By MICHAEL EDLEN | Special to the Palisadian-Post
Yes, the housing market is in a period of turmoil now.
Yes, higher interest rates make many people’s new home purchase payments much higher than they would have been in the summer.
Yes, the actual selling prices of homes in many areas are not still going up, and, in some cases, actually have been slightly lower than they were just a few months ago.
Yes, buyers finally have less pressure—fewer people bidding on new listings, much less need to throw caution to the wind in making offers in desperation, and the inventory of homes available is finally increasing in almost all areas of the country.
However, the definition of a market that favors buyers is that point when in that particular market area it would take seven or more months to sell all of the homes then available for sale, assuming the average monthly rate of sales remains the same as it has been for a while.
A “seller’s market,” such as we have experienced nationwide since 2013, is one in which it would take four or fewer months to sell the existing inventory. During this summer there were several weeks when the Palisades’ inventory of homes equaled barely a two-month level of supply, which was the strongest “seller market” on record since at least the 1980s.
Yes, the energy level has lessened substantially even in Pacific Palisades, as at least a dozen of hopeful current sellers can attest to. However, as long as the economic law of supply and demand is operative, and until the inventory of local homes available for sale is at a five- to six-month level, we shall continue to be in a market climate that favors sellers.
Yes, what goes up must come down, as the saying goes, and in all probability, at some point, the average prices in the Palisades will be seen at lower levels than they are now.
What will it take for this to happen? A continuing increase in the number of properties for sale and corresponding decrease in the number of homes being sold.
When is it likely that in the Palisades we will once again call it a “buyer’s market?” As many factors are at play, it could be sometime in 2023 or 2024, depending on interest rates, the economy, international events, etc.
In the meanwhile, for those interested in tracking numbers, as of mid-October there is a 3.4-month level of inventory in the Palisades. That is still quite a bit lower than a market which will not be in balance between buyers and sellers until the inventory here is at a five- to six-month level.
This general analysis does not, however, take into consideration that the rate of sales does vary between various Palisades neighborhoods too, as well as different price ranges. For example, we have often experienced a “buyer’s market” at the higher price levels while still in a strong “seller’s market” at the lower price ranges. Also, in most years the inventory level and sales rate drop during the holiday months.
If you become interested in what you might anticipate in your particular case, let me know and we can explore the probabilities together.
Michael Edlen is glad to discuss anyone’s particular situation regarding market values and timing, based on 30-plus years of having experienced several periods of market turmoil and transitions. Give him a call at 310-600-7422 or email firstname.lastname@example.org.
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