"Palos Verdes Resident since 1947"

September 2022 Newsletter

Dear Neighbor:

As we head down the back side of the recent meteoric rise in real estate prices, you can still get in on it.  Even though there may not be the frenzy of the past 18 months, prices are still near their all-time highs.  But, based upon the historical pattern (and I’ve been thru a few of these), if you’re considering selling and want top dollar, you need to act quickly.  While I don’t claim to have a crystal ball, historically prices drop even faster than they rose, and we are now at the edge of that drop.

You may hear commentators saying that “prices remain strong”.  Those who say this are almost inevitably looking at the sale data on properties that, by definition, went into escrow 60-180 days ago.  Using this to determine what is currently going on is a bit like looking at a star that is 400 light years away – you are seeing what it was 400 years ago.  One really has to be out here in the trenches for an accurate reading.

Each of these cycles in the last 40 or so years has had slightly different causes and dynamics.  The pundits that you read and hear on TV may use that as justification for the position that “this time it’s different and prices aren’t going to fall” – lenders aren’t making irresponsible loans, there isn’t the debt load of past times, property owners have more equity, etc, etc.  Property owners only have more equity because of the recent run-up in prices.  As to the rest of it (and I’m no economist, which I may be about to demonstrate), one difference this time is the unprecedented amount of money pumped into the economy to counter the economic effects of the reaction to Covid, which helped fuel the recent boom.  As many of us observed at the time, that money didn’t grow on trees and will have to be repaid either in higher taxes or inflation; and, right on schedule, we are now mired in the latter, with the former apparently on the horizon.  But the point is that that phantom money played a big part in fueling the recent boom, and that monetary spigot is now off.  That, combined with sharply rising interest rates, and stratospheric prices pricing many out of the market, says to me that we can expect real estate prices to settle back down to pre-covid levels – meaning a 20-25% drop in the next 18-24 months.

So back to where I began:  if you’re selling the family home so that you or your parents can go into retirement, and the amount you get is important (versus selling and buying another property in the same market), do it now, unless you are prepared to wait 8-10 years for prices to recover.  As is always the case in the wake of a hot market, when real estate looks like an easy living, there are many new Realtors running around.  Statistically most will be out of the business within a year once the challenges of a “normal” market set in.  In these turbulent times, you want someone selling your house who has been thru it before and knows what to expect – someone who has been in the business long enough to have seen this before – several times for me.  The stakes are simply too high to be represented by someone to whom this is all new.  Give me a call at 310 613-1076 or email at [email protected].  As you know, I’m a low pressure guy and won’t pester you.  I look forward to speaking with you.                                               

                                                                                                                                                                                                                                                                                                                                     Sincerely,                                                                                                                                                                                                                                                                                                                                                             Dana H Graham 


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