By ANTHONY MARGULEAS | Special to the Palisadian-Post
It was a mixed year for Pacific Palisades residential real estate as while prices continued to appreciation, the rate of appreciation has slowed considerably and the number of homes selling has declined. After seven years of rapid appreciation, it appears home values may be getting close to the peak.
In 2018, the average price of a Palisades home was $4,259,338 (Yes that is correct), which is a 7 percent increase compared with 2017. The median price was $3.35 million, which is a 6 percent increase compared with 2017. Compared with 12 to 17 percent annual appreciation bumps over the last few years, we are definitively in a changing market.
Two hundred and twenty-eight homes sold in 2018, representing the fifth year of declining home sales. This was a 12 percent drop from 2017, when 259 homes sold.
In perspective, the greatest number of homes to sell in a year was in 1999 when 423 homes sold. The fewest number of Palisades homes to sell was in 2009 when 189 homes sold, so while we are currently very low, we still have a little way to beat that record.
Inventory levels (number of available properties) have been very low all year, hovering between 60 and 80 for the first six months of the year. We then started seeing a big uptick in Palisades inventory, with 115 homes available in September.
In perspective, the greatest number of homes on the market was in May 2009 with 240 homes available.
The “days on market” average of 54 days was the lowest in 15 years, but was similar to 2017, which was 57 days on market. “Days on market” is defined as not simply when a home goes into escrow, but rather when all contingencies are removed, something the MLS classifies as “pending.” This varies by price range, as the higher-priced homes will stay on the market longer.
The least expensive Palisades home to sell in 2018 was on Las Pulgas Road for $1.4 million. The most expensive Palisades home to sell was on San Remo Drive for $33.85 million. All the data above is based on single-family home sales data as taken from the MLS. No condos were included in these statistics.
The most accurate way to analyze a market is to compare annualized data as opposed to monthly data. In addition, rather than using just one metric, such as average home prices, it’s best to look at a number of metrics, including median price and price per foot.
In the chart, you can see the Palisades had averaged about one percent appreciation per month for six of the past seven years.
For 2019, I predict real estate prices will appreciate 4 to 5 percent. This is due to a seven-year run up in prices, combined with the slowing appreciation this year to around 6 percent from the previous 12 percent.
Also, in election years, consumers tend to be cautious buying large assets like real estate, given the uncertainty of which person or party will be elected. (See in the chart in 2016 how it was a very flat market appreciation wise.) So, in 2020 we expect to see little or no appreciation as well.
One factor that will affect whether homes values go up or down is supply and demand. Inventory levels are typically low during the holidays, as there are only 72 Palisades homes on the market, which ranks as one of the lower levels we have seen.
Usually by the end of January, we start seeing inventory levels pick up, so it will be interesting to see how quickly we get back to at least 110 homes on the market.
Given that home prices are close to all-time highs and it appears values may have peaked, if you are thinking of selling and pulling out some equity, now may be a very good time to sell.
With interest rates still low, this is also a very desirable time for buyers to lock in those rates before they go up. Overall, the market is very active with more buyers looking to purchase than there are homes available.
Anthony founded Amalfi Estates 25 years ago. He has personally sold over $1 billion in properties and was selected by The Wall Street Journal as one of the top 60 agents in the country out of one million agents. He has been the No. 1 agent in the Palisades for the past five years. His firm gives 10 percent of its commission to charity and has given $800,000 since 2014. Call 310-293-9280 or visit amalfiestates.com.