Our Housing Guru has been a busy fellow as of late. The housing boom/bust has him all atwitter. So like any one of us would do, he hit the pavement to talk to some real life home buyers to see what's happening in their particular world as they search for shelter in the Los Angeles area. What he finds may surprise some... The first subject test case is a first time buyer who, based on the Housing Guru's description, we have created a composite image, below. The Housing Guru promises more to come.
Subject: single, successful 31 year-old female entertainment industry marketing producer, income just over $100,000. First time buyer.
Goal: a stylish one bedroom condo in West Hollywood or Hollywood, safe neighborhood, good building, etc.
Willing to pay: Right within the market average, say $465K to $569K per October's DataQuick information for WEHO and Hollywood zip codes.
Experience: Our subject has been somewhat picky about her choice of units. At the high-end of her range (just under $600K), she would have no more money for renovation and expects a “done” unit. At the lower-end, she’s willing to buy a unit that needs updating. She understands that a view and a completely renovated condo is not in her price range and is willing to accept one or the other. She’s looked from Franklin and Hollywood to Santa Monica and Fairfax, focusing on classic Spanish buildings, mid-century or other interesting structures. Her bidding strategy has been to start between 5% and 10% under list price (supposed to be a falling market, right?), a strategy that would have been advised against a year ago. She’s looked at comps carefully and will not bid on a “bargain” unit or something that’s been sitting a while overpriced unless she would enjoy living there(at $600K for 800 sq/ft, you’d better like it, right?). She’s been willing to counter and raise her price to within 5% of list price. Find out what our subject buyer finds after the jump.
Outcome: Six condos, six offers, zero purchases. What’s happened? Within the offer process, other buyers have emerged (even if she started as the sole bidder) and she’s been out bid. In one case, the seller simply wasn’t willing to come more than 1% off list. Most of the units have sold from 95% to 97% of list. She’s not given up yet, is still looking and bidding, and is neither willing to buy any of the “bad” units still on the market, nor pay list or over (again, isn’t it supposed to be a soft market)?
What does this mean: Forget the press. In desirable areas (WEHO, the better parts of Hollywood), in a competitive price range (dead center of the market for all condos, on the higher end of one bedrooms) the market is not crashing and a well-qualified buyer with real money in her pocket cannot get a bargain. She’s close enough to getting something to know the market isn’t on fire as it once was (things are not – generally – going for over list), so her hopes are high, but she’s realized that the sky is not falling, great units are not being given away and its going to take higher bids and faster counters to get a condo.