As I reported in the Skinny last year the real estate market was showing signs of strength thanks to low interest rates, tightening inventory and an influx of new wealth into the area thanks to the Silicon Beach phenomenon and the Westside always being an attractive second home destination for the international elite. In late 2011 many well respected financial analysts were touting this as a strong buying opportunity calculating that if you take the current interest rates combined with the drop in value of the past five years in actuality you have more like a 40-45% drop in Westside real estate value from the market heights.
Even knowing all of this, it would have been difficult to predict what the Westside market has experienced this year despite all of the worldwide economic turmoil. With inventory getting even tighter and interest rates continuing to drop to new lows the market flipped in almost overnight fashion and we are seeing double digit appreciation in many areas and price points over last year with multiple offers being presented on the majority of properties priced at market value. Make sure you read the Multiple Offer Mayhem posts below providing you with the inside scoop of what is going on.
Why so few properties?
Despite this strong value increase, many Westside owners are still underwater thanks to buying at the peak and then refinancing themselves to an even greater debt before the nation’s economic collapse. Many seller’s who are not in economic trouble are unwilling to take a significant loss to the property they currently occupy and even if they wanted to sell the tight inventory has left those looking for a home at a higher price point with very few options.
Standing out in a crowded pack of buyers
Agents are back to advising clients looking to purchase to do anything they can to create attention to their offers in a positive way. Ideas that were employed at the height of the market (personal notes written with flowers or baked goods, removing financing and physical inspection contingencies, picking up seller’s costs) are back in vogue as desperate buyers do whatever they can to get their hands on a property. Furthermore, agents must also present a clean and professional offer package with all the documentation along with having a solid reputation for the offer to be taken seriously.
Numbers tell the Story
In the highly coveted North of Montana market (90402) in Santa Monica, the number of days on market has dramatically shortened from 85 to 38 days and median sales has climbed to $2.694M compared to $2.441M in 2011. Further supporting the Seller’s market is the high listing to sales price ratio for the area – currently 97% and climbing higher. In a Seller’s market, this ratio hovers close to 100% and in a declining or Buyer’s market, the ratio can drop below 90%.
Patience is Key
Frustrated buyers need to stay patient and be ready to move on a property right away. The non-existent inventory should improve in the coming months with seller’s seeing this as a potential opportunity to get a price they didn’t think possible a year ago along with a presidential election looming. Though the Westside does not have nearly the amount of bank owned properties as other areas that are still struggling mightily, the banks still have properties they need to unload and that should provide a little relief as well.
117 South Medio- 4 bed/5bath, 5,365 sq. ft. Traditional on a 8,000 sq. ft. lot - This stunning traditional home created an unbelievable buzz when it first hit the market due to a ridiculously low list price of $3.295M. Many agents felt the property was worth over $4 million and it ended up selling for $4.251M almost $1M over asking! In total they received over 11 offers and countered back to 6 of them. Congrats to Partner Vicki Driscoll for helping her client see the value of the home in this marketplace despite the deceptive list price.
