The media paints confusing pictures regarding the present status and anticipated direction of the housing market. Headlines and statistics based on nationwide, statewide, and citywide reports lead to conclusions that are inconsistent, unreliable, and often times confusing even to the professionals in the industry.
Even when one looks at data in a specific community such as Santa Monica, the current market is challenging to understand. For example, it has been observed that the level of sales is 37 percent higher than it was this time last year, this is indeed a very “bullish” sign for the Santa Monica housing market. Other favorable signs include prices per square foot being only three percent lower than last year at this time, which could imply a flattening out of prices may have started to occur. Also, we have calculated that there is less than a six-month inventory of Santa Monica homes available for sale. This is the point that generally is agreed can be classified as a market relatively in balance between buyers and sellers. Also, it may be a good sign that the average days on market, which had been more than 100 days, is now closer to 60 days.
Although the above can be interpreted as favorable signs for a market that may be stabilizing, the evidence of that is far from clear. For example, a research report published on October 18, 2010, by Altos Research stated that the Santa Monica “market has shown evidence of slowing recently. The Santa Monica market is currently in a buyer’s advantage, with several months of inventory available at the current rate of sales.”
In looking at the condo and townhome segment, Santa Monica median prices have been relatively flat since reaching below $700,000 in the Spring, as compared with the earlier plateau of $800,000 for the previous one- to two-year period. Similarly, the price per square foot for condos and townhomes has been nearly unchanged for close to two years. However, inventory has been rising steadily throughout 2010 and buyers have far more alternatives to select from.
Whether the local market has about reached its bottom level or not is clearly unknown. For those who wish to try and time the market, interest rates may eventually have risen in offset to any further market price declines. Furthermore, potential sellers may need to wait several years before prices have increased enough to justify having delayed their selling at current values.
Michael Edlen of Coldwell Banker has been tracking and analyzing the local real estate market for years, and provides confidential counseling services to prospective buyers and sellers. More tips and information are available on MichaelEdlen.com. He can be reached at 310.230.7373 or Michael@MichaelEdlen.com.