LOS ANGELES, June 14 /PRNewswire/ -- Anthony Marguleas is owner/broker of Amalfi Estates in Pacific Palisades, one of the most expensive areas of real estate in Los Angeles and home to many celebrities. It's also an area where you cannot buy a family home for less than $1 million and a middle of the range family home costs between $1.5 - $2 million.

Marguleas says, "Most of the 'experts' talking about a real estate bubble are economists and financial consultants with no experience selling real estate. The truth is, real estate isn't like the stock market and it doesn't crash, or burst like a bubble. The worst real estate recession in the past 30 years only saw a five percent annual depreciation -- over a six-year period, approximately 20-30 percent in California. And that was in the early 1990s. Stocks, however, can lose 50 percent or more of their value overnight. The main reason people buy a home is because they want a place to live and/or raise a family; investment is of secondary interest for most homebuyers.

"The main issue driving prices up in southern California, especially in Los Angeles, is supply and demand. Homes for sale inventories in Los Angeles County as of April 2005 were at a 2.6 months supply. This means that if nothing new came on the market, then it would take 2.6 months for the inventory to run out. By way of comparison, the inventory levels in 1991 were at 27.9 months.

"A local LA example is in the Pacific Palisades. A year ago the inventory levels of homes for sale fell to an all time low of 35 homes for sale vs. past inventory levels of 300. Since then it's climbed up to around 70. The number of days a home is on the market before there is an accepted offer has dropped 50 percent too. A home that used to be on the market for 40 days now sells in 20 days, adding more pressure to the market.

"Most buyers in higher-priced areas are moving from a home where they already have a lot of equity, putting a large down payment from the sale of that home. When the market slows, it's more like a hot air balloon drifting slowly down, than a bubble bursting or a stock market crash.

"I can see the market cooling a little, as we have seen an appreciation of more than 20 percent in 2004, and we are on track for another double-digit appreciation in 2005. But once things cool, they invariably heat up again, and the balloon will start to rise.

"Many people believe that the low interest rate is keeping the market buoyant, not taking into account that only a few years ago the rates were significantly higher -- closer to seven and eight percent -- and home values still appreciated at the rate of 20 percent a year. Even if rates go up by two or three percent in the coming year, I don't think it's going to have as much of an impact as some experts predict.

"Two things that affect the low inventories in Los Angeles are the capital gains and the property taxes. Both of these discourage people from putting their homes on the market, so inventories stay low while the demand is still very high. In a city with such high property values, only being able to exclude $250,000 per single, and $500,000 per couple for capital gains means that home owners at the upper end of the market are severely penalized when selling. With property taxes at 1.25% of value as well, these factors are deterring many from selling and moving up.

"If a homeowner paid $1,000,000 for a home five years ago that is now worth $2,000,000, and they want to move into a $3,000,000 home, they would see an increase in property tax of approximately $2,000 a month (for every month they own the home). Existing homeowners are increasingly opting to stay put and improve or expand what they have. A major change in tax legislation here in Los Angeles and California is about the only thing that will significantly affect our market -- and even then, prices will stabilize, not drop. The changes are not only highly unlikely, but would take years to materialize."

Anthony Marguleas is the owner of Amalfi Estates. He has sold $100 million worth of real estate and is an expert on real estate sales, contracts, negotiation, and technology. The company has been in existence since 1995 and has Los Angeles offices covering the west side and the San Fernando Valley. Website: www.LAestatehomes.com Email: AM@LAestatehomes.com

Contact: Anthony Marguleas, tel: 310 573 4245 x100, or toll free, 800 769 3332 x100.

For press information, Melissa Kojan: tel: 323 632 9482 Email: melissak@amrealtyla.com

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