REAL ESTATE CONSULTANT
Several months ago I was hired to sell a home here, and the owner decided to set the price approximately 12 percent higher than where we suggested the market would respond to most favorably. After months of very active marketing, many ads and open houses, and an eventual price adjustment, we were finally able to negotiate a lease with an option to purchase. That is an example of a home that was merely “on the market.”
Recently, we listed a home on the same block as the home above. In this case, the owner decided to select a price that was intended to receive maximum market energy in a short period of time. As a result, the seller received several offers, and ultimately sold it for substantially more than the asking price. This is an example of a home that is actually “in the market.”
As of April 1, 2011, there were 85 homes for sale in Santa Monica. Fifty-six homes sold in the first three months of 2011, which is an average of 19 homes per month. That equates to only a four-and-a-half month level of homes available for sale, which is an indication that the local market clearly favors sellers today.
The average time on the market for the homes that have sold so far this year is lower than last year at this time by seven percent, which is another indication that sellers have a favorable climate. Other signs favoring sellers are a 41 percent lower housing inventory in Santa Monica, 47 homes now in escrow, and sales volume up by 27 percent. The only signs that favor buyers here today are that the average price per square foot is five percent lower, and the average median sales price so far this year is six percent lower than last year’s first quarter.
Many buyers are apparently taking quicker action when a suitable home is listed at a price they feel is attractive. Hence, the shorter time on market and lower inventory level. Clearly those properties were perceived as excellent values, and thus were really “in the market”, not just “on the market.”
Not many people notice the other approximately 50 percent of homes “on the market,” that are not really priced to sell. In fact, in looking back over the last year of Santa Monica home listings and sales, it may be observed that 47 percent did not sell yet.
Fewer are buying as compared with last year at this time, but those who do buy are doing so quickly and decisively. In fact, many sales today are resulting from multiple offers, and the sellers often get more for their property than they asked for. There are clear and definite benefits from proper pricing and marketing of homes. Indeed, it may well determine whether the home will sell at all.
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.