Mending Fences – Is It A Buyer’s Market?
By Monrovia Weekly
Published: Thursday, March 27th, 2008
Dear Ms. Garemore,
I recently read your article entitled “Buyer’s Affordability Index.” I’ve been hearing about extremely low home prices, how the real estate market is in a “slump,” and how the mortgage market is “in crisis.” However, this doesn’t seem to agree with reality.
The reality I see is an almost-completed condo development next to my office in Pasadena in a decent, but not super-great neighborhood.
Each of the five stories will be cut into 6 units, 3300 square feet each, but only floor space – no lawns, backyards, swimming pools or tennis courts. All you have is a wall separating you from the neighbors!
I was told that the planned asking price will start at $2 million! Does this sound crazy to you?!
If we’re in such a “down market” and “crisis,” why isn’t this real estate much
cheaper? As a hard-working professional, I can’t even afford most of the stuff out here!
I need a decent-sized house in a safe neighborhood for around $200,000, before I’ll even begin to believe that sellers are “desperate.” Eric
Dear Eric,
I can appreciate your feelings on this subject. It sounds like you’re frustrated with the real estate market, and I don’t blame you. Over the last ten years prices have rapidly escalated, making it difficult for many buyers.
Regarding the condo development, yes, $2 million is a huge price tag. However, in every price range, there is a target buyer. I’m sure the developer researched his “audience” before embarking on this costly investment. I suspect that an interested buyer would be willing to pay a premium for this particular location, perhaps to be in the hub of the Pasadena business district or to stay in close proximity to Downtown Los Angeles.
Even so, since the market has slowed down, if those units don’t sell as projected, I would expect the price to drop. Will they go down to $200,000? Probably not.
If you’re looking for an affordable house, I suggest two options: wait to see what the local real estate market does over the next 12 months; or do what many other buyers have done: consider moving outside of Los Angeles County where you can still find a nice home in a more reasonable price range.
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