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Jeffrey T. Sandorf's Blog

By Jeffrey T. Sandorf | Agent in Brentwood, Los Angeles...

Pacific Palisades Market Round-Up November 2012

 

November Market Snapshot

By Jeffrey T. Sandorf

 

The Palisades real estate market closed out November strongly as prices continue to appreciate, buyer demand remains strong, and inventory levels remain low.  

 

A total of 21 homes sold (closed escrow) this November as compared with 23 sales of a year ago.  The average sold price was $2,825,976 this November at 19% more than the average price in November 2011.  The average size home was 3562 square feet, with a price of $712.18 per square foot.  The average lot size was 13,400 square feet. 

 

The most compelling figure in quantifying a recovering market is the 2012 year-to-date average price of a single family home in the Palisades, which now sits at $2,467,976.  This is an increase of 15% over the average price of a home in 2011.  Considering that the average price is only about 10% lower than the peak annual price of 2008, this shows remarkable progress toward a market recovery.  In addition, a total of 250 homes sold this year, setting a pace that may exceed the 262 homes sold in 2011.  

 

Buyers have recognized that the market has reached its bottom and is recovering, and are taking advantage of interest rates set at historically low figures.  The average rate on a 30-year loan has remained below 4 percent all year, and has fallen further since the Federal Reserve started buying mortgage bonds in September in order to encourage more borrowing and spending.   Low mortgage rates have certainly helped elevate home sales this year: the National Association of Realtors recently noted that its index measuring the number of people who signed contracts in October to buy homes jumped to nearly its highest level in almost six years.

 

Inventory levels are quite low and the lack of supply is pushing up prices.  There were a total of 113 homes available for sale in November 2012, 32% fewer than the 167 homes in November 2011 and 41% less than July 2012 (the previous 12 month high).  The total supply of homes is calculated as the overall number of single-family properties that could have been purchased in a given month, as opposed to a snapshot of existing inventory on a specific day of the month.  As of the first weekend of December, there were only 64 “active” (not in escrow) homes on the market.  Asking prices range from $795,000 at their lowest and $26,000,000 at their highest.

 

The unsold inventory index displays the current relationship of supply and demand for the housing market expressed in months. The index is created by dividing the current number of homes for sale at the end of the month (supply) by the current number of sales in that month (demand).  The benchmark of this index is 6 months – anything below 6 is a seller’s market, anything above a buyer’s market.  In November, the unsold inventory index was at 3.2 months, favoring a seller’s market.  The average of the previous 12 months was 5.8 months, which is just about a balanced market. 


With appreciating prices, low inventory levels and 46 homes in escrow, we expect to close the year out strong and the market to remain solid going into 2013.  While the data clearly points to signs of recovery, buyers are still searching for values and will steer clear of homes perceived to be over-priced or problematic.  Sellers should closely review comparable sales with their agents so as not to over-price their property and lose the momentum of the current market.  Preparing homes for sale, including staging, making minor repairs and improvements, painting, and landscaping could mean the difference between multiple offers and a property that sits on the market.  There is a huge psychological element to buying and selling that sellers should not ignore, regardless of current positive market conditions.

 

 

 

Jeffrey Sandorf is a Partner in Amafli Estates, a Pacific Palisades real estate company.  Contacts: 310.625.4099 or visit www.AmalfiEstates.com.

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