Sunday, March 19, 2006

Prices Up... Sales Down... What's Happening?

The California real estate market... nothing ever seems to make sense. Just when everyone was predicting the crash of the market with sales slowing... prices are rising. None of the boys from the think tanks predicted this!
There is always one sure thing about the real estate market in Southern California... no one knows what will happen.
Part of the reason is that most of the areas around our major work centers are built out. This is especially true of the Los Angeles/ South Bay area. If you work in Century City, Downtown LA, Redondo Beach or Torrance you could see a commute of easily 2 hours before you found something "affordable"(a home under $400,000).
These areas don't have access to large tracts of land on which to build new housing. If you want to build new you will first have to tear down something old and that can be costly.
If you want to live in the South Bay you will have to pay for the privilege of a short commute to work. Unless we have a huge recession and related job losses ( as aero-space in 1990) or a major disaster or I think you can count on prices continuing upward. There may be more foreclosures then normal but overall the market will survive. Prices may move slowly but they will continue going up over the long term.
I have been selling real estate since 1979 and the market has gone up and down but I can guarantee you that in the end it always goes up more then it goes down. Even in the 1990's market you couldn't buy a home for what they sold for in the early 1980's.
The market went down it didn't die.
Many people are predicting a major crash in the South Bay. A small leveling off can be expected but if you sold thinking you can buy back at a 40-50% discount you may be very disappointed.

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