Saturday, February 9, 2013

West Los Angeles - 860 Homes for Sale - None in Playa Vista

Buying or Selling a Home in West Los Angeles - Real Estate Market Is More Like 2006 than 2012

We have heard it before.  Real Estate is all about location.  Right now a perennially hot spot for housing is finding its legs and then some.  In all of West Los Angeles there were only 860 single family dwellings for sale as of December 2012.  Marina Del Ray had 7 for sale.  Playa - none.  Cheviot - 5.  The entire city of Santa Monica only 27. 

With so few homes for sale, we are seeing frantic buyers paying over asking again.  Valuations are going up so fast that it is hard to know what a property is worth.  Zillow shows some properties up more than 20% in six months.

Whatever happened to the shadow inventory that was going to keep depressed homes off the market?  Seem that the banks wised up and realized they were better off to keep folks in those underwater homes than to foreclose.  They either maintain the client until better days, or they have a higher valuation when the time comes to sell.  Win Win.

So, the shadow inventory is likely to come slowly into the market, with the result being very little dampening effect on the price appreciation now being experienced.

What could slow down the market?  Not supply.  Nothing is being built in West LA or pretty much anywhere in LA.  And there doesn't seem to be a big rush for current owners to get out.  Many might feel that there is room for this market to run.  Prices topped out in 2008 around 50% higher than current values, so unless a current owner has a reason to move, expect most to stay put until they can take advantage of much higher prices.

Cash?  No.  It turns out that there are plenty of cash buyers in the market, both corporate and individual, who see an opportunity to buy cheap and rent out to folks who can't qualify for loans, but can afford the rent.  This can't go on forever, in that the investor will see a limit to what will "pencil out" as an investment. 

Eventually there will be a time when the individual buyer will be priced out, too.  However, as with all previous bubbles, this will likely happen only after a frantic period of overpaying. 

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