The Election’s Over – So What’s Next for Real Estate?

fortune-tellerNovember 11 2008  JetSetRnv8r has donned his turban and dusted-off his cyrstal ball for a look-see into the future. He knows exactly what’s going to happen and when, but he’s only going to share a little bit at a time to avoid causing a stampede.

As Vice President-elect Joe Biden famously said in one of the debates, “the past is prologue” so let’s take a look back at recent history to put the future into perspective.

Remember 2006? The country was bracing for mid-term elections. The House and Senate had both been under Republican control for twelve years. With an increasingly unpopular Republican president in the oval office, all eyes were on the elections to see if Democrats would make a come-back. There was a lot of anxiety through the summer and fall as these elections were seen as an important indicator to the future direction of the country, the economy, and the conduct of the war.

We didn’t know it then, but in retrospect 2006 was also the start of the leveling-off of the real estate bubble. House prices were reaching a plateau and sales activity was waning. JetSetRnv8r had a newly-completed house on the market. The house had garnered a lot of attention having been widely published, featured on HGTV and on a high-profile design tour. Now that it was on the market, it attracted lots of lookers, including its fair share of coveted celebrity shoppers, but there were no offers as we crossed the dreaded 60-day threshold.

Then came Election Day. Democrats swept both the House and the Senate achieving a clear majority. By 10:00AM the next morning, JetSetRnv8r had three offers on his house. By the end of the week, the house went out in trampoline-bounce3multiples at over asking price to a high-profile television and film star. JetSetRnv8r was not alone. The real estate market throughout Los Angeles experienced a very noticable election bounce that restored the market and pumped a little air back into the slowly deflating bubble, at least for a little while.

The lesson here is that elections do matter. Politics has a powerful effect on consumer confidence, and that directly affects every business including real estate.

So now that we’ve gotten through the most highly anticipated election in American history and elected a wildly popular new President who is expected to take the country in a radically (and welcomed) new direction, will we see an election bounce in the real estate market again? As of this writing, it’s been exactly one week since the election and it’s too soon to tell for sure. But anecdotal evidence collected by JetSetRnv8r among his circle of real estate agent contacts is that there has definitely been a surge in activity.

200187506-001Every realtor surveyed this weekend reported an increased number of calls on long-moribund listings and a frenzy of showing appointments. Attendance at this past Sunday’s open houses was definitely up, at least at those throughout the Hollywood Hills and Beverly Hills visited by JetSetRnv8r. For many months, JetSetRnv8r had been the only person on sign-in sheets and greeted by lonely, over-eager agents who jump up from their quiet reading on the couch. This past Sunday, sign-in sheets were overflowing and houses were comfortably full with the vibe of happy cocktail parties.

Pending Home SalesAs of this writing, JetSetRnv8r knows of no significant offers on long-time listings, but the post-election showings are definitely under way. Thirty to forty days from now will be the time to check the MLS for sales over the previous 30 days – the typical escrow period. Then JetSetRnv8r will reveal a little more of his prediction for the real estate recovery.

If you’re a real estate agent, let us know what you’re experiencing.

Read JetSetRnv8r’s posts on real estate sales trends in Beverly Hills here, the impact of the Wall Street bail-out here, how the real estate market brought down the entire economy here and here, and how to profit in a down market here.

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Real Estate Sales Trend Report — Beverly Hills

August 24 2008   Despite the daily drumbeat of grim news about the real estate market, a bright spot remains in Beverly Hills.  While researching comps on one of my houses, I was startled to discover the following trends from the past 12 months:

 $ Although the number of sales were down, the median price was up.

 $ The average price-per-square-foot increased.

 $ Among houses selling at or above full asking price, the price-per-square-foot increased substantially.

 $ Average days on market (DOM) was virtually unchanged.

 $ Among houses selling at or above full asking price, the DOM decreased.

 

There were some less sunny trends:

 $ The number of sales at or above full asking price declined from 20% to 17% and out of those, the number that reduced the list price (LP) from the original list price (OLP) increased from 17% to 24%.  Not surprising.

 

Here are the numbers for the 12 months ending July 15, 2008:

 

 

2008

2007

2006

Number of sales in Beverly Hills:

190

264

 

Median price:

$3,625,000

$3,115,000

 

Low

$749,000

$769,000

 

High

$23,000,000

$35,000,000

 

Number of sales at or above full asking price (LP):

33/17%

52/20%

 

No. of sales at/above LP reduced from original price (OLP):

8/24%

9/17%

 

Average days on market (DOM):

89

85

 

Low

0

5

 

High

447

309

 

Average days on market (DOM) at/above LP:

43

59

 

Average price per square foot:

$906

$889

 

Average price per square foot at/above LP:

$1,001

843

 

Low

$436

$456

 

High

$1,981

$1,483

 

Contemporary/mid-century/architectural sales at/above LP:

10

7

 

 

 For more about the high-end market in Los Angeles and investing in the current tumultuous market, read “What Does the Wall Street Bail-out Mean for You?” and “Amid the Chaos, Is This Any Time to Invest in Real Estate?“.