For those of us who lust after real estate the way certain overexposed television-turned-movie characters lust after designer clothes, “six months” has become a mythical countdown to our version of the Barney’s warehouse sale. Perpetually put forth as the amount of time before the housing market reaches its nadir, “six months” is part mirage, part the product of a highly speculative math formula. It’s the magic number that keeps us believing that someday in the near future, all deals will transform into quantifiable steals.
The magic question, of course, is six months from when? A year ago? Six months ago? Now? As a longtime member of the Church of the Sunday Open House (a group that does not discriminate on the basis of one’s ever actually buying a house), I’ve been hearing people recite the gospel of “just wait six months” since roughly the fall of 2006.
Obviously, there’s been some validity in that advice. Since reaching nosebleed heights in 2005, the real estate market has slowed so precipitously that some are comparing it to the Great Depression (not that any of those people actually lived through the Depression). Recently, it was reported that prices of single-family homes were down 14.4% in March of 2008 compared with March of 2007. Moreover, in an eye-ball catching combo of celebrity gossip and real estate news, TV personality Ed McMahon is in danger of losing his Beverly Hills estate to foreclosure. According to the Wall Street Journal, McMahon is about $644,000 behind in his payments. The property, which has been on the market for two years, has an asking price of $6.25 million.
Are you thinking what I’m thinking? Wait six months and maybe you’ll be able to pick up the McMahonsion for a cool million! Homes listed in the $900,000 to $1.5-million range could be $450,000 or so. Oh, and that two-bedroom Craftsman bungalow that has the original built-ins but needs just a tiny bit of TLC? That will be free.
Eager to get a start date for this blowout sale, I called five real estate experts and demanded definitive answers. Here’s a sampling:
Cindy Allen, Los Angeles blog editor of Redfin.com, an online real estate brokerage:
“Everybody talks about ‘the bottom of the market.’ One of the things people think is that the bottom is going to hit and come bouncing back like a rubber ball. But I think it’ll be more like a splat and stay splatted. I don’t think ‘six months’ means much right now.”
Jon Maddux, president of You Walk Away, a San Diego-based firm that assists people with foreclosures:
“I think we’re going to hit the bottom sometime around 2012. There are 40 billion adjustable-rate mortgages resetting in 2011. Nationally, we currently have an 18-month supply of homes on the market. There will be 250,000 foreclosure notices given this year. Anyone who thinks this is going to get better in the next few years is crazy.”
Christopher Hain, real estate agent with Ramsey-Shilling Associates, Hollywood Hills:
“There’s no way the market is going to get better this year, it’s always going to stink this year.”
Patrick Lashinsky, chief executive of ZipRealty, a technology-enabled brokerage:
“Most of the time, the six-month strategy is flawed. If you find a home that has everything you want, why wait six months so you can save $5,000? As for the bottom of the market, I wouldn’t sell my house right now unless I absolutely had to, because I’d be competing with bank-owned properties that are being sold at really low prices. On the other hand, the greater Los Angeles metropolitan area has been a tale of at least two different markets. Yes, there are foreclosures and real problems in the Inland Empire and certain places in the Valley. But we’re not seeing them in Bel Air and Santa Monica and even Silver Lake. I’d feel pretty good about selling in an area like that.”
An anonymous real estate agent who wouldn’t give her name because “there’s no point in trying to guess about this anymore,” Los Angeles:
“There are lots of ways to quantify what a home is worth to you. Just because you sell for $100K less than what you could have sold for a year ago doesn’t mean you’ve lost $100K. I’m dealing with a buyer right now whose friends are giving him a hard time because he’s paying asking price. They’re like, ‘Why are you doing that when even Ed McMahon is in foreclosure?’ It’s driving me crazy.”
So that sums it up. Six months is the new never. Meanwhile, I’m beginning to suspect that “real estate expert” is becoming one of those oxymorons like liquid gas, holy hell or, uh, Inland Empire.