due for a correction. I think people are seeing the writing on the wall and are realizing they need to get their heads out of the clouds and be more practical in the way they price their homes. Those that are smart will adjust their prices accurately and those that are dumb will chase the market!
It’s funny… No one ever believes the market will slow down and it’s so funny because you would think people would learn from their mistakes after all these years of rising and slowing markets and price corrections… but they don’t… they just keep going on like they are impermeable.
I’d like to restate that I am not expecting a downturn. I’m just giving you information, as the market dictates it.
A Change is Coming to Beverly Hills
The one place I think where there is going to be the greatest change in price is with the spec homes that have been built in Beverly Hills and in Bel Air. They were built for outrageous prices, and as a direct consequence, have just been sitting on the market for months now.
Sellers have hard money loans as well as big debt on these properties and they don’t want to pay the carrying costs. Some will continue to hold out and probably screw themselves in the long run, however, some will be more logical and start making deals.
Overall, I’m very excited about the first quarter.
There’s a lot of opportunity for buyers right now and there is still a lot of opportunity for sellers as long as they remain realistic. Go make the most of 2020.
