It’s interesting to look back fifteen years and compare 2019 and 2004 because 2004 was a year of big fear and doubt. Many people questioning “will the economy go up? Down? If I buy a house now am I buying at the top of the market?” Sound familiar? These are the same questions we're hearing from our clients now!
Let's take a look at the numbers, and then I'll dive into my interpretation:
Look at things like the $500,000 difference in the South Pasadena List Price/Sales Price this year—that issue would seem to be that the higher end of sales isn’t selling as much as the lower in South Pasadena. Makes sense, right?
Obviously, home sales prices have gone up a lot in 15 years in all these communities. The average number of sales has gone down and the days on market is all over the place. We aren’t seeing the general interpretation by experts on the market that we hear on the news—which is that days on market is increasing everywhere while the sales price is going down. In these areas, the sales price keeps going higher and higher. But why are we seeing the number of sales drop? Affordability? Choice? Probably a little of both. Less inventory, that is, far fewer available listings are on the market now than in 2004 and this has been the case since 2012. The higher end of the sales today in most of these zip codes are primarily high-style flips or new construction. That wasn’t the case in 2004 at all.
Flipping with style really started as a result of the glut of foreclosures and short sales in 2008-2011 and it started in places like Highland Park, where a few flippers bought foreclosures really cheap, fixed them up nicely and stylishly, then resold them at fairly reasonable prices to first-time buyers with some money of their own or with help from their families. Now the flips are the high end of the market.
Altadena is really interesting because the average sales price was almost $100,000 higher there than Eagle Rock in 2004, and the average sales price this year is almost the same as Eagle Rock. What does this fact mean? More choices in Altadena? We have sold several houses in Altadena this year because our buyers felt they had better choices in their price range—more house, more lot size, and sometimes the basic ability to purchase a home now for what they could afford instead of waiting to save more money or win the lotto or find some windfall somewhere. Eagle Rock has appeal because of its location—close to downtown, close to the studios, easy to get around in town and to get out of town. Also it’s neighborhoody (great community feel), has decent public schools, and is kind of a Mayberry-type suburb of Metro LA. And it’s cheaper than Los Feliz and Silverlake.
There is no clear conclusion to draw from all this, except that prices are still going up with no end in sight in these areas, so waiting for the crash is likely futile for the time being. When will the bubble burst? Maybe not for several years, maybe never. Only time will tell. It's usually luck that allows people to "time" the market. We often tell our clients that the best time to make their move is when they are truly ready!
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