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Manhattan Beach: Why Didn't You Buy in the 90's

By Kaye Thomas

Real Estate Agent with Real Estate West BRE# 701315

June 22, 2007 04:10 PM

Sand Dune Park... Manhattan Beach

After I posted Beach Cities Sold May 2000-2007 I had people ask about home prices in the 1990's. That always makes me laugh.. as if numbers from 10+ years ago have much to do with today. It reminds me of people who constantly talk about how much they weighed 10 years ago. That means nothing... it's what you weigh today that matters. The same is true of home prices.

I remember the market in 1995-1999. Most of the foreclosures were over and people who had lost their jobs were finding work again. Interest rates were good around 7.5-8.5% and life was moving along back to normal in the Beach Cities. There has always been a certain group of people who are afraid to buy because the price might go down.

When I entered real estate in 1979 these people were waiting for prices to go back to 1968 levels. In 1995 they were waiting for prices to drop back to 1987 levels. And today there are those who are waiting for prices to drop back to 1997 levels. The only thing that has happened over the years is that prices bounced around and then eventually went up and up and up. It's been the same story since my family moved to California in 1952.

Sold May 1995-1999 Manhattan and Redondo

In May of 1997 you could have bought a median priced home in Manhattan Beach for $538,000 but a lot of people didn't because they knew the market was going to crash. Why didn't they buy in May 1999... heck it was only $620,000.. but people didn't because prices had gone up since 1997 and they knew that the market would soon crash. In 2014 when I post prices from 2007 and they are vastly higher.... I'm just going to repost this article and ask.. Why didn't you buy in 2007 when prices were so cheap?

The demise of the California real estate market has long been prophesied but has rarely lived up to expectations. A 1999 article titled California, Nation Headed in Opposite Directions on Home Ownership decried how terribly overpriced California real estate was compared to the rest of the country. The average California resident would never be able to own a home when the median price was $208,000. Then there is the 1988 tale of One California Family Caught in the Middle where the parents worried about how their children would ever be able to afford a home priced in the $180,000's.

Agents get slammed because we don't tell the truth about how terrible the real estate market is... but the problem is that it isn't that terrible. It's not great but it isn't terrible. Often our memories are short and we forget that those homes priced in the $180,000's were out of reach for many because they weren't making enough to qualify.

Today's market is no different. People look longingly at the prices from 1995-1999 and forget they could have bought then.... but didn't because many were waiting for prices to fall. Today those who bought in the 90's are thought to be lucky. If they sell at a profit then they are greedy. No one remembers that these people took a chance at homeownership while others waited for the market to fall. They struggled with the monthly payments at interest rates that were between 8-10%.

Yes there is a certain amount of luck associated with the housing market but mainly the luck is only because you bought. It's like the old joke about the blonde named Sally who asked God to let her win the lottery.. every week she checked and she didn't win. She was really mad at God and wanted to know why she hadn't won yet.... and finally God replied: "Sally... help me out here ... you have to buy a ticket".

You have to get in the game before you can win a prize... if you don't take a chance and buy a house you will probably never own one.... YOU HAVE TO BUY A TICKET

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Lynda Eisenmann

Preferred Home Brokers - Brea, CA

Broker Associate ,CRS,GRI,SRES, Brea,CA, Orange Co

Kaye,

Your posts are great! I love reading you, experience and wisdom shows through. Today I met with a client who paid $385,000 for a 4-plex in 1999 when he bought it from me back then, (it was a CRS referral I listed and sold) we expect to sell it today for around 1,025,000. To top it off, he was a tenant in the building then and bought it will little down on FHA financing. Can you even imagine how he feels!

Btw,...let's see 10 years ago I weighed....

Jun 22, 2007 04:21 PM

Brian Brady

Matthews Capital Markets - Tampa, FL

858-699-4590

Imagine what they'll say in 2020:

remember when you only paid a million for that home back in 2007?

Jun 22, 2007 04:29 PM

Jeff Dowler, CRS

eXp Realty of California, Inc. - Carlsbad, CA

The Southern California Relocation Dude

Great post, Kaye. I love selling tickets. :)

It always amuses me when people want to know what the owner paid for the property X years ago when looking at current list price.

Jeff

Jun 22, 2007 05:20 PM

Kaye Thomas

Real Estate West - Manhattan Beach, CA

e-PRO, Manhattan Beach CA

Lynda- Thank you.... I also have clients who bought around that time and have done very well.. who knew but they took a chance and bought. I know this market is a little scary for some but it goes back to the baxic tenets of real estate.. it's a long term investment.. If you want to gamble go to Vegas..

Brian-In less time then that.. we just had a fixer sell that I told a client if he bought it in 5 years he would talk about how smart his agent was... it sold for slightly more then $300,000 over list price.. with 10 offers split between owner users and builders duking it out.. owner user won..

Jun 22, 2007 05:21 PM

Kaye Thomas

Real Estate West - Manhattan Beach, CA

e-PRO, Manhattan Beach CA

Jeff- OK you can be the ticket vendor.. I know that some RE Guru came up with that idea and maybe there are places where it might have some value but not in CA in the last 30 years..

Jun 22, 2007 05:24 PM

Marlene Bridges

Village Real Estate Services, Inc. - Laguna Hills, CA

Laguna Homes|Laguna Condos|Laguna Real Estate

Sally - You are so right that there are many fence sitters who still aren't ready to get into the game. When they make the decision, it'll be a whole new game. Sure glad I bought a ticket and hope to buy more. Let's go back to H.S. weight...that's probably the last time I didn't mind telling anyone what I weigh:)

Jun 22, 2007 05:40 PM

Bob & Carolin Benjamin

Benjamin Realty LLC - Gold Canyon, AZ

East Phoenix Arizona Homes

I lived in Redondo Beach in 1968. I remember those days fondly. There is only so much oceanfront and so many homes that can go on the beach cities. So the prices will continue to go up.

Jun 22, 2007 05:46 PM

Kaye Thomas

Real Estate West - Manhattan Beach, CA

e-PRO, Manhattan Beach CA

Marlene- It will be interesting to see what plays our over the next year.. but like you I'm glad I have my ticket.. and Yep I wouldn't mind seeing those BGHS senior weight numbers again..

Bob& Carolin- You hit the nail on the head there is only so much of the white sandy stuff and lots of people want to live here..

Jun 22, 2007 07:10 PM

Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

Or, you really know the market has crashed when folks stop buying.

I can't figure it out. Our market is a fraction of what it was 3-5 years ago. Buyers will not buy what they see for their qualifying amount. Homes sit on the market for months, a year or more. Yet, new listings keep coming on the market with every higher prices.

I believe I market is crashing and folks just don't know it yet. Although, for new construction, it's very much the time to buy.

Jun 23, 2007 12:12 AM

Kaye Thomas

Real Estate West - Manhattan Beach, CA

e-PRO, Manhattan Beach CA

Lenn- Wish my crystal ball wasn't still so cloudy or I'd have an answer. In your market there really is a lot of inventory and prices are dropping.. so the fear is real..but what buyers don't think about is the rising interest rate.. they would be far better off to get a lower 30 year fixed rate loan and have the house price bounce a bit then to get a higher rate and the price drops 5%-10%.. the house value may bounce back in a year or so..but the rates could be permanently on the rise.

Jun 23, 2007 03:31 AM

Leigh Brown

Leigh Brown & Associates, RE/MAX Executive - Charlotte, NC

CEO, Dream Maker - Charlotte, NC

I love the way you write and deliver hard-core real estate knowledge in a readable way. This is one to share with all buyer clients!

Jun 23, 2007 02:08 PM

Kaye Thomas

Real Estate West - Manhattan Beach, CA

e-PRO, Manhattan Beach CA

Leigh- Thank you for the very kind words.. this is why I love blogging.. you can share information with clients that they might not otherwise get..

Jun 23, 2007 03:29 PM

Danny Smith

DISCOVER TEXAS HOMES - Round Rock, TX

Kaye, your absolutely right! People always look back to compare things. That's quite a sand-dune in the pic!

Jun 24, 2007 01:34 PM

Kaye Thomas

Real Estate West - Manhattan Beach, CA

e-PRO, Manhattan Beach CA

Danny- The whole town used to be nothing but huge sand dunes.. actually shipped a lot of the stuff to Waikiki in the 20's.. but there are still places where if you start digging it's nothing but sand..

Jun 24, 2007 02:18 PM

Celeste "SALLY" Cheeseman

Liberty Homes - Mililani, HI

(RA) AHWD CRS ePRO OAHU HAWAII REAL ESTATE

I just had a man who I've been working with for two years...he sold his vacant land and he finally is ready to buy. He got afraid that the interest rates would rise (they did but fell again last week). Sometimes, I just have to be patient and show the facts to them (the ones that think there's going to be such a severe drop in prices that they'll make the big score) that the market over here is dropping some in some areas...but significant enough where their going to get a good deal like I did three years ago....(I sure am glad.....)

Jun 25, 2007 06:43 PM

Kaye Thomas

Real Estate West - Manhattan Beach, CA

e-PRO, Manhattan Beach CA

Sally- I bought my current house in 1991 at the top of the market.. I watched the value drop in 94 with all the foreclosures but I wasn't going anywhere and knew it would come back.. which it did and then some.. even if the market dropped 50% I would still be ahead of the game.. not to mention all the tax benefits over the years..

Jun 25, 2007 07:16 PM