Local Housing Market Transitioning?

By MICHAEL EDLEN | Special to the Palisadian-Post

In general, we have been experiencing a relatively strong “seller’s market” in the Palisades since 2015. Even during most of the last six COVID months, sellers have enjoyed an advantage.

As a reminder, any real estate market is considered to favor sellers when the level of inventory of homes for sale would take four months or less to sell given the then current rate of sales per month. The market is considered to favor buyers when that level of inventory is above six months. At five or six months the market is relatively in balance between buyers and sellers.

As we begin the fourth quarter, the inventory has increased to five and a half months, after having ranged between four and five months for most of this year. This increase is due to more homes finally coming on the market each week than have been selling since late-August, even though the rate of sales has not changed at all. The number of homes available is now 20% higher than it was one month ago, which is the largest increase in inventory we have seen in a very long time.

A few observations may be of interest to those who would like to get an understanding of what is going on right now with the Palisades market. To begin with, the median average sale price of homes is about $3.3 million. However, the median list price of homes is now up to $4.5 million.

The lower half of our market, priced below $3.3 million, has only a four-month level of inventory. This is clearly still a seller’s market at least as of the beginning of October.

In contrast, homes priced above $3.3 million have now increased to a seven-month level, favoring buyers. In fact, those above $5 million might take over a year to sell at the current rate of sales.

As a whole, the market still looks relatively healthy, with a steady rate of about 20 homes being sold each month, and there are now 40 in escrow. However, there are signs that could be interpreted as indicators that the market is finally in a transition beginning to favor buyers. It is taking longer to sell, inventory is creeping up, fewer multiple offers are being made and a growing number of escrows have been falling out.

Of course, a more refined analysis would reveal even more differences in the market depending on which Palisades neighborhood and price ranges were relevant. In recent analyses we have done for clients, we have noticed that there are some locations where the inventory level is even more favorable to sellers than others.

For example, the area between Las Casas and Las Lomas south of Sunset has only a one-month level of inventory below the $3.3 million market mid-point, which shows a strong “seller’s market” condition continuing at least into next year. Other areas have eight-month or greater levels of inventory at the current rate of actual sales, which is not at all favoring sellers.

Without speculating on the near or longer-term impact of pandemic conditions, the economy, reactions to the election results, etc., it is clear that the market is showing that changes are in process.

It has, once again, become of crucial importance for sellers to be as accurate as possible in price positioning and thoughtful in-home preparations before putting their homes on the market. A seasoned agent’s counsel can be invaluable in times of market transitioning, and timing may have once again become critical in the sale process.

Michael Edlen has been the leading agent in Palisades real estate for most of the last 25 years. He and his team of trusted specialists have helped nearly 1,500 people in their real estate transactions. For current market data and other information about marketing, visit edlenteam.com. Any inquiries can be addressed to michael@edlenteam.com or he can be reached at 310-600-7422.