Los Angeles, California is teeming with many of America’s most sought-after real properties. Today, Dani Behr and luxury real estate agent James Hirsch offer some crucial real estate advice for buyers and sellers and market predictions. James shares some trends that he has observed from buyers and sellers through the years, and enlightens us with the truth in supply and demand in the current market. He also reveals tips on how we can close deals from a macroeconomic standpoint. If you want to learn how to invest in LA, James is the man to follow.
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East meets West with Real Estate Expert Jimmy Hirsch
Top LA Realtor, Jimmy Hirsch
Every episode I have a special guest, but this time, I loved him from the moment I met him. He is real as it gets and in LA, sometimes it’s a little hard to find. It was about as authentic, real and that East Coast humor that I love. He got me and I got him. He is the one and only, Jimmy Hirsch.
Thank you, Dani. It’s great to be with you.
Thanks for joining me.
It’s my pleasure, anytime.
It’s funny because Jimmy and I worked together. We worked at a real estate brokerage together for quite some time. Whenever I saw you at events, I was always excited to see you because you bring a certain amount of energy and humor. You’re always happy and that rubs off on me. Have you always been happy?
First of all, you should set the bar a little higher than me. More importantly, I don’t think I was always happy. I was always content for sure. As I get older, I strive for contentment rather than happiness because happiness is such a false idol, so to speak. The opposite of happy is sad and if I’m not happy, sometimes I feel like I’ve missed the mark and something’s wrong with me. The human emotions run the full gamut of happy, sad, depressed, anxious and okay. I’ve learned, especially being an empty nester with my wife of many years, that being content is a whole lot more achievable than being happy as far as my humor goes. I’m a New Yorker and what you see is what you get. It comes from my parents. My parents are hilarious people normally, not even realizing how funny they are.
I’ve had the privilege of meeting Jimmy’s parents on many occasions and they truly are hilarious. Their characters, there’s something about that generation that did not encourage it, but everybody was a character. Everybody says how it was and there was none of the BS you get now. Do you find that there are not those types of characters anymore?
They are certainly declining. We’re New Yorkers, so what you see is what you get. You may not like the truth, but that’s what you’re going to get in between your eyes each and every moment you’re with any of us. That generation has more or less been tailing off. You don’t find couples married many years often who are not politically correct, who don’t ever want to be politically correct, and they are who they are. The authenticity is refreshing. That’s why we’ve been relatively successful out in California because we don’t buy into the bullcrap we never have. Hopefully, we never will. We’re real. Take it or leave it.
Do you miss the East Coast or do you find there’s many over here now in LA that there’s enough to go around and get your New York, East Coast fix?
I definitely don’t miss living on the East Coast. I moved out here when I was sixteen and I don’t miss the weather. You never realize what a large part the weather plays in your life until you live in twelve-month-a-year sunshine. Ironically, I came back from New York. I go a couple of times a year for 5 or 6 days. It’s perfect and I love the buzz of Manhattan. I love the food and theater is one of my favorites, but I don’t miss living there. I love LA and I’m an avid golfer. I love playing golf for twelve months a year. It helps the game versus 6 or 7 months back East. At times, I would miss the people. There’s such a wide variety of transplants out here. I enjoy the melting pot of Southern California.
What are the secrets to a 26-year marriage, Jimmy? As I say to my parents, people get less for serial murder. For LA, it’s in dog years. It’s like 100 years almost. Dog in LA is times ten.
That’s an easy one. We have separate toilets. You could give all kinds of reasons.The current political climate of California makes a business owner there feels that risks equals financial rewards and benefits. Click To Tweet
How did you meet your wife?
Blind date. We both were engaged to other people. I had broken it off and she had broken it off. We had a common friend who worked with Pam that came in and said, “I had a dream I fixed you two up,” and the rest is history. It hasn’t all been wonderful. I don’t think any relationship can say with any degree of honesty that it’s all been blissful. Out of the 26 years, certainly three, I’ve been happy. Over the years, Pam and I have always had a seemingly good ability to communicate with one another. I don’t think that conflict resolution is the key. Conflict discussion is key because sometimes you’re not going to agree with the other person. To be able to agree to disagree, be okay and not harboring resentment long-term has been the key to our longevity. The second thing other than two toilets is if you’re lucky enough to raise your kids healthy, once they leave the house, we enjoy a newly invigorated marriage. What we realized after raising two girls in Los Angeles is we still like each other. That was a big question mark. We dig the fact that we do what we want when we want, and there’s a whole lot less fighting about where we’re going to eat as a family.
Your daughters used to step in and screw up your plans.
Nobody wants to eat at the same place and we’re creatures of habit. You go through the list of 7, 8 or 9 restaurants that you go to and one kid doesn’t like this and the other one doesn’t like this. The only one we seem to all agree on is sushi. We have a lot of that in Los Angeles, but if you eat tuna seven days a week, you get mercury poisoning and everyone dies anyway.
You’ve got a parasite. Either way is not a good look.
With my weight problem, I could use a parasite.
There’s always an upside. I love your optimistic attitude. How did you get into real estate? Do you still love real estate? What is it about being a realtor in Los Angeles that you enjoy? Why is it a good profession to be in?
I’ve been doing real estate for several years full-time. It’s a second career for me. I had a 25-year manufacturing background on the commercial side of things. My father and I owned a company together. We made steel doors, door frames and window frames for the commercial industry, all non-residential throughout the country. We operated a couple of factories and we were in a low tech, high labor-intensive business. It was a grind most of the time. It’s not a get rich quick scheme, work your butt off for a great lifestyle. It taught me patience and perseverance in doing things I don’t like to do. Most importantly, how to deal with people from all walks of life. We had a product that was constantly late. It was a high degree of pressure from the moment you went into the office to the moment you left. We had a wonderful event. We sold the business in 2010 and after flunking retirement in my late 40s, I decided to rebrand myself in what I want to do. I looked at some different businesses to go back into. We had a non-compete in place, so I couldn’t go back to that space for five years. I was a member of this organization, YPO, Young Presidents’ Organization. A friend of mine said, “Rather than see what you want to do, why don’t you try and rule out what you don’t want in the second career?”
The process of elimination. What was on that list, Jimmy?
No receivables, no inventory of material and most importantly, no employees. Owning a business in California was difficult. It’s an anti-business climate here. Our products were dirty and we get a lot of painting and priming work. It made it difficult. The labor laws here don’t make it easy for a business to run seamlessly as it is. We had direct experience because we had another factory in Oklahoma. The difference is they appreciated the jobs and then we further opened up a maquiladora down in Tijuana, Mexico. It had its challenges, but it was business-friendly. They wanted companies to succeed.
Do you think there’s an entitlement in California of people who doesn’t want to put the graph in because there’s a lot more opportunity? LA is a city of anything’s possible and people come here to make their dreams come true. If they’re doing a bit of a side hustle or laborious job on the side, it’s like, “I came here to be an actor. I came here to do this or that. I deserve everything I want.”
The answer is a little bit of a yes and a little bit of no. The little bit of yes portion is when you’re at a restaurant and you have a waiter that says, “I’m a director and a writer.” Why are you taking my drink order then? I don’t begrudge people who have to do what they do to earn a living, there is a certain level of entitlement, but it’s more generational than it is regional. The second thing is the current political climate of California makes a business owner feel like if you’ve taken risks and you reap financial rewards and benefits of that risk, you are somehow deemed a crook or taking advantage of the people. Nobody shares in your losses, but everybody wants to have a hand in the till with your gains.
In California, it was not always like that when my father bought our business in 1981. You had a different political climate where the law’s in favor of owning a business. Environmental issues and labor laws were tough, but they were fair. The pendulum has swung far in the liberal direction that if you are successful, you have broken the rules. I don’t know what happened in California, but being well-off became a crime and that’s sad. Most people want to be treated fairly regardless of where they are. Most people, I believe, are treated fairly and the ones who are not treated fairly, those businesses fail anyway.
Ultimately, that is the American dream. We all come from somewhere else. Everybody is an immigrant at some point, whether it’s our generation, our parents or grandparents. That is the whole point of the American dream. You come here, we are not a socialist country, you work hard and you get rewarded for it.
Without question, and there’s nothing wrong with being rich, so to speak. Most people are a little right of center or a little left of center. What is happening is that your political climate, both locally as well as nationally, is polarized and artisan. Even your adversary on the other side of the aisle has a good idea. You are pressured not to even reach across that aisle to make a negotiable deal because you’ve acquiesced to the competition. We’ve lost our way in American politics. We’re all from somewhere. No one is ultimately born in the United States. Whether you agree on immigration or not, everybody deserves a fair chance. I don’t know anywhere where taking a whole bunch from one class and outright giving it to the entitlement to another class has ever sustained a successful society.
One of my fears leaving it to my girls in their early twenties is that they’re going to be inheriting a climate that is unfair to the masses and all walks of life, not just the privileged and not just the downtrodden. One of the real downfalls, in my opinion, is the erosion of the middle class. I thought what made America fantastic for 100 some odd years was you weren’t rich and you weren’t poor. There was a thriving middle class and that seems to be eroding. The rich are getting richer and the poor are further left behind. That’s a travesty and we all pay the price for that eventually.
It’s become almost like the old adage. Let’s not discuss religion or politics because everybody becomes hypersensitive. I know a lot of people that don’t even share their real honest opinion in case they get the wrong response or somebody decides, “I don’t agree.” I’ve had somebody who will not be friends with me anymore.
It’s absurd where you’re seeing families split up because of different viewpoints.
Everybody’s allowed their opinion and viewpoint.
There’s nothing wrong with respectful disagreement, but there is something wrong with being shut down from your own opinion. Getting back to your early question of real estate, I still love real estate. I love meeting people.
You were going through your list of elimination of things, so no employees and no receivables. Let’s segue going from the list to how you decided.
My friend brought up, “How about real estate agents?” I said, “That’s perfect. That checks all the boxes.” I’m not new to real estate. My wife and I have lived in about five different homes during that tenure of marriage. We’ve flipped a couple of homes in Park City, Utah. I grew up with parents who were flippers. To me, homes were always drywall and paint. I never got attached and I never was deep-rooted. My wife had a tougher time. She had lived in the same home for 35 years, but we quickly showed her the light.
I’m like you, I never got sentimental. I also did flips from a young age and if you start doing that quite young or you’re used to your parents doing that, you don’t get attached. You realize that the home is where your stuff isn’t and the people you love are. It could be anywhere.
People would make a home, not fireplaces and wood floors.People are what make a home, not fireplaces and wood floors. Click To Tweet
What I find interesting, and you probably will have experienced this, is when we’re going to sell a house and the seller is looking at, “Who are the people that are going to buy my house?” I’m like, “You’re selling it. Why do you care who’s buying it? As long as they give you the money for it that you want, why do you care?” What are they going to do with that? Are they going to tear down a wall? Are they going to redecorate? I’m like, “Why do you care? You’re not going to be living in it. What do you care what someone does when you’ve sold it?” People in LA, especially. I’ve never experienced this in the UK, but people here are bizarrely sentimental. Often, they have left the property and have sold it. Have you experienced this?
Absolutely. First of all, you’re from the UK and have a stiffer upper lip, so it’s easier not to be as sentimental. The other point, more importantly, people get attached. People get attached to the roots they’ve built and the memories they’ve created there. I’m absolutely sensitive to that fact, but I tell my clients or potential clients, as soon as the wire comes into your account, you have lost all claims to care what the next buyer does. They’ve earned the right and they’ve paid for the right to burn it to the ground if they desire. If they want to put it to the foundation, that’s their fault. You can’t have it both ways. You can’t accept the wire and then put conditions. Unless, it’s a historical house.
That’s for the city, state and local agencies to decide that. You’re taking the money for it and you pocketed that money, bye-bye.
That’s the deal. You get money for the property. Unfortunately, you don’t get money and then the future says so on someone’s nickel. Those are the same people, by the way. You have a sentimental attachment to it. I find who commands the most amount of sales price and disregarding comps. There is a correlation there because everyone thinks their house is worth more. That’s human nature. I tell people that the deal consummate if the pricing and terms are fair. It doesn’t have to be swayed one way or the other. There’s much information now available electronically to both buyers and sellers. It’s rare in my experience that both the buyer and their agent or more on simultaneously, one or the other.
You could use all your fingertips. You can swipe your ZTL. You’re Zillow. It’d be quite ignorant to go buy a house and not do a little bit of homework and not see what the values are in the area you’re looking at. For your own peace of mind, yes, you can rely on your agent and you should for their expertise, but you should do your own homework. It would be wise for buyers to do their own due diligence and homework before purchasing as much as we, the experts, are giving them our knowledge and our expertise of doing this over and over again transactionally. Know what you’re buying. When you go buy a car, you don’t just take the guy’s word for it. Do a little homework and use your fingertips more than ever before.
It’s insulting to think that people don’t know the values of a specific neighbor they’re looking in. We are fortunate here in Metropolitan Los Angeles that we have some of the most expensive real estate in the world. When you’re dealing with multimillion-dollar transactions, it’s almost offensive to think that a buyer who has a couple of million dollars as a down payment to qualify for the balance of a couple of million-dollar loans is oblivious to market fundamentals in a specific neighborhood. The days of, “I just need one buyer to fall in love with this emotional purchase,” those are over and those are Hail Mary’s. Maybe they occur. I haven’t seen it occur in the last several years and rarely do you have a buyer and their agent oblivious to the market conditions simultaneously at the same time. People want to know they’re not over. Buyers want to know they’re not overpaying and sellers want to know that they’re not undersold. The term ‘fair’ is a deal consummator, not a deal-breaker.
What are the trends that you see over the last few years, not just in Los Angeles, but in real estate with buyers and sellers? Where are you seeing the market going? There’s always a lot of propaganda, especially coming up to election time of, “The market’s going to crash.” Historically, we oversee the seven-year cycles and we’ve surpassed that. LA, as we know, is the most under-housed city in the United States apparently. There are lots of demand and not a lot of inventory, but prices are soaring and they’re not going down. There are pocket areas as we know that are overpriced and I don’t think have lost value, but they’ve stabilized because they were well overpriced like the bird streets and those sub-areas.
I’d like to answer it in three parts because it’s worth it. Different things are happening in different segments of the market. I like to look at the market. Mostly, I specialize in the San Fernando Valley. I’m going to speak to my expertise there. I call it a low, medium, and high market. The low-end, that’s not to demean anybody by my terminology. It’sjust the price points. Entry-level homes in Los Angeles and in the Valley, I call that $1.2 million and below. Hot, huge demand, low supply, and little price decrease there because demographically, you have more demand than supply. We’re strong in that entry-level market. The mid-market is that $1.3 million to $2.8 million. It’s price sensitive. Most of that area and most of that market is what we call the resale market. The resale market is at the end. If it’s priced fairly, it moves rather quickly. If sellers are running realistic to local comps in their area, it sits and it chases the market down. If they’re a motivated seller, they’re going to hurt themselves financially.
That mid-market range is flat, stable if you will. It’s not up and it’s not down. It’s moving sideways and it has been. I predict it to continue that way. The high end is where we see the most movement. The high end is on a $3 million and up. In the Valley, a lot of new construction inventory, a lot of pronoun resales and older family homes. Maybe a little outdated, out of style, but great houses and great neighborhoods that have suffered price appreciation as a result of the boom of the new construction. That being said, I believe once the pace of these new constructions is absorbed in the marketplace, you’re going to see it. They’re used to being a big price disparity the last years in new construction versus resales in the same neighborhood.
If you’re a $4 million buyer in the Valley, there’s something to be said about new. The new one is nice. Everybody likes to be the first owner, but that comes with a price premium, the construction. I definitely see the new construction decreasing over the next couple of years. We’re not seeing the developers soaring up and beating up teardowns like they were. Remember, when a developer buys a place now, he or she is looking at 12 to 18 months in the future on their exit strategy and they’re not bullish. The high-end market where there’s been a big disparity between new construction and resales, that gap is going to be close. It’s simple economics one-on-one. It’s supply and demand.
There’s also a question of, “What kind of buyer are you?” Some people are working full-time and busy jobs. There’s a lot of busy people and they don’t have the time. They would rather overpay and move-in ready. Others would rather overpay somebody else’s construction and somebody else’s flip. There’s always a market for business.
Typically, you can finance behind your price as opposed to a renovation. That’s from the micro-market segment. From a macroeconomic standpoint, I don’t think we’re any jeopardy like we were in ‘06, ‘07 and ‘08. I don’t think your fundamentals are different in terms of lending practices.
That’s many regulations and that’s almost over-regulated. If you can get a loan, they’ve dotted their I’s and crossed their T’s. There’s no 100% or 90% anymore.
You don’t have 3% or 5% down. However, we got to be careful because I’ve heard and I’ve seen in certain places and typically other markets, it’s starting again. Governments cause recessions. They create them and then they solve them, but they create them again. As housing starts to see a little bit of a pullback, governments ease up on lending, and then all of a sudden, your 20% down becomes 15%. That’s a real danger point. Once you start hearing on your 10% down payment, you sell everything and sit on the sidelines because there’s going to be a crash. One last point about the macroeconomics, you still have low-interest rates out there. You still have favorable lending terms. You need to qualify, but I honestly believe that we’re not headed for a crash, but you’ve had 10 or 11 years of serious economic expansion. Most markets last 7 to 9 years. Keep in mind that we came out of the great recession, so you had a devastating downturn. It stands to reason that you’re going to have an extended recovery. We’re already beyond that extended recovery.
I see from a macroeconomic standpoint, people should be cautious, but there are many deals happening out there. The key is fairness. It’s a price-sensitive market. Especially now, buyers think we’re twelve months into the future and sellers like to think we’re twelve months in the past. We as agents have to navigate the present in between those two timeframes and say, “Here’s what’s happening.” If you’re a seller, what’s your level of motivation? Do you have to move, or if you get a high price, you’ll walk through it?
There’s always the that and then you’re going to overpay for your next place.
If you’re leaving California, it’s a no-brainer. It’s still going to be a good time. You’re still looking at great opportunities to sell.
Also, if you look at the price of rents, there is such a low inventory and the prices are higher than they’ve ever been. You’re weighing up your rental and you’re throwing down the drain every year to what could contribute towards a mortgage and appreciating asset. It’s buy and at least sit with it and make your money back.
The problem is the down payment. It’s not the carrying cost. I’ll give you an example close to home. I have a 23-year-old daughter. After graduating from college, she lived with us for years. She moved into our first apartment on the Westside with a two-bedroom. Her rent payment for her roommate’s two-bedroom exceeds our $1.1 million board. That’s crazy. However, these are economic realities. Unless they have the income to cover the rent, they lack the down payment.
How do people get out of this bubble of they can never fold the debit? The cost of living has gone up exponentially in LA, so people are finding it hard to save a little extra wage month, which is the American dream of saving, “Get your down payment and buy the house.” People are living at home a lot longer because they want to save money. Everything has changed.
The quick answer is that they need to either get money from their parents, but a more realistic response is, they need to consider areas that they did not necessarily grow up in. It’s hard for somebody, for a 23-year-old girl or boy who grew up in Metropolitan Los Angeles to expect that in their twenties, they’re going to buy a house in the neighborhood they grew up in. While sad, this is the supply and demand the truth of what the market is. These prices are crazy. If enough people throughout the world are dealing with a global market because we have a tremendous amount of global money into California, you’re no longer competing with your neighbor who you grew up with. You’re competing with another $2.5 million like-minded, age people from across the globe.
I love your insights and I love your experiences. You’re always such a pleasure to talk to, Jimmy. Will you come back on again and do part two with me?
It will be my pleasure. I love you, Dani. I appreciate you having me. Anytime.
Thank you for reading. We’ll get Jimmy Hirsch back on again for some more real estate one-on-one in the near future. Thanks for following the show. Thanks again, Jimmy.
About Jimmy Hirsch
James Hirsch is a native New Yorker whose family’s move out west culminated with a BA in Economics from the University of Southern California and an entrenchment into the life and culture of Encino and greater Los Angeles. Over the next 25 years, his work and leadership in commercial construction would broaden and diversify an aptitude and propensity for residential real estate. Bringing over two decades of bold and astute direction in commercial construction and a lifelong passion for real estate to The Agency’s office in Brentwood, James utilizes his diverse array of experiences to produce the results his clients deserve. His real estate acumen is constantly renewed and given sharper definition through a lifestyle dedicated to serving his community and his clients with an unparalleled attention, professionalism and integrity.
James’ parents sparked the entry point into real estate, as they successfully bought and “flipped” homes throughout his childhood. When they decided to pull up stakes and head west to California, James took with him an inundation with the nature of buying and selling the places we call home.
After graduating from USC, James worked toward a successful career in commercial construction, where he served as President and Chief Operating Officer of a national, metal-manufacturing corporation. It was during this time that he continued a relentless pursuit of his passion for residential real estate by purchasing, renovating and selling several homes in both his hometown of Encino and Park City, Utah.
Today, James continues to make his home in Encino with is wife of 23 years and is a proud father of two wonderful daughters. A natural skier and golfer, James owns a distinct and seasoned affinity for the city and climate of his workplace, having been a member of the Brentwood Country Club since 1983. His strong connection to his community persists through his active involvement in several charitable organizations, including The Jewish Federation of Greater Los Angeles, The American Israel Public Affairs Committee (AIPAC) and the Guardians Foundation.