By MICHAEL EDLEN | Special to the Palisadian-Post
These are fascinating times, with a generally higher level of anxiety and uncertainty around the country than has probably been evident for more than 50 years. Yet the stock market is at levels higher than were imaginable even 10 years ago, and local real estate values are 40 percent higher than they were at the last peak of the housing market in 2007.
I am frequently asked such questions as, “How is the market?” “Is this a good time to sell?” “Should I wait to buy or will prices be higher later?” “Are there any ways to avoid or at least minimize the taxes I’d have to pay if I sell now?” and “Where would we move if we sold this big place?”
Of course, the answers to these—and many other questions—are often unique to the individuals asking. However, there are factors that I can provide to assist in sorting out the issues.
We are now in the 11th year of a typical eight- to 10-year cycle in real estate values, and some of these issues at this time are more challenging than others.
In brief, the rate of price increases has finally slowed down from a monthly rate of about 1 percent for the last few years to a current rate of less than ½ percent. With any number of economic, psychological or monetary factors that could now impact the real estate market at any time, it would be safe to assume that we are far more likely to experience a downward correction beginning in the next several months than to see prices continue to rise indefinitely.
One major factor to watch carefully is the inventory of homes available as compared with the rate of sales. As of now, we have nearly 30 percent higher inventory than we had last year at this time, which is logical considering that the number of sales is more than 10 percent lower than last year.
In a couple of Palisades areas, the sales level has dropped significantly in specific price ranges over the last several months, which is a sign of weakening market strength.
As for the questions of the timing of selling or buying, the sooner one sells and/or buys, the sooner the enjoyment of the benefits of the change desired can be experienced. And, interest rates eventually are far more likely to increase than stay close to historic lows. Higher rates usually result in less affordability, which translates into negative impacts for sellers and buyers alike.
It is interesting to note that each month, close to 20 Palisadians find answers to where their next home will be located. Alternatives have included smaller or larger, closer in or further out, nearer to family, senior communities, rentals, etc. We are glad to provide no-obligation consultations about various potential solutions, and there are many to explore.
Making personal life choices a higher priority than being limited by potential tax impacts can often clarify the decisions about selling or buying. We can discuss some of those choices and provide information that may be helpful. However, we always advise people to consult with their tax experts regarding ways to deal with tax issues.
Michael Edlen has been the leading real estate consultant in Pacific Palisades for nearly 30 years. He may be reached at 310-230-7373 or email@example.com.