It seems as if everywhere you look, there is another headline decrying the collapse of the housing market and warning about the end of the world as we know it. Almost on a daily basis I receive a call or an e-mail from a client armed with the knowledge they gleaned from an evening surfing on Zillow or Redfin, such as median U.S. home prices falling 6.2 percent over the last year, echoing those same doomsday scenarios.
While that is certainly not encouraging news for the nation as a whole, before you begin hoarding canned goods and buying up all the duct tape within arm’s reach, it’s important to remember that there is no investment in which geographic location matters more than real estate. The old adage about real estate being all about “location, location, location” became an old adage for one very simple reason: it’s true. To project national real estate trends onto any local community would be a mistake, but it becomes a seismic catastrophe when dealing with Los Angeles, which has always, and will always, play by its own rules.
Los Angeles is a city of endless options. Where else is the choice between water-skiing and snow-skiing only a question of how far you want to drive, rather than which month it is? Where else are you just as likely to see a movie on the screen or see one being made in the streets? In truth, L.A. is a brand onto itself (Steve Martin didn’t star in a movie called “Salt Lake City Story” and Jason Priestly didn’t star in a teen drama called “Albuquerque 87110” for good reason). Los Angeles remains one of the most desirable areas to live in the nation, if not the world. To paint it with the same broad brush as you would Phoenix, Detroit or Miami, is to paint a picture that bears little resemblance to reality. As long as there is a Los Angeles, there will be people flocking to live here. As such, L.A. real estate remains one of the soundest long-term investments one can make.
But still those same late-night, web-surfing doomsayers will note that even Los Angeles median prices themselves fell 7.2 percent over the last year, which is actually 1 percent more than the national figure. However, calculated in that number is everything from Anaheim to Westlake Village. Talk about a broad brush. Here in Santa Monica, for instance, the median price went from $887,500 to $884,000 over the last year, which is only a 0.39 percent decline. Sure, we would all like that number to be on the positive side, and eventually it will be. But until then, every percentage point counts and it is readily apparent that Santa Monica has not been hit nearly as hard as the rest of the city, state, or country.
The danger in taking statistics such as those without the proper context is that it creates an unrealistic expectation in the market, on behalf of both buyers and sellers alike. Buyers, believing they are in the driver’s seat, will ignore recent comparable sales and submit low-ball offers, ultimately missing out on the home of their dreams, while sellers, believing much of the same, will hold off on putting their homes on the market until it has rebounded so they can get the maximum return on their investment. In the end, everybody loses because nobody has internalized the true state of the market and their place in it.
In all areas of business, facts matter. But in real estate, facts that are specific to the area you are looking to either buy or sell in matter more. In this age of information, it is very easy to get a distorted picture of how the market actually looks, as opposed to how the headlines have made it out to look. Now more than ever, having a real estate professional is key to understanding what is truly happening out there. But as with statistics, not all real estate professionals are created equally. It’s vital to work with someone who knows a local area, like Santa Monica, inside and out. With respect to my colleagues, while an agent from Pasadena, Irvine or Bellflower may be a good person and a hard worker, if they do not regularly visit open houses in Santa Monica to get a sense of the available inventory or have not successfully closed a transaction in Santa Monica recently, then they simply do not know the market well enough and they run the risk of projecting the trends in their local community onto ours, which will end up doing you more harm than good. That’s why when it comes to all areas of real estate, Simon says keep it local.”
Simon Salloom is a realtor with Partners Trust Residential Brokerage. To Comment on this article or contact Simon go to www.WestsideSimon.com. He lives in Santa Monica with his wife and two children.