A Mid-Year Look at Palisades Real Estate

By MICHAEL EDLEN | Special to the Palisadian-Post

Interpreting all of the seemingly conflicting news items about real estate today. Some articles point to falling prices all around the country and warn that the prime areas of the Westside are about to do the same. Yet the evidence seems to point in another direction: multiple offers have not gone away, and there continues to be a shortage of inventory to meet the steady demand from frustrated buyers.

We have recently taken a look at where the Westside real estate market may be headed and some explanations for the confusion. Copies of that analysis are available by request, either by email or phone. In this article we will take a look at what the current market looks like in Pacific Palisades as of early June.

Rather than having a rapid increase of homes on the market as most experts had expected, the supply has remained relatively stable for several months. Even though the spring usually is when a lot of new listings come on the market, this year has turned out to be an exception.

At the current rate of sales, there is approximately a four-month level of inventory with 68 homes for sale. This has been surprising to many analysts, bearing in mind that when the inventory level is below five to six months, a real estate area is considered to be a “seller’s market.”

There are a few other interesting observations that can be made about the current picture in the Palisades. The first is regarding the prices. Over the last 12 months the average sold price has been close to $6 million, while the current average list price of homes for sale is more than $10 million.

Similarly, the median sale price for the year was $4.7 million, whereas the current median list price is $6 million. Such a large disparity would seem to indicate that many sellers today are rather optimistic or aspirational in their expectations.

The second is regarding time on the market. The 238 homes sold over the last year were on the market for an average of 29 days and a median of only 13 days.

However, the 68 homes now for sale have been on the market for an average of 87 days and a median of 56 days. Clearly the market is not as favorable for homes that are listed at prices beyond where the market is likely to support.

It is also interesting to observe that 18% of the homes sold here in the last year were not listed in the MLS. That is a substantial increase from the 7% that was more typical in previous years.

As one might expect, the majority of those off-market sales were in the higher price ranges. The potential consequences if this trend were to continue is that more sellers might be leaving money on the table, due to far less exposure to the market and substantially less chances of attaining multiple offers.

Anecdotally, the market seems to be adjusting to the new higher interest rate environment quite well. Even though the cost of loans has doubled in the last year, there has been sufficient buying strength to enable many buyers to engage in multiple offers.

While there are fewer such situations now than there were a year ago, the buyers’ energy has been enough to keep average prices from going down much so far. If interest rates do continue to edge up, though, it feels like we could be headed into a transitioning market this summer.

The impact of lower affordability logically would put more prospective buyers on the sidelines. This in turn would lead to sellers having a weaker market climate and lower prices as a consequence.

Readers are welcome to request periodic updates on these events as they evolve, as well as to receive a copy of the companion article about where the Westside market seems to be heading. Meanwhile, next month we will take another close look to see if any identifiable trends can be noted.

Michael Edlen has been providing local real estate statistics and pricing strategies for more than 35 years. Having worked with more local clients than any other agent, he is available for complimentary consultations at 310-600-7422 or michael@edlenteam.com.