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What Just Happened to the LA Real Estate Market?

Price reductions
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Crazy! What do all these price reductions mean? Today, I’m gonna tell you about it.

Hey, Scott Himelstein with the Scott Himelstein Group. Welcome back to our vlog. All right, so today I’m telling you what do all these price reductions that are taking place right now, what does it mean? I mean, right now we’re seeing price reductions of 50,000, 75,000, $100,000. Seller says, sell it now. Seller says, we’ll look at all offers on the table. It says sellers motivated. Kind of sounds like 2007.

So I wanna let you know today what’s truly happening right now. I think where we really need to start with is what was taking place over the last couple of years. So you would have a house that would sell for $1 million in the neighborhood, and then the next seller they would list their property 50,000 higher at 1,050,000 and then they would get 1,075,000 or 1.1. And then the next seller after that would list their home for 1.1 and then they would get up to 1,150,000. And then the seller after that would get 1.2 and so forth and so forth. So what we finally got to is that last rung on the ladder where the last round of sellers who says, Hey, you know what we’re gonna try an extra 50 to $100,000. And so that’s where you’re seeing right now with this round of reduction is that we’re kind of just taking a knife and taking the cream right off the top. So we’re not yet at falling home values. And so the last six times that the rates have increased more than a point, the prices have remained steady or went up.

And that being said, there’s a big HOWEVER AND BUT. And the big BUT is that you’ve never seen the increases in prices historically that we’ve seen in the last couple of years take place. So right now you’ve never seen this appreciation of home values in over 20% in the previous year. That’s number one. So it’s possible that the home prices could actually fall dramatically. Now I need you to accept that it’s a possibility. I don’t anticipate a foreclosure market because people have jobs and equity in their homes. So I don’t foresee that happening. I don’t know what’s going to happen. I’m not gonna lie to you. Nobody does. But that being said, you need to know that it is possible home values could fall dramatically. And again, I don’t know what’s gonna happen but you need to understand that what we’re seeing right now, this current round of price reductions is the cream coming right off the top.

So knowing that, I think the next thing that we have to talk about is that there is a perfect storm that was created and nobody could have anticipated this. So again, number one, home values went up astronomically, over 20% year over year. Then number two, inflation, we knew it was an issue, but it’s at 8.6%. It’s the highest inflation in over 40 years. Number three, in order to combat inflation they doubled mortgage interest rates from just six months from the low three’s (3) to where we currently stand right now over 6% currently right now. So that trifecta has changed everything literally overnight.

And so my advice is to get with a professional. If you’re looking to buy or sell a home and tell them, Hey I need you to tell me the truth of what’s taking place in the marketplace right now. If somebody says the market is absolutely going to crash. If somebody tells you, Hey the market is gonna be perfectly fine. The prices are just gonna keep going up. They are crazy. We don’t know. I don’t know. They don’t know. So I’m not a professional economist, but this is my take on what is slowing down the market right now.

All right, so those are the top three reasons that kind of caused that, again, that trifecta that we were just talking about but there’s a fourth bonus factor and that’s kind of conspiring all together with the other three factors. That is when all of this happened, consumers tend to freak out. And then other consumers freak out. Then they talk about it on social media. So 30 years ago they didn’t talk about their emotions on social media. So all these market conditions and factors are conspiring with one another.

Again, I don’t know what will happen but the one thing I do know is that people still wanna live in Southern California and will be buying and selling real estate. We’re still seeing multiple offers if the home is priced right. We literally just had a listing that had 13 offers on it. We had reduced the price just slightly, and again we were able to get multiple offers. So homes are still selling right now.

If you have any questions about the market, feel free to shoot me a DM or give me a call 818 396-3311, that’s 818 396-3311.

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