31753 Kentfield Ct – For Sale!

2023 has been a very interesting year for real estate so far.  The first quarter was my slowest quarter on record.  I closed two deals, one of which I sold in December.  The second quarter was as hot as ever and I closed 11.  Yet here I am in August and the market has slowed again.  This is the myth of Goldilocks in plain view.  The fairy tale is that somewhere there is a real estate market that is just right.  As a real estate professional for more than 30 years I can tell you unequivocally that the real estate market is either too hot or too cold. There is no just right.  We’re always losing our mind because it’s either too busy or too slow.

So has something changed or is it pure seasonality?  When we saw interest rates more than double last fall, the market softened.  But by January buyers had become acclimated to the higher rates and when rates dropped back into the mid-upper 6% range the spring market took off.   Every year Super Bowl Sunday marks the kickoff, pardon the pun, of the selling season (Find out what your home is worth here). This year was no different and the market went on a tear from early February into mid-May.  If you want to map out the typical real estate calendar, mark February to mid-May as the hottest part of the year.  Now it’s not unusual for it to be slow in August.  In fact, August is always the slowest month of the year.  This has been exacerbated by changes in the school year which now starts in early August rather than right before or right after Labor Day like it did when I was a kid.  This even makes July a slow month as well as August.  The question everyone’s asking is however, does this seasonal slowness explain the current market condition or are there other factors in play?

763 Camino Dos Rios – For Sale!

There is little doubt that when interest rates hit 7% it’s like somebody turns off the spigot.  This has happened already several times since the Federal Reserve started raising rates in spring of 2022.  There’s been a lot written about new construction having a renaissance since new construction provides much needed inventory.  But there is very little new construction in greater Los Angeles.  Therefore, there is little catalyst for people to list and sell their home especially in light of they’re having a mortgage with a sub 4% interest rate.  Low inventory remains a serious problem and a huge tourniquet on the market (Find listings here). However, I am of the opinion that there’s something else at play here and that is labor unrest. 

31535 Lindero Canyon Rd #11 – For Sale or Lease!

The number one industry in Southern California is the entertainment industry.  The market began slowing by mid-May not uncommon, but it began slowing with more vigor than normal.  Why?  Allow me to suggest that the writers going on strike May 2^nd had something to do with it.  But, the market really began to crawl in July.  I’ve already stated that school starting early impacts July, but don’t forget that the actors began their strike on July 19th.  Have you ever stayed till the end of the movie and looked at all the credits?  There are literally hundreds of names and none of those people are working.  But not only are the people directly involved in the production of the film not working, but all of the ancillary businesses that provide materials and services have seen their business come to a halt even though they aren’t on strike.  Consider for a moment the catering company for a movie, commercial or TV production.  The caterer’s truck is sitting idle.  The driver/chef is not working. The guy that provides the buns to the catering company is not providing them any buns.  The bakery that bakes the buns is not baking as many buns.  The guy that sells the sodas is not selling any sodas to the guy that in the catering truck.  Same for napkins and cups.  The gas station that regularly fills up the catering truck is not selling as much gas.  Then there’s the surrounding restaurants that are near the studios are idle as there’s no production nearby with hungry employees and the list goes on.  I think you get the idea here.  But that’s not all.

10600 Wheatland Ave – For Sale!

What’s the second largest industry in Los Angeles?  You guessed it, tourism. The hotel workers are on strike.  The hotel unions actually appealed to Taylor Swift, asking her to cancel her concerts At SOFI stadium as a sign of support for the hotel workers.  I believe it’s safe to say that labor unrest is an underlying reason for the real estate slowdown here in Southern California.  I personally had a buyer who worked on a comedy as the sound engineer just last month tell me that he’d have to put his real estate search on hold because he didn’t know when he would be going to work again.  Clearly the disruptions in our two largest industries are having an impact.  I currently have a listing in a Los Angeles neighborhood called Shadow Hills.  It’s an amazing half acre property, completely rebuilt to look like a Greene and Greene craftsman home from Pasadena.  It should have been sold two months ago. Had we listed in the spring it probably would have sold on multiple offers and yet here we are in August and it remains available.  This particular neighborhood is very popular with people working in the entertainment industry because it’s close to the studios and post production facilities in Burbank and North Hollywood.  It’s logically impacted by the writers and actors strike, yet I have other listings far west of them in Thousand Oaks and in Westlake Village that remain unsold as well.  These are not neighborhoods typically associated with the big name Hollywood types but they are for many of those behind the camera.  I think it goes to show just how far the reach and influence of the entertainment industry throughout the Southland and helps to explain the more than usual slowdown we are experiencing in the So Cal real estate market (which by the way makes it a better time to be a buyer – Contact Tim here.)  Unlike Goldilocks who finds a porridge and a bed that’s just right, we in the real estate community know a fairy tale when we hear one.