What Happened in 2013 and What to Expect in 2014
2013 was a turbulent year. It started out with a bang with the continuing increase in prices from 2012 surge. By mid year, it appears that the buyers simply were exhausted from the multiple offers and were out bid by all cash buyer (usually rehab/flippers). In addition, the Federal Reserve increased the interest rate in the late spring which coincided with the buyer’s exhaustion, which left a vacuum of buyers. Prices actually began to soften and the multiple offers began to disappear almost over night.
What is significant, is that while the rest of the country and even in other parts of LA County were suffering price declines, the Mar Vista neighborhoods were minimally affected. The prices were not going up; however, they were not going down. The inventory began to increase slowly and picked up momentum during the latter part of the year. Because of this shift some sellers held back their property from coming on the market which has contributed to a shortage of inventory. So as the year 2013 came to a close, the real estate prices in Mar Vista just flattened rather than decline. In the 4th quarter of 2013 many homeowners had commented to me when I was door knocking that they noticed more listings on the market and that they were taking longer to sell. The perception is backed by the statistics which contributed to an even buyer and seller market where buyers did not make full price offers and sale prices were negotiated back and forth. Thus the negotiating skill and experience of the real estate broker took center stage on all sales.
In 2014, I believe that the interest rates on home loans will begin to climb this year to as high as 5 %. The stock market which is usually a leading indicator has made a spectacular rise (NASDAQ 38%, S & P 500 29 %) This will increase employment which will produce a steady stream of buyers to counter the rising interest rates.
Inventory will remain tight because the real estate prices will climb slowly instead of a volatile manner. Overall, it will be a year of steady growth will be named the year of steady growth…
Behind the scenes, there is a lot of consolidation of real estate Internet companies such as Zillow, Redfin, Trulia, Realogy (think Century 21, ERA), and Re/Max going public. In doing so they are on a shopping spree to buy up other Internet companies to expand their base and income. The biggest news that is visible in Mar Vista was the purchase of Coldwell Banker by Berkshire Hathway (Warren Buffet). You may have noticed the change of color from blue and white to brown and white.
I believe that the “Move Up” market (homeowners who already own a home and want to sell and buy a bigger home) will become the larger segment of the Mar Vista market. The reason is that prices in Mar Vista have reached the peak prices of 2006-2007 which has brought short sales and foreclosures to a trickle and the original down payment equity into play. Meaning the homeowners who bought at the peak of the last market now have equity in their homes so that they have a down payment for the next home when they sell their current home. In addition, there has been a pent up demand building in the Move Up market that has felt pinned down to their current house because they lost all of the equity and then some.
The rehab/flipper market is still alive and well. Although the profit margin has dropped significantly which has eliminated all the amateurs’ flippers, the pros continue to bid up prices where a fixer house on a 7,500 plus square foot lot in a prime Mar Vista locations will fetch over a Million Dollars!