Experience Counts … Especially in Transitioning Markets

By MICHAEL EDLEN | Special to the Palisadian-Post

Having noticed the changes that have gradually been happening over the last few months, it has become clear that the real estate market in Pacific Palisades is not still booming. However, those who are frightened by the large negative headlines in the news that have many people highly concerned are most likely over-reacting to their greatest fears about the housing market.

Of course the recent series of increases in interest rates have begun to impact our real estate market. However, the sky is not falling, nor has it become anything close to a market that favors Palisades’ buyers over sellers—at least as we enter the fall season.

We have had such a long-lasting shortage of homes available as compared with the large number of financially qualified and eager hopeful buyers that the upward pressure on prices has continued even though fewer are able to purchase homes at the price levels now prevalent.

We have looked at market trends in previous articles and will take another look before the year is over. For now, suffice it to observe that the rate of price increases has definitely slowed down, buyers have somewhat less competition when bidding on a home and correspondingly, sellers are receiving fewer multiple offers, which are also now including more conventional contingency clauses.

Having personally experienced the three previous market adjustment cycles, I am quite aware of the skills and strategies that are most useful in representing sellers or buyers during the period of changes. It has not taken great efforts to sell a home when the inventory level has averaged between two and four months, as it has since 2016.

During the last challenging market from 2008-14, we had periods when our local inventory was between seven and nine months, highly favoring buyers. A market anywhere in the country is generally considered to be in balance between buyers and sellers when that level is five to six months.

As of the beginning of October, the Palisades’ inventory of homes available has gradually increased from two to three and a half months since May 2022. The monthly rate of sales has slowed down significantly, and at this rate of change, it may be that we will indeed have a market again in balance early in 2023.

In previous articles we have provided a series of questions for sellers to ask potential agents before deciding which one to entrust the responsibility of selling their home. These are readily available on our site or by request.

Recently a potential home seller asked me the following questions in his process of narrowing the field before deciding who to hire for representing his family:

Have you been in real estate since before 2010?

How many listings have you personally had in the last three years?

Have you personally actually sold more than five of your listings in the last three years?

What is your escrow fall-out ratio? What percentage of them have closed?

The real estate market tests agents by performance over time. Working with an agent who is among the most qualified is even more important during this period of the significant changes now in process as we continue in a time of increasing interest rates and declining sales volume.

Michael Edlen has been counseling local property owners and seekers for more than 30 years, and has experienced three market correction periods. He can be reached at 310-600-7422 or michael@edlenteam.com.