Unprecedented Market: Palisades Real Estate Defies Expectations
This is one of the most fascinating real estate markets we have ever experienced. Despite interest rates having doubled in the last year, and fewer people able to qualify for loans to buy homes, prices have continued to increase in the Palisades. Also, even though the inventory of homes available for sale today is nearly double what it was last year at this time, homes are selling twice as fast as they did last year. See the accompanying chart and description for more details.
Because homes are still continuing to sell as readily as they have, the available inventory has stabilized, rather than continuing to increase at the rapid rate it did for several months last year. As of May 1, there are 70 Palisades homes for sale, almost exactly the same number as were sold in the previous 4 months.
Remember that real estate markets are generally considered to be in balance between buyers and sellers when the inventory level is about 5-6 months (meaning it would take that long to sell the available homes at the current rate of sales and assuming no new listings came on the market in that area). Our current level of inventory is about 4 months, indicating that our housing market favors sellers, and is likely to continue doing so until at least a 6-month level of homes is available. This type of general analysis can be useful in all neighborhoods and in various price ranges, as there are usually substantial specific variances within a community as large as the Palisades where sales are stronger or weaker during any particular period.
Shifting Trends: Rise in Off-Market Sales Amidst COVID Years
An interesting shift in our market during the Covid years has been an increasing number of people who have sold without listing their homes in the MLS (Multiple Listing Service). Most agents generally counsel clients to only sell through the full exposure of the real estate market. Because we have a fiduciary duty to owners who hire us to sell, we must explain the benefits of maximum exposure of a home to the market. Otherwise, we may end up selling a listing below its highest potential price, resulting in less value to our client than they might have had.
There have always been some owners who preferred to sell without the benefit of the MLS. Reasons for this include not wanting many strangers coming through their homes, not wanting to do any cosmetic or other changes to have photos done for marketing, hoping to find a buyer willing to buy it as it is without even seeing it inside, not wanting the kids to know the home is being sold, or having someone bedridden and needing complete privacy and quiet.
Off-Market Sales Statistics: The Growing Preference of Palisades Homeowners
During the Covid year from March 15, 2020 – March 14, 2021, there were 323 Palisades homes sold. Of these, only 21 were not in the MLS, or a total of about 7% sold off-market. Thereafter, gradually more owners preferred to sell without the benefit of full MLS exposure.
By the third Covid year, from April 30, 2022- April 29, 2023, total sales had slowed down from 323 to 249. This reflected the doubling in interest rates and higher prices. The other significant difference was seen in a doubling of the number of homes that sold without ever being officially on the market in the MLS. Those 45 homes comprised 20% of the total sales during that year, which is an almost astonishing increase from the previous typical years of 5-7% of the Palisades market.
We observe that this group of Palisades homes that sold off-market were on average about 30% higher prices than the majority of sales in total. Perhaps it is an indication that many owners of higher-value homes chose to do a sale quickly before the new “mansion tax” went into effect last month for sales at $5 million or more.
Uncertain Future: Multiple Factors Make Housing Market Predictions Challenging
Our “crystal ball” remains in the repair shop! With such a remarkable combination of economic, technological, monetary, political, international, climate and other factors as we are now experiencing, it is not easy to predict with much certainty what the housing market may look like even later this year. Buyers are still able to purchase at interest rates below historic averages, and perhaps at lower price points if inflation continues beyond this year. Sellers are still able to sell at new historic high levels at least until the inventory level exceeds 6 months. Stay tuned!