The Number of Homes Sold in 2013 is 20% Greater Than Last Year
This has resulted in prices being about 15% higher than last year. As long as the number of homes available for sale is less than would be sold in 4-6 months, the upward pressure on prices is likely to continue.
It has been more than 7 years since we have seen as low as a 2-month level of inventory in the Palisades, which is the current level for homes below $5,000,000. Also, during the 3rd quarter, more escrows have been opened in the Palisades than there were new listings put on the market. This has not occurred in a 3rd quarter since 2005.
Observations About the Status of All Palisades Listings for the Past 6 Months
These may be of interest to those concerned about the statistical magnitude of the current results of this unusual market. A total of 242 homes were listed since between May 3rd and November 3rd and 76 of those are available as of November the 3rd.
54% of those total listings have already sold or are now in escrow and their average sale price has been 1% more than their average list price. This is not a surprising observation considering the strong demand as compared with the relatively short supply of homes available.
However, 33 of the total listings have expired or were withdrawn from the market during the 6 months, and many agents have noticed a recent reduction in the market frenzy. There are fewer “multiple-offer” situations than there had been for many months, and the current rate of price appreciation has clearly begun to lessen.
We have noticed a few extremes in the current market moment. First, although the median sale price of the homes listed and sold since May 3rd is about $2.1 million, the median list price of the 76 homes available November 3rd was $3.6 million!
Average List Price Today is Over $5 Million & the Average Sold Price is $2.3 Million
A large difference is also noticeable in looking at an average price per square foot. The actual sale price per square foot for the last 6 months has been $805, whereas the average list price is $1,040 per square foot.
One rather obvious conclusion from the above observations is that there will need to be some significant price adjustments in order for many current home sellers to succeed in their sale process. Another observation is that a current buyer needs to be mindful that a high percentage of Palisades homes are still selling within 1-2% of the list price when the homes are listed appropriately to begin with. We are clearly experiencing a market that is different from any previous time.
When interest rates begin to increase as they most surely must in the next year, many buyers will find the increased price levels have made homes unaffordable for them.
In the meanwhile, sellers are likely to continue enjoying some added upward pressure in prices until the level of inventory available once again increases to the 5-6 month level.