Southern California’s real estate market has seen its share of ups and downs in recent years. And in its upcoming season, Bravo’s “Million Dollar Listing Los Angeles” will deal with the initial effects of the coronavirus pandemic on the housing market.
The popular series returns for Season 12 later this month, covering the aftermath of California’s 2019 wildfires, and runs right up to the first rumbles of the pandemic in the U.S.
The Agency’s David Parnes and James Harris, two of the show’s stars, are right in the middle of all the machinations of the SoCal housing market. Parnes recently filled us in on what the pandemic means for buyers and sellers, whatever their income bracket.
And Parnes knows his stuff—he earned a bachelor’s degree in economics and politics with honors from the University of Manchester before he came over from England. He and Harris have been responsible for $1 billion in real estate sales since 2017.
Among the trophy properties they’ve helped clients buy and sell: The Manor in Holmby Hills for $120 million, Le Belvedere for $56 million, and other posh properties in Malibu, Bel Air, Beverly Hills, and the Hollywood Hills.
Here’s what Parnes had to say.
Has the pandemic tanked the real estate market?
Not really. We’re actually quite busy, and there’s a surprising amount of activity going on. I feel people today have the opportunity to borrow cheap money, which is a huge advantage as far as affordability goes. People are able to lock in really great mortgage rates, and are perhaps able to get more property than they thought.
Also, the stock market is very volatile. So if your money is in stocks, bonds, or just in the bank, you’re really not getting much of a return there. Even bonds are risky. I feel that residential real estate is very, very safe right now. With cheap money readily available, there are a lot of buyers out there.
Do you see same positive trends apply to both the high and low ends of the market?
Absolutely, and I”ll tell you why: When you consider homes priced below $2 million, the vast majority of those buyers are getting mortgages. They’re able to get very, very good mortgages—lower rates than we’ve seen in years.
Are sellers skittish about listing these days?
No. We’re seeing a lot of listings right now, and they’re getting a lot of activity. We’re encouraging our sellers to put their properties on the market because the truth is, there are a lot of people at home. They’re looking at properties online, and it’s a good time for people to get their properties out there in front of these potential buyers.
Would you say we’re in a buyer’s market or a seller’s market?
There have been some opportunistic deals that have closed for a lot less than the asking prices.
However, I think in the sub-$5 million market, it’s still equally a buyer’s and seller’s market, because of the low borrowing rates. We’re still seeing multiple offers on good-quality product.
In the over-$5 million price range, we’re seeing slightly more discounts on asking prices, but nothing too dramatic at all. I still believe that if the product is beautiful and well-located and checks all the boxes, [the market is] still very much equal—neither a buyer nor seller’s market.
What advice do you give to home sellers in this economic environment?
My advice is the same in any market. If you’re looking to sell your own house, I always say declutter and neutralize—less is more in that respect. You want to create a relatively blank canvas, without too much of your own personality, so you can trigger that emotion, and buyers can imagine themselves living there. Landscaping is also really important.
Original features are also really important. If you’re doing a remodel, I would always keep as many original features as you can, because they elicit emotions from buyers. Keep the original charm. Those original features often can’t be replicated.
They’ve changed the codes so you can’t put in new wood-burning fireplaces, so keep the ones that are already there: original crown moldings, original beautiful millwork, even some original flooring, sconces, air-conditioning grates rather than vents. Those are the types of features that elicit emotion.
What is it like to show a house these days?
As long as a house is vacant (of residents), it can be shown. So a house can be empty or staged, and clients can walk through. We’re also doing virtual tours, and they’re really helpful. We have 3D tours, and we also offer social media tours like Instagram Live, so we have a lot of collateral for our sellers.
If a home is occupied by the residents, buyers can still drive past and check it out. Many times buyers are very familiar with the neighborhood, know it well, and are very committed to it—they’re going to buy there anyway, so they don’t consider a walk-through absolutely necessary.
Does social media really sell houses?
If it’s done right, absolutely. I feel great photography from drones added to beautiful videos, which we do pretty much for all of our listings, paints a really good picture. Even if it doesn’t close the deal, it certainly opens the deal.
Are some buyers still paying cash?
I think sub-$10 million buyers tend to take out mortgages, but [when paying] over $10 million, buyers often pay cash. And the cash typically represents just a small portion of their net worth.
Are there still foreign buyers who buy U.S. homes sight unseen?
At the end of the day, buyers believe that the U.S. is a safe haven for investments and will continue to be a safe haven. Residential real estate in the U.S. is very stable and strong and very, very safe, as of now. So a lot of foreign buyers are purchasing sight unseen.
Is the rental market strong for people with cash who might be sitting on the sidelines?
Demand for leases is definitely strong. Due to the fact that people are not ready to pull the trigger right now, they are leasing in the interim.
What real estate trends affect your new season?
Before COVID-19 struck, there were shifts in the market. A lot of sellers became unrealistic. Across all price points, we have sellers thinking their properties are worth more than they are. It’s a matter of gaining their trust so that we can sell them appropriately.
If a home is overpriced, it sits on the market and goes stale, and it ends up going for less than it would have. What’s really intriguing this season is that things don’t always work out, and there are a lot of twists and turns.
And the virus plays a part in the upcoming season?
COVID-19 actually hits toward the end of the season, and we covered that. After we wrapped filming, we had to take precautions in some or our interviews right at the end.