Observations by a Beverly Hills Realtor: How is the Real Estate Market...

By
Real Estate Agent with Berkshire Hathaway HomeServices 01238708

Looking for the latest update: What is going on in the Greater Los Angeles Real Estate Market? Observations by a Beverly Hills Realtor, Endre Barath, Jr.

I get asked this question almost every other day from existing clients and those clients who are considering buying or selling. I keep repeating myself like a broken record: Please do not listen to the “headlines” instead let’s look in the areas you are considering buying or selling.  So they ask is this the new normal??

Keep in mind the larger trends are a good indication of the pulse of the market, but it is not a tell all.

What I am seeing there is not only a low demand to buy, but it coupled with low supply. There are fewer buyers who are considering buying and there are fewer sellers who are considering selling to either move up or in downsizing? This generally is followed by the next question: Why is this trend happening?

Well, the answer is quite simple, when homeowners who are considering selling,  they start doing the numbers and realize that their purchase power has shrunk, in turn they start reconsidering . I just finished listening to Steven Thomas a quantitative economist and his assessment is spot on. Check out his illustration.

www.endrebarath.com

In January interest rates were 3.25% now they are around 6.25% put this in simple perspective with a 10% down payment on a million dollar purchase the monthly payment was $3,917.

Now in August the same identical numbers on a $1million purchase with 10% down payment  the monthly payment is at $5,541.

www.endrebarath.com

Add to that inflation of everything from food purchases at the Grocery Stores to buying your fuel to operate your car. Everything has increased except for the income of the potential buyers and sellers. All in all  these points discourages home owners to sell their home. Let’s be clear why should they move?

They love their homes; they have been living in it more so in the past two years during the pandemic shutdown and realized it is not so bad living and working from home. Yes, some would prefer to have an extra bedroom and have a pool in the backyard.  This of course would make life better for them, but it is not an absolute necessity.  Hence, they stay and do not want to sell their home.

www.endrebarath.com

On the other hand the buyers who live in Apartments homes want to have a back yard and get away from their neighbors. They would love to have distance, the ones that are seriously looking understand that a purchase today at a higher interest rate is still better hedging their money against inflation. They would be locked into an interest rate, meaning the bank will not raise their payments. Unlike the landlord who would be increasing their rent. Then to boot they would start reducing their principal every month and get value increases as the property’s value would increase. Then on top they would reap tax benefits too.

Sadly, not all buyers are this savvy and the activity of buyers have decreased too. Only savvy buyers are in the market today.

 

www.endrebarath.com

Wishing you a safe and healthy life and I look forward to your comments. If you are looking for a knowledgeable, focused and goal-oriented Realtor in the Beverly Hills area who will help you achieve your Real Estate goals, please reach out to me directly! If you are looking for a pet friendly Beverly Hills Realtor who can handle and sell the most difficult properties that no one else could, please reach out to me directly!! If you are considering buying or selling a home, a luxury home, luxury investment real estate, luxury vacation homes, or luxury beach properties in Southern California, Los Angeles, Century City, Westwood, West Hollywood, Beverly Hills, Marina Del Rey, Venice or Malibu, feel free to contact me at 310.486.1002 ( m) homes@endrebarath.com or visit one of my websites at https://www.endrebarath.com I contribute a portion of my commission to local animal rescue organizations. Endre Barath, Jr. Realtor at Berkshire Hathaway HomeServices California Properties DRE#01238708

 

 

 

 

Comments (42)

Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Ray Henson  savvy people buy in the low end of the market, they are not afraid they understand... I have a client who is so savvy and now thanks to the last down turn drives a Rolls Royce:)Endre

Sep 04, 2022 10:39 PM
Ray Henson

During the Great Recession, I thought I would become a real estate agent and try to find a few good rentals.  I had no retirement plan other than that.  The plan worked out very well.  I doubt I will ever drive a Rolls Royce, but my GMC Sierra will do and I am much closer to retirement.  ☺️  Real estate and a little leverage go a long way.

Sep 05, 2022 09:46 AM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Adam Feinberg  we are so on the same page on a side note for some reason I just noticed we were not following each other... that has been corrected on my end, Endre

Sep 04, 2022 10:41 PM
Adam Feinberg

I could have sworn I was following you. Obviously this wasn't the case, but it's been corrected on my end too. While our markets operate differently (i.e. co-op's and all sorts of strange property types, etc) I imagine there is some overall with the type of demographic we are serving. Most of the area I specialize in is more of Manhattan's version of a middle class (but wouldn't be viewed that way in most of the nation). That said- with all the new construction we are seeing, there is a growing segment of my specialty area where apartments are starting at $1.2m with a few going for up to $5m or so. Townhouses without being a total gut or having some sort of rent control attached start around $2.2m and typically go up to around $5m- with the recently closed former home of Neil Patrick Harris being an outlier for $7m. That said, I might occasionally handle sales outside of my core area. 

Sep 05, 2022 11:26 AM
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

The Beverly Hills song that was popular in the 90s kind of ringing in my head right now in a really earwor kind of way

Sep 04, 2022 11:23 PM
Aura Alex
CloseMyDeal, LLC - Seattle, WA
Specializing in Multifamily Projects Nationwide

My millennial daughter and her husband bought a house in Seattle's suburb early last year without assistance from realtors. By the time they picked the place, they only met with the listing agent, and they came with the Purchase Agreement already filled out, and EM check ready to be signed. The only time agent was involved was when they needed to show inside the new home and execute the contract.

They didn't even consult me (the old lady) about the buying process; all were researched and done online. They were first-time buyers, and it was a breeze for them!

Sep 05, 2022 12:07 AM
Dr. Paula McDonald
Beam & Branch Realty - Granbury, TX
Granbury, TX 936-203-0279

Oh, the media schmeadia! Yes, turn them off, and as you said, focus on your own neck of the woods as we say down here! Great post.

Sep 05, 2022 06:03 AM
Miriam Odegard
United Real Estate Indianapolis - Indianapolis, IN
Real Estate Broker Serving Greater Indianapolis

Very informative post, full of expert analysis. Thanks, Endre!

Sep 05, 2022 06:08 AM
Matt Brady
Watermark Capital - Del Mar, CA
One of San Diego's Best Lenders

My favorite blog of this year. A very easily understood presentation of what I have been trying to tell people for the past year!

Sep 05, 2022 11:39 AM
Sheri Sperry - MCNE®
Coldwell Banker Realty - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

Hi Endre Barath, Jr. - Great analysis as always.  The big warning I am giving sellers is that the bottom feeders are starting to show up.  They see that some sellers are dropping prices, and then the bottom feeders think they can come in and steal the house for another 10% to 15% below the last drop.  Sellers can't panic right now.

Sep 05, 2022 06:22 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Laura Cerrano I am glad my post made you ring a tune in your head:)Endre

Sep 05, 2022 07:07 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Aura Alex  they are a rare exception... there is a great deal of bad information out there on the Internet, Endre

Sep 05, 2022 07:09 PM
Aura Alex

Endre, The information my kid reviewed was listed on the broker's website (Redfin). Are you saying their listing information on the Internet is not reliable? Or were you referring to something else? If so, what kind of information on the Internet that potential buyers can't trust?

Sep 05, 2022 09:49 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Miriam Odegard  thank you glad you liked it, Endre

Sep 05, 2022 07:11 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Dr. Paula McDonald  glad you liked it and I so agree with you, Endre

Sep 05, 2022 07:12 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Matt Brady  thank you and like you I wish more people would comprehend this...Endre

Sep 05, 2022 07:14 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Sheri Sperry - MCNE®  yes I have started to see a few... I tell them I will not write the offer up until they become realistic, Endre

Sep 05, 2022 07:15 PM
Debra Leisek
Bay Realty,Inc Homer Alaska - Homer, AK

As in all things Real Estate, what goes up must come down and down goes back up. There are always buyers and sellers for every market The good agents are ready and able to help their clients make the best decisions for themselves and sometimes protect them from themselves.  It is an interesting business we work in. 

Thank you Endre Barath, Jr.  for another timely post!

Sep 06, 2022 12:28 AM
Margaret Goss
@Properties - Winnetka, IL
Chicago's North Shore & Winnetka Real Estate

Yes - the snapshot graphic from Steven Thomas is sobering. And it would look scary and undoable to a newer buyer. Expert analysis of what's really going on as you have done is the best antidote any real estate advisor can give.

Sep 06, 2022 08:38 AM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Aura Alex  Redfin, Zillow, Trulia all came about 20 plus years ago with the intent that they would eliminate Realtors... there was a meeting in San Francisco.... and the peopel spoke how they will eliminate Realtors... fast forward 20 years now Zillow and Redfin are Brokers because they could not eliminate the Realtors.... so with that said Zillow admits to 15-20 per cent errors on either direction high or low... Trulia was absorbed by Zillow.... as to Redfin they hire Realtors who are trying to pick up extra business because they want additional income.... their goal is to eliminate commissioned based sales and hire employees with a paycheck.... just my two cents like I said your kids lucked out...Endre

Sep 07, 2022 10:46 PM
Aura Alex

Endre Barath, Jr. I was familiar with Redfin's hiring practices. A friend of mine went over there and tried to recruit me. Yes, they are w2 employees, which was the main reason they could offer clients 1-2% listing fees. They even said if you're great, they will reward you with a company car painted with the Redfin logo. This was at the time around 2005, I think. I don't know much about them today.


 

Sep 07, 2022 10:55 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Debra Leisek  loved your comment and indeed you make some great points, Endre

Sep 07, 2022 10:48 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Margaret Goss  this is the reason our value comes in play for buyers and sellers, well said on your part, Endre

Sep 07, 2022 10:51 PM
Hannah Williams
HomeStarr Realty - Philadelphia, PA
Expertise NE Philadelphia & Bucks 215-820-3376

Endre Barath, Jr. Or also the buyers with good credit - great synopsis of the market 

Sep 08, 2022 09:58 AM