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December 2016 Real Estate by Dennis Adelpour
2016 was a great year for real estate. We had another year of appreciation with some areas seeing double digit gains from last year. (January's Newsletter will breakdown the overall increase). We started to see a slow down towards the end of the year but a strong increase in activity after the election. It will be interesting to see how the first quarter looks as the dust starts to settle with a new president and the market digesting higher interest rates.
Many analysts are forecasting that 2017 will also be a strong year for real estate in Los Angeles. It’s important to note that the Los Angeles real estate market behaves very differently than other markets in the country. Everyone wants to live in LA so you know the demand will always be high. With a lack of supply of homes and a strong demand of able and willing buyers, Los Angeles is in a world of it’s own with regards to real estate.
The Key indicators to keep an eye on in 2017 are interest rates, the supply of homes, number of sales and how long properties stay on the market before getting sold. These metrics will give us insight as to the strength of the market moving forward. We will keep an eye on these indicators and update you through our monthly newsletters.
Advice for Sellers
Seasonally speaking, the market starts to pick up again in January and continues to do so through July/August. Buyers are going to be more cautious going into 2017 with a highest cost of money and prices going up. The first quarter will have a lot of uncertainty with the direction of the market so if you plan to sell in the 1st quarter, you must price your property correctly. Pricing correctly does not mean pricing low and selling it for a discount. Choose the correct pricing strategy for your specific home to make sure it doesn’t sit on the market. As days on market will be a key indicator in 2017, you don’t want to give buyers a reason to try and drive your price down. The pricing strategy we use for homes priced at $10M are usually very different than for properties priced at $1M. The supply and demand ratio for your specific area will help you determine what pricing strategy would be best. Send us your home address and we can provide you with helpful area statistics that will guide you through the process of coming up with the right price.
Advice for Buyers
Interest rates are still near historic lows from a macro perspective. Increasing rates from 3.5% to 4.5% is a major jump however, and has caused many buyers to take the side lines because they are no longer able to afford the payments. This one point increase translates into a 28.6% increase in how much interest you would potentially pay. That’s a large increase. Consider getting a ARM (Adjustable Rate Mortgage) loan with much lower interest rate than a 30 yr. fixed loan if you know you don’t plan to be in this home for 30 years.
We are still seeing some great bargains out there. Regardless of where the market is, you always want to get a deal. Explore those listings that have been on the market for more than 60 days and those properties that keep coming on and off the market. Those are usually where the deals are located. Let us know what areas you are most interested in and we can send you a list of homes that have been on the market for 60+ days and homes that keep coming on and off the market for your review.
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