LOS ANGELES, July 27, 2016 /PRNewswire/ -- Lacy Burke, a Westside Los Angeles RE/MAX Real Estate agent, warns potential home buyers of a market bubble spurred by inexperienced flippers and hungry Real Estate developers. He calls it "the mirage of limited inventory." Burke assures there are countless homes on the open market, but they are being held by speculators asking prices FAR beyond market value.
"When you start to double asking prices 6 months after buying it, the market is being completely manipulated," Burke says. "It's creating a situation where buyers aren't buying houses. It's hurting the public."
"Because of all-time low interest rates investors are buying up properties that are considered tear-downs or heavy remodels," Burke says. "They're buying houses for about $2.5 million and they're doing a light remodel, putting $200,000 into renovations, and then putting the houses back on the market 6 months later for $4.5 - $5 million."
As a Realtor specializing in high-end Westside properties, Burke says that homes priced beyond true market value are a common and growing concern, damaging the market and keeping potential home buyers from finding fair market options. The notion that there is limited inventory of homes for sale is false, and inexperienced investors are negatively influencing the marketplace by inflating asking prices beyond market value. When buyers fail to meet those prices, sellers will just sit on their homes for years.
Among Burke's clients, Kuljit Hundal, a physician and 20-year Santa Monica resident looking to buy a new home, has first-hand experience with this housing dilemma.
"It's not healthy for any local community," Hundal says. "Housing has turned into the new penny stock. A lot of the investors are naive themselves. It cannot be healthy for the housing market in the long term. I believe in the market. The market corrects in the long term, but people get burned in the short term. People need to know that housing prices don't always increase. Even in nice areas."
"If a consumer highly overpays for a property and has the highest comp in the neighborhood, they are going to have a hard time selling," Burke says. "You're seeing this happen in Malibu, Brentwood, and Beverly Hills."
Burke says he has noticed asking prices anywhere from $1 - $2.5 million beyond true market value, keeping qualified home buyers away. He warns consumers to beware of these overpriced properties and become educated by researching multiple neighborhood properties in order to understand actual local market values. A good Realtor will do this footwork with a client, but some, Burke warns, are inexperienced or just do not understand market values themselves.
Lacy Burke is a RE/MAX Realtor working on the Westside of Los Angeles.
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