Several weeks ago we observed there were some indications that the Santa Monica housing market had begun to turn in favor of sellers. With the benefit of three complete months of home sales records available now, we are able to verify that a market shift has indeed occurred. The number of sales for the first quarter of 2012 was off by 11 percent; the time it has taken to sell them is 16 percent longer this year.
However, average sale prices and median sale prices, as well as average price per square foot, are substantially higher than they were at the beginning of 2011. The average price level is up by 24 percent, and the median price point is more than 28 percent higher in 2012! The average price per square foot is a more reliable measure, and it indicates a nine percent jump in prices over the last year.
Last month, we noted that there had been several instances of multiple offers, which surely is more typical in a “seller’s market” than a “buyer’s market.” Recently, there have been several more such instances in the Santa Monica, with prices moving higher in each of these occasions. Notably, there are several investors/developers active in the local market and they have yet to satisfy the desire for properties to develop. As a result, even homes that need a tremendous amount of work, but are in relatively good locations with reasonable size lots, are finding a strong demand if the price is fair. There again, multiple offers have been the rule rather than an exception.
Another indicator of underlying market strength is the time it would take to sell the homes available at the current rate of sales. As of the end of March, there is a 4.3-month level of inventory. Typically when there is more than seven months of inventory, it is considered a “buyer’s market.” Less than five months is generally considered a “seller’s market.”
Whether this will continue to be a predominant pattern through the rest of 2012 remains to be seen due to a few unknown factors. For example, there is still a fair number of bank-owned Santa Monica properties as well as a substantial number in various stages of pre-foreclosure activity. If the number of homes available increased considerably over the next few months, as it typically does before the summer, the upward moving price trend may level out once more. Only time will tell.
For the past 26 years Michael Edlen has tracked local statistics and trends, and provides real estate counseling services to prospective buyers and sellers. More tips and information are available at MichaelEdlen.com. He can be reached at 310.230.7373 or Michael@MichaelEdlen.com.