Buyers, sellers need a dose of realism

first_img AD Quality Auto 360p 720p 1080p Top articles1/5READ MOREStriving toward a more perfect me: Doug McIntyre And for the people in the real estate business that packed the hotel ballroom, Sands’ advice back then is appropriate today. They flocked to the California Association of Realtors first symposium headlined “The State of the Housing Market 2007 – A Market in Transition” looking for a lifeline in a sinking business environment. They got a healthy dose of reality and a pep talk from some of the participants. Sands, who sold his company in 2000 and started private equity firm Vintage Capital Group in 2003, thinks that in this transition things will get worse before they get better. And anybody who has been in it for seven years or less might want to pursue another career. “We always sold two-story houses,” Sands said of his days as a Realtor. “One story for the buyer and one for the seller.” The plots in both are simple now. Sellers need to be convinced to set realistic prices. And buyers need to be convinced it’s still possible to find a bargain. Alan Long says you might just have to get by “riding a smile and a shoeshine” as Arthur Miller wrote in his classic play “Death of a Salesman.” But Long, president of the Southern California Region of Sotheby’s International Realty Inc., remains optimistic. “You can say the market is bad, but people still want to buy. They still have confidence in our product,” he said. That might be true. The numbers suggest a big dose of caution should accompany that confidence. Leslie Appleton-Young, vice president and chief economist at the Los Angeles-based association, expects things to be tough this year and next. Sales fell an annual 23.6 percent last year and should fall by 23 percent this year. In 2008, sales declines could slow to just 9 percent. And this year the median price statewide is expected to increase 3.5 percent. But, in 2008, it should fall by 4 percent. That would be the first annual decline since 1997. Inventory is building, but Appleton-Young said this can be easily fixed. “Our industry can control this by not taking listings from unrealistic sellers.” Of course, next year could be worse than this year even if rising inventory can be managed. Credit standards have tightened, and that’s affecting sales. The old standard 30-year fixed-rate loan with a 20 percent down payment could become the new standard loan. Lots of other products have been pulled from the market. Foreclosures will continue to rise, too, as borrowers with adjustable-rate loans face payments they can’t meet. That will bring emotional as well as financial pain to many families. This is a market with lots of things happening. So what’s coming? “It’s a pretty difficult environment now to come up with a forecast that’s right on,” Appleton-Young said. Maybe. But here’s mine. Our future, residential real estate wise, is cloudy with a chance for tears. [email protected] 818-713-3743 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! The letter from Fred Sands, considered by many to be the Godfather of Los Angeles area residential real estate, got right to the point. “This is a very difficult market for sellers. You basically have two choices: Forget about selling your property for the next three years, or reduce the price and get it sold,” he wrote. The letter was placed at every chair in the hotel ballroom, one of the fist things attendees would see. Sands first distributed it to his employees at Fred Sands Realtors, a powerhouse company for more than a quarter century, in the early 1990s as the market was starting an epic downturn. last_img read more