By KYLE BLEVINS | Special to the Palisadian-Post
As a real estate professional, the number one question I am asked—and will continue to be asked—is: “How is the market?” Everyone wants to know.
If you are buying, you’re hoping for more inventory so you have options and can use that as leverage in your negotiation. If you’re selling, you’ll hope homes are flying off of the shelf and the demand far exceeds the natural turnover.
If you’re staying put, plain and simple, it is good to know how much your home is worth and how the local market is reacting to new product.
Real estate is such a localized market. You cannot solely rely on data and market trends that engross all of Los Angeles County. Homes sell in the Palisades at a completely different pace and value than Sherman Oaks, West Hollywood or even our neighboring community of Brentwood.
Today we are going to be taking a focused look at the Palisades to see exactly where we stand.
There are many different ways to analyze a market. You can take a look at the number of days it takes to sell a home. You can focus on specific price points.
At an even more in-depth analysis, you’d start to factor in national demographic trends, election years, consumer debt, interest rates, trade wars and things like coronavirus. The list goes on and on.
This short article is not meant to predict where the market is headed. Frankly, no one knows. This is intended to be a broad look at a local market.
We are going to use the Unsold Inventory index (UI index), also known as the Months Supply of Inventory, to analyze our market. UI index is the current number of homes on the market divided by the number of homes that sold the previous month. As an industry standard, above five implies a buyer’s market and below five indicates a seller’s market.
If you take a look at Figure 1, you will see that the highest UI index value in each year took place between the months of November and January over the last five years. These tend to be the slowest months in sales due to holidays and travel. No surprise that the biggest outlier, 17.0, took place November 2016 during our last presidential election.
The values that I am most concerned with are the months of March, April and May. Spring is the busiest time of year in the residential market.
Kids are finishing high school and empty nesters are downsizing. Parents on the other end of the spectrum desire to be in better school districts for their children for the upcoming school year. People, in general, have gotten back into the groove of things since the holiday season and intend to make big positive changes in their life headed into spring.
Since 2015, last year was the first year these three months averaged out to be a buyer’s market with a UI index value of 5.57. Finishing February at 9.9, we look ahead to March with 90 active houses for sale (18 fewer homes for sale than last year at this time).
With 27 active/in escrow listings, we are in the unique position of seeing activity at the ground level. January overall was a slow month. Half-way through February—specifically President’s Day weekend—is when we saw the biggest jump in activity where we received four offers on three of our listings.
Despite last week’s dip in the stock market, we had 32 parties come through our first open house for one of our new listings.
Scares of a growing pandemic have begun to affect the U.S. economy. While it is too early to tell how this will impact the local residential market, as Warren Buffet famously quotes, “Attempt to be fearful when others are greedy and to be greedy only when others are fearful.”
With all of the outside factors that affect the market, it is impossible to say what will happen in the future. However, past data suggests we are headed into another strong spring season. See you out there.
Kyle Blevins is a member of The Marguleas Team of Amalfi Estates. Kyle truly believes in giving back to his community and gives back 10% of his commission from each sale among five charities, Make-a-Wish, SPCA-LA, American Cancer Society, PATH, which helps homelessness, and Homeboy Industries. The team has been fortunate to donate $800,000 since 2014. Kyle can be reached on his cell at 323-803-8455 or firstname.lastname@example.org.
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