I've always said that real estate values in Manhattan Beach and the Beach Cities would hold up better then in other parts of Southern California ... and so far this has been true. I also said that all bets were off if we hit a recession. There is no question that we are in a very bad recession... with no end in sight. Today the stock market went where no one wanted to see it go. Unemployment in California jumped to 10.5% and we are going to see hikes in both Federal and state taxes. The South Bay may still be a bit better off then other parts of the state, but the outlook isn't pretty.

I thought we might squeeze by with another 10%-12% decline in home values this year but after hearing about the Administration's plans to increase revenue over the next few years coupled with the massive tax hikes in CA, and a complete lack of confidence in the market... it looks as if I was wrong. Yep... that's right... I was Wrong and I admit it.

I don't know how far prices will drop, and neither does anyone else, but the handwriting is on the wall that prices are moving lower and much faster then expected. A number of builders are in serious trouble. There are still new homes that have been on the market since 2007 without finding a buyer. Other projects didn't get off the ground until well into the market decline and are facing stiff competition for buyers. A number of homes that were rented may be hitting the market again as investors want to get their money out of the projects. You are going to see more short sales and REO's pop up on new construction. As prices on new construction float down that will put pressure on older homes.

In addition, if the recession continues much longer, a lot folks may be facing some real financial hardship over the coming year. As more people lose their jobs or have their income reduced many will opt to sell their homes in order to relocate to another area or state in search of employment. As inventory increases and buyers have more choices prices are going to fall... supply and demand on the other end of the spectrum.

A third factor in the Beach Cities might be because of the planned increase in the capital gain tax that the President wants. If I had owned a large home for a long time and planned to move to a smaller home or even out of the area I would definitely put my property on the market. There is a big difference between a 15% tax on gain and a 20% tax if you saw some major appreciation in the value of your property.

I've talked to a number of buyers in the last month or so who just don't know what they want to do. Some are dropping out of the market for a few months or a year. Others are still ready to buy but are very cautious about price. Today's low rates are enticing for those who plan to own for a long time. If you are in a quandary the best thing to do is pull out a pencil and see what the difference in your payment would be if you bought today at a low fixed rate vs if you wait and prices drop another 15% but rates move up 1%-2%.

All of these issues will put increased pressure on the South Bay-Beach Cities housing market. When you add tougher lending underwriting and down payment requirements, the pool of truly qualified buyers gets smaller. Homes are selling but at lower prices as buyers maneuver through a dicey market. Buyers are in the drivers seat for this ride and they are going to make payback rough for sellers.

8 ideas about selling your home in the South Bay-Beach Cities of Manhattan Beach, Hermosa Beach, Redondo Beach and El Segundo.

I've written a lot of posts about selling homes in the Beach Cities. For a long time the advice was pretty standard... price it right...make sure it is clean... spruce up the landscaping... advertise it everywhere and price it right. These items are market basics and should be part of any plan to sell. But in today's South Bay- Beach Cities real estate market a seller may need a few more innovative ideas to get their property sold. One of the good things about being in real estate a long time is that while every market is different they are also a lot alike. The California real estate market is one of booms and busts. It is cyclical by nature and usually changes every 7-10 years. As markets change sellers need to change with them and often must start thinking outside the box. In today's market it is even more important for Sellers to think outside the box if they need to sell.

So what can a seller do to get their property sold? Here are 8 ideas that may improve your chances...

1. Make sure that you are a seller: I know that sounds a bit strange but a lot of people with homes on the market are not really sellers. They are might be sellers... that is if they get an offer they like and if they find a new home they like then they might sell their home... These sellers are generally not serious about selling and will rarely get an offer they like. Having a home on the market is difficult at best. You have to always keep it neat and be ready to show at short notice. These sellers would be much happier if they took their homes off the market and waited a few years for the market to change or until they really need to sell. Don't think taking your home off the market until the Spring will make it more valuable.... it won't. Right now the best you can hope for is that prices will reach the point where they flatten out sometime next year. I don't think you will see prices begin to move upward again for another 4-5 years.

2. Price it right and keep the price right: This is the # 1 item on everyone's short list. But it's not always as easy as it sounds in today's market... especially now that it is taking longer to sell a home. You can look at all the comps, spiff up the house, be right on the money and still not see offers very quickly as buyers are taking their time. Then in a few weeks a new listing hits the market that is significantly lower in value because it is an REO or a desperate seller and suddenly you have new market values. You need to be aware of what is happening in the market all the time. Recently a number of listings in Manhattan Beach saw some major price reductions. If you have a home in competition with those listings the value of your home just went down. So you need to know your market and where it is headed.

3. Have a clear idea about what you want to do before you list: If you want to buy another home then you should have an idea about prices where you want to move. If you plan to rent then you need to know in advance what the rental market is like. If you are downsizing to a smaller place then you should start to go through things you may want to give to friends or relatives or to Good Will. These are seemingly small decisions that can take a lot of time. If you get a buyer who needs to move today you don't want to lose him because you are not ready to move.

4. Consult a Stager:. You know you will probably have to clear clutter, paint , possibly put in new carpet and landscape so why not get someone who knows how to do this give you a hand along with some great ideas. Sometimes a short consultation with someone is enough to determine how to make your home shine and show off the best features.

5. Make sure the house always looks great: If you are working full time or have a large family this might mean hiring a professional to spruce up the house once a week. Consider this a bonus for always having to be in the mode to show.

6. Leave the house during showings: I know a number of sellers who have lost themselves bunches of money by being too chatty with a potential buyer. It's one thing to talk about a roof problem that you have had fixed but quite another if you start discussing how you have to sell asap because of a move to New York. Remember that you are always in negotiation with the buyer and their agent. Keep your lip zipped when talking about money.

7. The First Offer may be the best: I don't know why this is true but it is almost 90% of the time. Don't disdain that first offer that is a few dollars less then you want in a down market. It could not only be the best offer you receive but the only one for a long time. Now that's not to say that all first offers are good ones... sometimes they are way off the mark... but you need to carefully evaluate the offer before dismissing it. For instance an offer that allows you to stay in the property rent free for a month if you are waiting for a home to close escrow in another area might be worth more then you think when compared to having to rent a place short term or get a hotel room and put all of your possessions in storage. If you are buying a new home then a quick escrow with cash in the bank might just get you a better deal on your up leg purchase. Again you must evaluate all offers as there is a definite time factor of money that comes into play.

8. Think about taking back a 2nd TD: While some sellers have little or no equity in this market there are still a lot that have a a great deal of equity in their homes. As lenders become more persnickety about the amount they will loan even to well qualified buyers it might be to your advantage to take back a 5%-15% second at a good interest rate if the buyer has a sizable down payment. I would not suggest it if the buyer has less then 15% down but it is something you might consider for buyers who have 15%-20% with great FICO scores but need a bit more room if the lender decides at the last minute they want 25% down which is happening a lot in our market. It's also a way to make up a little money if you settle for a lower price. You will be able to get the current market rate which will be better then rates offered by banks. I just had a long discussion with the sellers of 511 N. Dianthus about this. We went over all the good and bad points and decided that it makes sense for them to take back a note.

Selling your Beach City home in today's real estate market can be a challenge. However with some forethought and a little luck it will happen. Be patient and remember a sense of humor always helps. If you can laugh at the small absurdities of life the big ones get a bit smaller....

Unless you have been living in a cave in Siberia you know that the Manhattan Beach-Beach Cities real estate market has turned from the hottest Sellers  market in history to a very slow Buyers market. Aside from the fact that it was time for a market correction the subprime loan crisis and subsequent credit crunch have punched up the number of foreclosures to record numbers in most areas and created a fear of buying even in fairly stable markets. As expected more foreclosures are showing up in North Redondo and we can expect to see an increase in Manhattan Beach, Hermosa Beach, South Redondo and El Segundo in the next few months.  

The question has never been whether we would have short sales and foreclosures but rather the number we will see in each city compared to other parts of LA County and California. So far we are still doing better then most areas but it doesnt mean sellers can ignore the facts. Walking along The Strand in Manhattan and Hermosa one would think that the market is booming.. it seems as if half of the homes are either new construction or undergoing major renovations. While Strand property may continue to see some hefty prices being paid.. the rest of the market is seeing price adjustments that are going down not up. That doesnt mean the 40%+ decline in the Beach Cities some are predicting but it does mean that Sellers will need to price their homes more aggressively if they want to sell.  

Most of the properties that have sold in the last few months have been either on the high end or the low end with not much happening in the middle. This seems to be true in all the Beach Cities. I think part of the answer lies in the fact that Buyers seem more in tune with the market conditions then Sellers. They will pay a fair price ¦ even a hefty price.. for a property they feel has great value. They will reject properties they consider to be above market value¦. no matter what the price.  

In a Sellers market¦ Buyers get it and understand that if they want to buy they have to step up and pay the price¦. Sellers only partially get it because they think they can push up prices forever and the market will always favor them. In a Buyers market.. Sellers often dont get it and continue to price their property well over market value¦ Buyers get it and refuse to buy if the property is not priced right and in great condition. I suppose this is what makes life interesting.. but it also creates some bad situations for Sellers who are not in tune with the market. If you are a seller who has to sell and you refuse to price your home right you may wind up losing a lot of money and possibly your home trying to chase a down market. This is especially true if you purchased within the last two years. I see a lot of property in all the Beach Cities that has been on the market for well over 6 months with minimal price changes. Its as if sellers hope that if they keep it on the market long enough someone will finally pay their price. Sadly it doesnt work that way.  

Properties that are on the market too long become like last years fashion mistake.. nothing except a major markdown will make them move. If you are a seller and need to sell then you should be evaluating your price every week in this market. Your home must be in good condition. If it doesnt show well or has big flaws or a poor location then you will have to consider some major discounting on price. Forget what has sold or what is still on the market.. your competition is what has recently gone into escrow. You need to look at what sold and why.. then price you home at slightly less not more if you want to sell quickly.  This is not a market to test the water. If you must sell then price your home to sell. If you dont have to sell take it off the market and wait for a better market. Whatever you choose to do.. be a smart seller and deal with the market realistically¦.. wishing only works in fairy tales.