This article can be found in The Argonaut, where Lisa Phillips is a regular contributor.
Q: Is the real estate market going down? Is it too late to sell?
A: I have been asked this question by virtually every homeowner and buyer with increasing levels of concern recently. The old adage “What comes up must come down” combined with the pain and suffering so many endured in the not so distant past recession, is certainly making some people nervous. Let’s calmly reflect and analyze the question and its impact on our local market and on you.
In the long term, real estate investment may be one of the surest bets. Yes, there are almost guaranteed ups and downs – everyone is jubilantly celebratory of the ups, but some are unable to stomach the downs. Are we headed for a downturn, and if so, what does that mean for you? Here’s what we do know:
- Interest rates are continuing to rise. They do remain relatively low as a result of Federal measures taken to get us all back on our collective feet after the recession. Low interest rates mean lower monthly payments on a mortgage and/or the ability to stretch your money to afford a more expensive home. The Fed has been slowly raising those interest rates, easing us back into reality. We can expect a couple more rate hikes in the next year alone, and with each one, the target price of many buyers shrinks. Combine that with the beating California has taken in tax reform – once completely tax deductible, our relatively high property taxes are now limited to a $10,000 deduction. Again, this is a factor that impacts each buyers’ bottom line – their monthly expense budget for homeownership.
- Lack of affordability. Beyond increase in interest rates and therefore mortgage payments, buyers are simply having trouble affording the high prices of todays’ market. While your home values have gone up, the pool of buyers out there have not been able to increase their wages by even close to the real estate rate of appreciation. Their options decrease as home prices rise, and many are forced to sit out of the real estate market, striving to save more down payment money, higher earnings, and hoping for better prices.
- Sellers’ market slowdown indicators: According to new reports, this is the slowest market for sales of existing homes in 20 months, with supply levels up and sales transactions down. Reports On Housing, who tracks such real estate activity, reports we have already moved from a “Sellers’ Market” to a “normal” market. In LA County, compared to a year ago, there are 20% more houses on the market, while the number of properties in escrow has declined 13%. Marketing time for an existing home has increased from an average of 60 days to 85 days in the same period.
How does this impact us locally? Here are the statistics for our local neighborhoods, single-family homes and condominium sales combined, per the MLS:
Marina del Rey– compared to this time last year, the number of homes on the market has increased 30.1%, with the number of new listings up 64.7%!! While pending sales are down 28.1%, the number of days to sell a property averaged only 15, down 21.1% from the past year.
Venice– only a slight increase in new listings, but pending sales are down 69%, and days to sell were up more than 100%.
Westchester– Overall number of homes for sale up only 6.3%, but new listings are up 26.5%. Pending sales are slightly down by 6.7% along with days to sell, averaging 17 days, down by 20% from last year.
Playa del Rey– a 9.4% increase in homes for sale, although average days to sell was up by more than 33%, and number of pending sales down by 25%.
Playa Vista– a marked increase in properties on the market, up 56.5% from last year, with pending sales down by 60%. Good news is days to sell are down by 35% on average.
Palms/Mar Vista- Homes for sale up by 39.1%, with pending sales down more than 50%. Again, good news with days on the market remaining at a stable average of 15 days.
Culver City– Number of homes for sale increased by 41.8%, with pending sales down by 28.6%, but days on the market down by 7.1%.
Santa Monica– Number of homes for sale increased by 38.6%, with pending sales down 54.9% and days to sell increased significantly by 53.8%.
To get the best picture, you really need a personalized analysis of your property, including condition, neighborhood, and price range. (These statistics are for the entire MLS area referenced, and your sub-neighborhood may be different. Contact me any time for more specific statistics for your particular property.)
One parting piece of advice- if you do anticipate selling in the foreseeable future, and you want to ensure that you profit from the premium prices we have been getting, don’t wait to see prices decline, and sell in a panic. Although there are signs of correction, the good news is that overall low inventory is generally causing properly priced properties in our areas to sell quickly and at premiums. You have not missed out yet, I promise!
Disclaimer: This article is intended to be primarily for entertainment purposes, and is not to be considered legal advice.
ABOUT LISA PHILLIPS, ESQ./ CA Dept. of Real Estate, License #01189413
Lisa Phillips is an active Realtor® in the Los Angeles area, a licensed Broker and Attorney for more than 20 years. Lisa is also a member of the National Association of Realtors “Green Resource Council”, and achieved its “GREEN” Designation, and a Broker-Associate with Real Estate Collective. Her unparalleled knowledge of real estate, from local markets and pricing to legal issues and deal-making, has made her a trusted and valuable asset to her clients. In addition to her real estate and business savvy, Lisa is passionate about helping others, and works tirelessly for her clients, as well as several charitable causes. For more information, please email [email protected] or visit www.LisaPhillipsRealEstate.com.