REAL ESTATE NEWS (Los Angeles, CA) — In 2019, the Loft Blog declared real estate dead. The article titled “Real Estate is Dead” painted a gloomy picture of the real estate market during that time. The article reported that real estate, particularly in Los Angeles and other major U.S. markets, was critically impacted with far fewer transactions. Real estate agents were facing financial struggles, with the number of transactions in lofty neighborhoods like Downtown L.A. and Lincoln Heights decreasing by 75%.
High property prices deterred potential buyers, who preferred to wait for a potential market correction. Major real estate players, including OceanWide Holdings, faced financial troubles, with the latter opting to offload its properties, including the half-completed OceanWide Plaza.
The post predicted that the real estate industry was in for a significant downturn akin to that of 2007, with declining markets in places like San Francisco, San Jose, and Manhattan. Even though some markets were doing well, the overall trend was downward, as supported by data from the Greater San Diego Association of Realtors, showing a decrease in single-family home sales.
Despite this bleak scenario, the article stated that home ownership typically led to long-term returns, even if purchased at the market’s peak. It suggested that then might have been a good time to sell before a potential global recession hit the real estate market. The article also highlighted that this downturn was not permanent, and there were always bright spots in real estate, especially if California managed to address its high taxes and homelessness issues. Unfortunately, taxes and regulations have increased, and homelessness has not improved since 2019. Hopelessness is just beginning for millions of Americans (not for Jay-Z and Beyoncé — they just purchased a $200 million home).
Since the current real estate market for average Americans is worse than 2019 (apparently worse than death), how can we adequately characterize today’s grave situation? New Jersey is booming! Let’s compare to human conditions that are commonly considered worse than death:
- Incontinence
- Needing a breathing machine
- Needing a feeding tube
- Needing care all the time
The concept of incontinence in humans refers to a lack of voluntary control over urination or defecation. In the context of real estate, an equivalent concept might be a property that has uncontrollable or unexpected issues, costs, or challenges. Here are a few possibilities:
Physical deterioration: Just like a human body can lose control over certain functions, a property might face unexpected and uncontrollable physical deterioration. This could be due to natural disasters, poor construction, or simply the aging of the property.
Financial instability: Another form of “incontinence” in real estate could refer to the unpredictable and uncontrollable financial costs associated with a property. This could be due to sudden increases in property taxes, unexpected maintenance or renovation costs, or the financial impact of vacancy periods.
- Legal challenges: The property could also face legal problems that are out of the owner’s control, such as zoning changes, easements, or issues with title. Agent commissions are up for discussion and debate
- Market volatility: This is a situation where the real estate’s value fluctuates wildly and uncontrollably, due to changes in the economy, local development, or market trends.
- Environmental hazards: This could include properties that are subject to flooding, landslides, or other environmental issues that can’t be controlled.
Remember, these aren’t perfect analogies to the concept of incontinence, but they do represent some ways that a property can have issues that are difficult or impossible for an owner to control.
In medical terms, a breathing machine or ventilator is a device that provides or assists with the essential function of breathing when the body can’t perform this function adequately on its own. If we were to translate this concept into a real estate context, it might involve some sort of intervention or assistance that is critical for the survival or functionality of a property. Here are some possibilities:
- Maintenance and Repair: If a property is in a state of significant disrepair or neglect, it may require substantial maintenance or renovation to become livable or functional again. This could range from foundational repair, roofing, plumbing, electrical work, etc.
- Financial Support: If a property is financially “underwater” (i.e., the owner owes more on the mortgage than the property is worth), the owner might need significant financial assistance or restructuring of debt to avoid foreclosure and keep the property. This could be equivalent to a “financial ventilator”.
- Legal Assistance: If a property is mired in legal issues – for example, disputes over the title, zoning problems, or violations of building codes – it might need expert legal intervention to resolve these problems and allow the property to be used or sold.
- Environmental Mitigation: For properties that are exposed to environmental hazards such as flooding, landslides, or pollution, significant mitigation measures might be required to protect the property and its occupants. This could involve things like installing retaining walls, upgrading drainage systems, or cleaning up hazardous materials.
- Government Intervention: In some cases, government programs or interventions can be essential to revitalize a struggling real estate market or neighborhood. This might involve tax incentives for development, affordable housing programs, or community development grants.
In all these cases, just like a ventilator provides a critical life-support function, these interventions provide essential support to properties or real estate markets that are in distress. In medical terms, a feeding tube provides necessary nutrients to a patient who is unable to eat or digest food normally. The patient is reliant on the feeding tube for survival and well-being.
In the realm of real estate, the equivalent could be a situation where a property or real estate market is unable to sustain itself and needs external support or resources to keep functioning or maintain its value. Here are a few examples:
- Financial Infusions: If a property owner is struggling to meet their financial obligations (mortgage, maintenance, taxes, etc.) and risks losing the property, they may need external financial assistance. This could come in the form of a loan, grant, or investment.
- Regulatory Assistance: In certain circumstances, regulatory changes or exceptions can help sustain a property or area. This could include rezoning for a more profitable use of the land or historical preservation grants to maintain an older property.
- Market Stimulus: In a struggling real estate market, broader economic stimulus measures may serve as a “feeding tube.” This could include lower interest rates to encourage borrowing, tax incentives to stimulate buying or construction, or programs to support affordable housing.
- Renovation and Repair: If a property is in poor condition, a significant investment in renovation and repair could restore its livability and market value, much like a feeding tube can restore health in a patient.
- Public Investment: In some cases, public investments in infrastructure, amenities, or services can help revitalize a neighborhood or community, enhancing property values.
In all these cases, the concept is that an external “lifeline” or support system is necessary to maintain the health and value of the property or real estate market, just as a feeding tube is necessary for a patient who cannot eat or digest food on their own.
In healthcare, needing care all the time often refers to conditions where a patient requires constant attention, supervision, and assistance with daily tasks, such as in cases of severe disability, chronic illness, or old age. Translating this to a real estate context, this could mean a property that needs constant maintenance or management, or where issues frequently arise that require attention. Here are a few potential equivalents:
- High-Maintenance Properties: Certain properties may require constant upkeep due to their size, age, or design. For example, a very large property, a historic home, or a property with extensive landscaping might need ongoing attention to maintain its value and function.
- Rental Properties: If a property is rented out, it may require constant management, including attending to tenant requests, ensuring rent is paid, addressing maintenance issues, and complying with rental laws and regulations.
- Properties with Frequent Issues: Some properties might have structural issues or be located in areas prone to environmental hazards, leading to regular maintenance or repair needs. For example, a property in a flood-prone area might require regular checks and preventative measures to avoid damage.
- Properties Undergoing Renovation: A property that’s being extensively renovated may need constant attention and management to coordinate contractors, handle unexpected issues, and ensure work is done to code and on schedule.
- Vacant Properties: Properties that are left vacant for long periods may also require constant care to prevent vandalism, maintain the property’s condition, and ensure it remains insured.
In each of these cases, just as a patient who needs care all the time requires regular attention and resources, these types of properties require ongoing investment of time, money, and effort to maintain and manage. On top of these, we must consider all of the pain and suffering caused by real estate malaise.
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Copyright © This free information provided courtesy L.A. Loft Blog with information provided by Corey Chambers, Broker CalDRE 01889449. We are not associated with the seller, homeowner’s association or developer. For more information, contact 213-880-9910 or visit LALoftBlog.com Licensed in California. All information provided is deemed reliable but is not guaranteed and should be independently verified. Text and images created or modified by artificial intelligence. Properties subject to prior sale or rental. This is not a solicitation if buyer or seller is already under contract with another broker.