The Los Angeles real estate market has been experiencing a "good sale" not a fire sale, but a good sale.  When the real estate market is hot, most homes sells quickly and for top dollar.  Even, homes with incurable defects such as being located on a busy street, not offering much of a back yard, etc., sell quickly. 

But when the market turns, the homes on the busy street, the ones with poor floorplans, the homes with problems that can't really be fixed are the first to drop in price. These same homes are typically the ones that experience the most severe drops in price.  This is one reason that there is such a huge problem in the Inland Empire, so many of these people commute, few really want to live there, they just bought homes because that was all they could afford (or because they wanted a big shiny new home and didn't want a smaller older home in one of our communities).  The less desirable homes and locations depreciate more than the desirable. 

Since 2004, the more affluent Los Angeles neighborhoods, have dropped about 15-25% (depends on the home, neighborhood, amenities, etc.).  By affluent I don't mean Beverly Hills, I am including communities where doctors and attorneys might live but also police and fireman.  Communities such as La Canada, Glendale, Pasadena, Burbank, La Crescenta, Eagle Rock, etc.

Many home buyers were priced out of the 2004 housing market, and are "sitting pretty" with large down payments, looking only for the right home.  But which is the right home? 

First and foremost it must be priced for today's market.  Most of the homes which are selling continue to sell for over 95% of final list to asking price.  Home seller's don't need negotiating room, they need an aggressive asking price.  Well priced homes continue to sell in multiple offer situations and some of these sell for over asking price.  (My last two listings sold in multiple offer situations and for over asking price - fact!).  Home buyers are uncertain if and when we will have hit bottom, they don't want to overpay for a home, because they aren't sure if prices might dip further in the coming year.

Condition can be an obstacle because of lender's requirements for larger down payments (although down payments of as little as 3% are available FHA financing).  Home buyers tend to pay more money for homes which are staged. 

Home buyers looking for a bargain should hope to find a cosmetic fixer.  Think Grandma's house, the roof is in great shape, the home has copper plumbing but the wall paper is hideous, the carpet is gold BUT the expensive items have been done and paid for.  Because most buyers can't see through the ugly, this is typically the best buy.

According to Mercury News: Heavy discounting on foreclosed homes and low interest rates continued to power a home-buying spree across the West in September, sending sales of existing homes in the region soaring at an annual pace reminiscent of the days of the housing boom, according to two reports Friday.

To finish out my week:

A potential home seller contacted me and told me that this is a bad time to sell a house because buyers can't obtain financing. False! Qualified buyers continue to obtain loans (lenders earn their income by making loans).

A potential Glendale home buyer contacted me about homes priced in the high 5's and low 6's, this buyer is in the low to mid 4's.  He thought he might have a chance of getting one or the other in his price range. Highly doubtful, I think he has a better chance of winning the lottery.   Very few Glendale homes are selling for more than 20% off the final list price.  AND the small percentage of homes that are taking this hit are grossly overpriced in the first place.

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