The Southern California gold rush isn't over for home sellers. As the spring buying season kicks in, there is still money to be made, and plenty of it. But, some experts say, good luck on getting another year's worth of double-digit appreciation, a bidding war or an instant sale.
"That kind of white-hot housing market has definitely slowed," said Delores Conway, director of the Casden Real Estate Economic Forecast at the USC Lusk Center for Real Estate. "We're getting back to more normal-type levels of buying and selling."
For The Record
Los Angeles Times Thursday May 11, 2006 Home Edition Main News Part A Page 2 National Desk 0 inches; 33 words Type of Material: Correction
Housing market: An article April 2 in Real Estate about the end of the housing market frenzy included a reference to Tom Finn. The Keller Williams real estate agent's first name is Tim.
For The Record
Los Angeles Times Sunday May 14, 2006 Home Edition Real Estate Part K Page 5 Features Desk 1 inches; 35 words Type of Material: Correction
Housing market: An article in the April 2 Real Estate section about the end of the housing market frenzy included a reference to Tom Finn. The Keller Williams real estate agent's first name is Tim.
"Sellers just can't put a sign up and think by the end of the day the house will be sold and they are going to get more than they asked for it," said Nicolas Retsinas, director of the Joint Center for Housing Studies at Harvard University. He also said he sees a movement "to a market that is more amenable for buyers."
Of course, what buyers really want to know is whether prices are going to drop anytime soon. Don't bank on it. According to Ryan Ratcliff, an economist with the UCLA Anderson Forecast, we "have only seen prices decline during and after a major recession," and one is not predicted in the next 12 to 18 months.
Meanwhile, interest rates are creeping up, houses are lingering on the market a little longer and the number of sales are down, experts note, but demand remains strong, and prices are still appreciating year over year.
"Definitely, it's peaked," said Jack Kyser, chief economist for the nonprofit Los Angeles County Economic Development Corp. "You have what you would call a face-off between buyers and sellers. Buyers just don't jump at the first house they see on the market."
Sellers, Kyser said, need "a real estate agent who's been in the business more than one or two years, preferably somebody who was in the business in the early '90s, who knows soft markets. And, be realistic about what you can get for your home."
Adding to the mix is pressure from rising interest rates. Douglas Duncan, chief economist for the Mortgage Bankers Assn., projects the rate for a 30-year fixed mortgage will rise from its current 6.25% to 6.75% by the end of the year.
"We are seeing a transition in the marketplace to a less hectic, less frenetic market than we experienced in the last several years," said Leslie Appleton-Young, chief economist of the California Assn. of Realtors.
One big change from this time last year is the number of homes for sale. "In January we had a six-month supply of housing on the market," Appleton-Young said, more than twice the inventory of homes last January. In February, inventory climbed to 7.2 months, again more than double that of the same month last year.
"Buyers have more to look at and can take a little more time," she said. "It also means that sellers have got to price very strategically if they want a rapid or quick sale."
That's certainly been the experience of Francis Gibbons of Prudential California Realty, Los Feliz, who has been in the business for five years.
"Buyers are becoming much pickier, more demanding and insistent on what they want," he said.
What's happening also depends on location and asking price. In the entry-level market, Janet Singleton of Coldwell Banker Marina del Rey said Spanish-style homes in Leimert Park, an area she specializes in, are "still getting multiple offers. We might not get them the first day, but we might get them the first couple of weeks, especially if you're in that $500,000-to-$700,000 range."
In the high-end market, where homes sell for $5 million and upward, "we are getting fewer offers, but each price sets a new watermark," said Jeff Hyland, president of Hilton & Hyland Real Estate Inc., a 50-person boutique agency that concentrates on Beverly Hills, Bel-Air, Brentwood, Malibu and other areas of the Westside. However, "we think the days of the overbidding, multiple offers are not here anymore."
Marc Fiedler, with the Coldwell Banker Beverly Hills North office, is seeing the same pattern. Gross sales are down, he said, but purchase prices are up. His office completed between $250 million and $260 million in sales during January 2005 and only about $140 million this January.
In February he helped Monica Lubkor, general manager of a private club, put her Beverlywood-adjacent ranch-style home on the market.
Within a week, she had a deal on the three-bedroom house, but it fell out of escrow.
She tried again in March.
"I wanted $830,000, but Marc Fiedler told me to price it at $799,000. I took his advice," she said. That price generated four bids and she is now in escrow for the amount she wanted originally.
Tom Finn of Keller Williams, Woodland Hills, knows the market professionally and personally. He just sold his three-bedroom home in Calabasas for close to the $789,000 asking price, and he has no complaints about the offer he accepted. He estimates the price he got was 7% higher than the price he would have received this time last year.