Q & A: JOHN BARRENTINE OF RED REAL ESTATE GROUP IN Los angeles, california
q: what's happening in your market?
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"Choosing an agent that you trust and that you want to work with and believe in is the way to succeed in this market." JOHN BARRENTINE
Q & A: CHUCK MARQUARDT, BUYER SPECIALIST - RED REAL ESTATE GROUP IN LOS ANGELES, CALIFORNIA
CINDY: Reveal what’s going on in the LA market - at the moment.
JOHN: Well the market has certainly shifted in the first quarter of this year around the 3rd week in January 2012 something occurred and we've been in multiple offers ever since. Its a direct reflection of consumer confidence. We've been seeing We've sold about 23 properties in the last 9/10 weeks. We have 3 full time buyers agents. 65% of our transactions are listings and 35% are on the buy side CINDY: Have you seen any trends with this recent group of buyers? What sets these buyers apart from the ones in the past? JOHN:They're serious! They want to buy renovated properties that are done.The ones that are selling in multiple offers and going over asking price are redone. - new kitchens, new baths, nice floors - they're going quick. They've been waiting.My personal feeling is there is an entire group that's been holding off and waiting. Consumer confidence is back. Buyers are feeling more comfortable buying. |
"Isn't it interesting how people get used to the new reality? People are complaining that it's going above 4% interest rates." CHUCK MARQUARDT
CHUCK:It’s an interesting market.
It’s not really a buyers market.It's not really a sellers market.
It's Micro Market specific.
CINDY: What's a micro market?
JOHN: It’s a market in a very small area.
There are parts of the city where it's a very significant sellers market .In LA from the Miracle Mile area to the Beverly Center to Hancock Park area there are 2.7 mos of inventory in stock.which means if nothing else came to market in 2.7 months - that's about 75-80 days - there would be no homes left for sale.
So a break even market is 6 months of inventory. That’s a stable balanced market.
So below that becomes a sellers market. it's a sellers market in the flats of LA.
However for instance, Malibu there are is almost 3 years of inventory on the market .There the sellers have no control over anything -so the only thing you can do is to price it wildy low to attempt to create any activity whatsoever - it would take crazy low pricing to attract anyone there..
CHUCK: That’s an interesting thing for you to say though that it's a seller's market because
In a true sellers market the sellers can charge higher prices and buyers are going to go for it because theres not alot of inventory.. What I’m saying is it's not really a true sellers market either because its not like a seller can go crazy high on their list prices. Buyers aren't going to do it.
Even though it's a sellers market technically, in some of those micro markets.
JOHN: Buyers are very sensitive. If they perceive that the Seller is greedy or unreasonable in any way then they will walk away and go to the next property because there are choices with things coming on the market.
Having said that we're seeing multiple offers with 2-10-12 Buyers competing for a single property and were having open houses with 100-125 people coming through on a Sunday afternoon, We haven't seen that kind of activity and kind of zeal in the market since 2006.
It's a major shift....
CHUCK: And yet the prices are not going up crazy high.
JOHN: Well, There are still foreclosures and short sales that are coming through the pipeline so what its doing is really sort of stabilizing the market.
There's enough activity there it's keeping prices from getting further depressed i believe,
Its going to be interesting in several months to go back and see exactly what happened.
CINDY:If somebody wanted to get into the market..at this point in time it’s a good time with interest rates being so low - It's the harmonic convergence right now!
CHUCK: Isn't it interesting how people get used to the new reality? People are complaining that its going above 4% interest rates.
CINDY: Remember back in the days of high interest rates?
JOHN: Anything under 10% is a good rate. If you've been around for very long at all -- anything below 8% is a great rate.
CINDY:What's there to think about right? Get into the market now!
JOHN: 25 years ago when interest rates were 17% and 18% people were selling houses..
CHUCK: What we know in LA is that the rental market is going through the roof right now.
CINDY:Tell me about that.
CHUCK: People lost their homes, right? And they have to live somewhere and it's been hard for people to buy homes at this point.because lenders weren't lending for a little while.. People were nervous about making that investment.
So the rental market is projected in LA to be “IT“ for new construction in particular. New construction is mostly around multiple unit apt bldgs . This is according to the Anderson school of business at UCLA from their report back in mid summer 2011.They were talking about what was going to happen in the LA real estate market for these reasons.
The rental market is going to go crazy as far as new construction goes.
CHUCK MARQUARDT
REDREALESTATEGROUP.COM
It’s not really a buyers market.It's not really a sellers market.
It's Micro Market specific.
CINDY: What's a micro market?
JOHN: It’s a market in a very small area.
There are parts of the city where it's a very significant sellers market .In LA from the Miracle Mile area to the Beverly Center to Hancock Park area there are 2.7 mos of inventory in stock.which means if nothing else came to market in 2.7 months - that's about 75-80 days - there would be no homes left for sale.
So a break even market is 6 months of inventory. That’s a stable balanced market.
So below that becomes a sellers market. it's a sellers market in the flats of LA.
However for instance, Malibu there are is almost 3 years of inventory on the market .There the sellers have no control over anything -so the only thing you can do is to price it wildy low to attempt to create any activity whatsoever - it would take crazy low pricing to attract anyone there..
CHUCK: That’s an interesting thing for you to say though that it's a seller's market because
In a true sellers market the sellers can charge higher prices and buyers are going to go for it because theres not alot of inventory.. What I’m saying is it's not really a true sellers market either because its not like a seller can go crazy high on their list prices. Buyers aren't going to do it.
Even though it's a sellers market technically, in some of those micro markets.
JOHN: Buyers are very sensitive. If they perceive that the Seller is greedy or unreasonable in any way then they will walk away and go to the next property because there are choices with things coming on the market.
Having said that we're seeing multiple offers with 2-10-12 Buyers competing for a single property and were having open houses with 100-125 people coming through on a Sunday afternoon, We haven't seen that kind of activity and kind of zeal in the market since 2006.
It's a major shift....
CHUCK: And yet the prices are not going up crazy high.
JOHN: Well, There are still foreclosures and short sales that are coming through the pipeline so what its doing is really sort of stabilizing the market.
There's enough activity there it's keeping prices from getting further depressed i believe,
Its going to be interesting in several months to go back and see exactly what happened.
CINDY:If somebody wanted to get into the market..at this point in time it’s a good time with interest rates being so low - It's the harmonic convergence right now!
CHUCK: Isn't it interesting how people get used to the new reality? People are complaining that its going above 4% interest rates.
CINDY: Remember back in the days of high interest rates?
JOHN: Anything under 10% is a good rate. If you've been around for very long at all -- anything below 8% is a great rate.
CINDY:What's there to think about right? Get into the market now!
JOHN: 25 years ago when interest rates were 17% and 18% people were selling houses..
CHUCK: What we know in LA is that the rental market is going through the roof right now.
CINDY:Tell me about that.
CHUCK: People lost their homes, right? And they have to live somewhere and it's been hard for people to buy homes at this point.because lenders weren't lending for a little while.. People were nervous about making that investment.
So the rental market is projected in LA to be “IT“ for new construction in particular. New construction is mostly around multiple unit apt bldgs . This is according to the Anderson school of business at UCLA from their report back in mid summer 2011.They were talking about what was going to happen in the LA real estate market for these reasons.
The rental market is going to go crazy as far as new construction goes.
CHUCK MARQUARDT
REDREALESTATEGROUP.COM