By Michael Edlen | Special to the Palisadian-Post
The year 2020 began with remarkable underlying strength that appeared to be unstoppable for at least several months. Low interest rates fueled the ability for increasing numbers of buyers to enter the market and for others to upgrade their lifestyle by trading up. Everything changed dramatically by the end of March, of course, and many people felt that there would be absolutely no real estate activity during the COVID-19 pandemic.
Our team had predicted that the global virus situation would have a serious impact on real estate sales here for about three months, based on the experiences in other countries. Thus, we anticipated that around mid-June, the sales might begin to recover.
Due to the unexpected social unrest around the country, it is difficult to speculate when that recovery might begin. One leading indicator we are closely watching is the number of new escrows being opened each month, which dipped from 31 in March down to nine in May.
A detailed analysis reveals that the Palisades market is quite different for homes selling above $3 million, which is nearly the mid-point of the overall market, versus those selling below that level. Specifically, based on the sales so far this year, there is now only a four-month level of inventory for sale below $3 million, which, in theory, indicates a “seller’s market.” Above the $3 million range, it would take about 11 months to sell the existing inventory, which in theory is a strong “buyer’s market” in the Palisades.
One aspect of the rapid sales market deterioration is a corresponding increase in the number of local homes available for lease, which is 74% higher than at this time last year. There are now 96 homes for lease, asking an average of $10,000 per month. Fifty-six have actually leased so far this year, averaging $8,000 per month.
It may be interesting to observe that these patterns are not the same in many other areas of the country and even in several areas of the Westside. Those locations where average prices are not as high are often experiencing multiple offers and the inventory levels are not as favorable to buyers at this time.
Political events, progress in resolving more issues related to the coronavirus and the economic health of our country will all determine the timing of the real estate market recovery. However, many economists project this will occur beginning by the fourth quarter of this year.
As long as interest rates remain near 50-year lows, such a recovery could well occur once the level of confidence improves as the world begins to gradually heal.
Michael and his team are still quite active in providing full real estate services to their clients, although with significantly different safety and communication methods. Feel free to contact Michael with any real estate questions or concerns: firstname.lastname@example.org.
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