"Palos Verdes Resident since 1947"

Around and Around We Go

Do you remember the old carnival ride where you climbed into a big 30 foot diameter cylinder and stood against the wall?  The thing began rotating, pressing you against the wall, and then some nutcase removed the floor from beneath your feet.  However, you were held in place by centrifugal force, which was clear when you looked across the cylinder at the other riders stuck to the wall.  What would have happened if someone had tripped over the cord and the thing had suddenly stopped?

This has occurred to me lately as a pretty good metaphor for higher end real estate prices.  As I explained in my recent article “All Is Not What It Seems”, the lower end of the market (below $750,000) is very active with the number of sales up 28% compared to the same period a year ago, while the upper end (over $1.5 million) is very slow with the number of sales off 44%.  Not only has this created the misleading phenomenon of making it look like prices are headed south faster than . . . let’s see . . . the French survivors of Agincourt (many sales on the low end, a dearth of them on the high end and Voila!

The average sale price goes down, regardless of what’s actually happening with prices; it has also tended to cause the higher end sellers, for want of sales, to set their asking prices off what others are asking.

There are several reasons the high end is slow, many of which are probably apparent to you, and we don’t need to get into that here.  What is important to understand is that sellers (and agents, to some extent) have been whirling around, stuck to the wall at a certain price, while the floor (the market price) has descended.  The builders have been carrying their (generally high end)  inventory for a while, much of the land having been bought at the peak and, as B B King said, “the thrill is gone”.  They have got to be eyeing the plug right now.  When they yank it out of the wall, everyone is going to find out where the market is.

If you’re thinking of selling, you can use this situation to your advantage by getting ahead of the curve.  The other homes for sale will make well-priced one look like a deal, and you will get the buyers.  Space is limited here, but call me at 310 613-1076 and we can discuss this, the Battle of Agincourt, or whatever you want.  And visit my website:  DanaGraham4RE.com.

Leave a Reply