The inventory is so thin these days that we have to look at every possibility, and try to find a way to have them make sense. The trouble with having a recent comp next door is that the sellers will believe that it means something, where buyers aren’t so sure.
Jim Klinge
Klinge Realty Group
Broker-Associate, Compass
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So it’s not my imagination that inventory is extraordinarily slim. Not that we’re not picky buyers, but with what we have to work with, it would buy a heck of a house (and land) in many metro areas!
I can see $1K/sf for beachfront property, even ancient beachfront property, but ancient ocean view property?
Nice 11,500 sq ft lot. At the current asking price, that’s only about $5M an acre.
In LA, desireable inventory is very thin and has been for the past 2 years. Some is grossly mispriced, so it sits out there turning down reasonable offers, while the desireable stuff priced within spitting distance of fair value gets 3, 4 or even 5 offers, and may go close to list or (if it was priced at market based on comparable closings in the past 3 months) even over list. This is the problem when: (1) banks fail to foreclose on delinquent underwater homes; (2) current but underwater sellers have no incentive to list their homes at realistic prices; and (3) folks with lots of equity who don’t have to sell keep telling themselves that things will get better, so they put off listing a home for another year.
Like JtR, we scour the listings that are getting stale but have lots of equity for ones that might be open to a lowball. We also throw in our bids on a the one or two good ones that pop up, but so far we’ve been outbid twice in the past month.