REAL ESTATE

The Housing Market

Local real estate experts discuss current trends and what the future holds

By Kamala Kirk

Due to an increase in demand for real estate during the pandemic, buyers faced more competition and higher home prices. With interest rates going up over the past few months however, the housing market appears to be slowing down, which has left prospective homebuyers and sellers wondering whether now is still a good time to buy or sell. We interviewed three seasoned real estate experts to gain more insight on the current market, their predictions for what to expect in the future, best spots to live on the Westside, and tips for finding a good real estate agent, among others.

Stephanie Younger, The Stephanie Younger Group at Compass

A Los Angeles native and a top real estate agent in the area, Stephanie Younger has brought a world of experience and vision to her clients throughout her long and successful real estate career. An alumna of Loyola Marymount University and a longtime Westchester resident, Younger is loyal to the Westside with a commitment to serving the people and communities she knows and loves.

Compared to the past two years, how has the real estate market shifted?

SY: During the pandemic the residential real estate agent was suddenly at the core of the hierarchy of needs. Agents were declared an essential service and we spent the pandemic working harder for our clients than ever before. Post-lockdown we are witnessing people shift their focus from real estate to their pent-up need for travel and life experiences. Other pandemic boom industries, like Peloton, are seeing the same shift in consumer behavior. The media has focused on the interest rate story, but it's more nuanced. That said, we are still receiving multiple offers, but it is not the same buyer exuberance.

With interest rates rising, is now a good or bad time to buy a home?

SY: Though interest rates are rising a bit, historically they're still on the lower end. Most homebuyers are looking for a long-term asset, and Southern California real estate continues to be an attractive blue-chip investment. The story that no one is discussing is the opportunity that buyers have (right now) with reduced competition. Six months ago, the majority of successful buyers were offering all cash. In this market, buyers with loans are more competitive than they have been in years.

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Will housing prices continue to cool off?

SY: We have been hesitant to prognosticate too much because we had not anticipated the aggressive response from the Federal Reserve chair, Jerome Powell. Historically, real estate has been one of the best hedges against inflation. Sellers do not like selling real estate in inflationary markets, which reduces the oversupply of housing inventory. Therefore, the softening of real estate values is a demand-side issue. We anticipate demand returning once Mr. Powell softens his rhetoric — as consumer inflation expectations begin to cool off. We feel strongly that Mr. Powell is maximizing the effect of rate hikes through impassioned remarks that serve to deflate demand. In fact, he is doing his best to achieve his targets without setting interest rates to where they were in the 1980s. Once the pace of these rate hikes stall (as inflation cools), the stock market and all assets (including real estate) will again enter a bullish cycle.

What makes Westside real estate so desirable?

SY: The balanced mix of industries which operate here provide fantastic opportunities. People take for granted that LA has evolved to become a major hub for important industries. It's also a less cyclical environment than Silicon Valley, where real estate is directly reliant on investment in technology. Instead, we have major defense contractors, oil and gas companies, aerospace companies and media conglomerates. All those industries tend to fare well in times of economic instability. Finally, the long-term reason to invest in the Westside continues to be our massive cultural export. It's important to remember that people from all over the world travel to experience our lifestyle from the thousands of movies and billions of images they consume from our social media technology export. It's exciting to know that we are constantly creating PR moments to attract tomorrow's dreamers to our city.

Where on the Westside should buyers look right now?

SY: One of our favorite pockets right now is Venice. Venice real estate struggled recently, but we feel there are a few catalysts that are emerging. Another attractive market continues to be Westchester. We are seeing smart owneruser investment in floor plan expansion and a higher caliber of architecture that is creating a very attractive pocket with some of the most favorable prices per square foot on the Westside.

What are the top features in a home that buyers want?

SY: Right now we are seeing buyers focus on clever, wellconceived storage solutions. People love open floor plans, but the casualty of those open sight lines has been storage space. Smart builders are ensuring that homes have accessible storage and nooks to conceal the latest in home gadgetry.

Has cryptocurrency had an impact on real estate transactions?

SY: We are excited about the prospect of blockchain reducing friction points in real estate transactions. We anticipate escrow and title companies adopting this aspect of cryptocurrency in the near future. However, the current volatility of cryptocurrency prices has reduced its utility in a standard 30-day home purchase and sale process.

How can buyers find the right real estate agent?

SY: We believe the best agents act as trusted advisers. It's important that your agent understands your financial goals,

your lifestyle requirements, and your future plans. Finding an agent you feel comfortable having these conversations with can require research. Read online reviews, schedule a phone call with a respected local team, or attend a few open houses...and meet an agent who has a proven process that addresses your needs. Always remember that a good agent makes you feel comfortable asking questions and explains your options thoroughly.

What are your predictions for the real estate market in the next year?

SY: We are anticipating continued lower than average inventory and a return in demand-side fundamentals, which will fuel a return to price appreciation amidst stabilizing mortgage rates. Our most optimistic estimate is that this cycle resumes in Q1 2023.

Tips for buyers and sellers?

SY: Buyers should take full advantage of this market. We are seeing opportunities in off-market property and an environment perfect for long-term value investors. Sellers should be willing to invest money in presenting a polished home product. In the previous market, buyers were willing to look past deferred maintenance. The best way to invest intelligently is to work with a real estate team with resources to front expenses and utilize in-house designers who can identify high-ROI areas that can be addressed quickly and economically.

Kris Zacuto, Compass

Kris Zacuto, broker associate with Compass, has established himself as an authority on luxury real estate in the Silicon Beach market. In 2017, he partnered with Brookfield Residential as the exclusive listing agent for Playa Vista’s most luxurious homes - Jewel Playa Vista. Exclusively presenting and selling all 14 new construction residences was an unprecedented accomplishment for the area, which resulted in numerous sales records set in the process.

With interest rates rising, is now a good or bad time to buy a home?

KZ: Rising interest rates have pushed many buyers out of the market with affordability becoming more difficult week to week. If we look at general affordability where the cost of money is increasing, we would

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Kris Zacuto. need to see prices decrease in order to call it an overarching good time to buy a home. In some markets across LA that is the case; however, in many prime LA markets home prices have not adjusted downward enough to call it a buyer’s market. That being said, we are starting to see some good buying opportunities arise in certain cases where price has adjusted and there are fewer buyers competing for a particular home.

Will housing prices continue to cool off?

KZ: Many indicators lean toward home prices continuing to soften in the near future. Fewer buyers in market has reduced demand, and with days on market and inventory continuing to increase — reduced prices typically follow.

What are the top features in a home that buyers want?

KZ: Home features vary buyer to buyer; however, in a market like this one where buyers are more diligent about their purchase while enduring volatile rate hikes—the most important feature is location. Purchasing in an area, and on a particular street that will hold its value and allow for more security in potential appreciation over time, is the top focus for buyers in this market.

How can buyers find the right real estate agent?

KZ: Buyers are wise to find a real estate agent that will provide them with an edge in this market. There are various ways an agent can offer tremendous value to buyers, and two of the most important relate to locating the right property. An agent that has expertise and experience in a particular area will be able to give comfort to buyers about which properties on the market offer the best buying opportunity and how to go about securing the property. Locating properties off market and pre-market are other ways agents can provide value in a low inventory market. Buyers can find the right agents by determining who has the right type of expertise in a particular area.

What are your predictions for the real estate market in the next year?

KZ: 2023 should be an interesting market as rate hikes continue to lean out the buyer pool, and inventory continues to increase leading to cooling prices across LA. We expect to see sellers recognizing more consistently that pricing properly will lead to more successful sales experiences, and in turn will lead to a more balanced market than we’ve seen in some years.

Tips for buyers and sellers?

KZ: The top tips for sellers in this market is related to presentation and pricing. Homes that present well and are priced appropriately will still sell in a reasonable amount of time, as there are still enough buyers currently in the market. The top tip for buyers is simply to be diligent about your purchase to assure you’re investing in the right home that has the best opportunity to appreciate over the years.

Vivian Lesny, Vivian Lesny & Co.

Serving Silicon Beach since 2001, Vivian Lesny & Co. specializes in Culver City, Playa Vista, Marina del Rey and Playa del Rey. She has helped hundreds of home owners for the past two decades prepare their home for sale and navigated them through the process from start to finish. Lesny and her team of dedicated buyer’s specialists help their clients identify homes for sale often times before the home hits the market.

Compared to the past two years, how has the real estate market shifted?

VL: The number of buyers has diminished in comparison to the past two years. I’m seeing fewer investors/flippers in this market.

With interest rates rising, is now a good or bad time to buy a home?

VL: Our buyers are taking advantage of the softening prices and writing offers where they ask the seller to buy down their rate by one to two points. This combination of factors makes it an excellent time to buy, take advantage of a less competitive market, secure a lower rate with a seller “buy down” option, and benefit from decreasing prices.

Will housing prices continue to cool off?

VL: I see this as a temporary reaction to rising rates, but the overall demand to own real estate in Silicon Beach is still high. People will adjust to the “new normal.”

What makes Westside real estate so desirable?

VL: I can think of dozens of reasons. The top three I hear the most consistently would be the weather, jobs, and “the scene.” There is so much to enjoy and do on the Westside, plus we are within a short drive to the beaches, deserts and mountains.

Where on the Westside should buyers look right now?

VL: A few of my personal favorites: Playa Vista, Marina del Rey, Culver City, and Playa del Rey.

What are the top features in a home that buyers want?

VL: Outdoor space and/or a walkable community.

Has cryptocurrency had an impact on real estate transactions?

VL: Not from what I am experiencing.

How can buyers find the right real estate agent?

VL: Spend some time with the person who is actually going to be doing the showings. Make sure they understand what it is you are looking for. It would be helpful if the agent is actively selling homes and living within the community you want to live in.

What are your predictions for the real estate market in the next year?

VL: I suspect we are going to see properties sitting on the market a bit longer than in years past. We are in “correction” mode now and will probably see more of the same in 2023.