As we began 2015, there are only 24 Santa Monica homes on the market, which is the lowest level in many years. Due to the high demand for Santa Monica houses especially under $2 million, the average $4.6 million list price is almost unbelievably 50 percent higher than it was 12 months ago.
In 2014, we experienced the same 20 homes per month average sales rate as was in 2013, with average sales prices increasing by nine percent. With just 24 homes on the market now, it would take less than one and a half months to sell all of the homes available at the current rate.
When the inventory level dips below six months, it is generally considered to be a “seller’s market.”
As of January 2015, sellers have the most favorable market environment that we’ve had in decades.
A number of factors have contributed to this continuing lower supply. One is that some owners who have been leasing their home rather than selling in the down market have not yet made them available for purchase.
Another factor is that the level of purchasing by investors has continued to increase through 2014, putting pressure on the market in many Santa Monica and other Westside neighborhoods.
Looking forward, buyers are likely to experience a continuing high level of frustration in their effort to identify and succeed in purchasing a home. Although interest rates are still near low levels, which has made home purchasing much more affordable, many prospective buyers have often found themselves being out-bid by either all-cash buyers or by investors/developers seeking more business opportunities.
It may take many months before enough homes are listed for sale in the more affordable price ranges, but the increase in home prices will gradually encourage more homeowners to put their homes up for sale.
As could be expected, local sellers are likely to continue enjoying a very solid market in their favor for at least several months. Until interest rates and/or average price levels increase more significantly, it is reasonable to suppose that the current strength of the buyer pool will be great enough to offset the seasonal increase in new listings that is about to begin.
Of course, each neighborhood has its own price dynamics. Also, there are varying degrees of market balance between sellers and buyers at different price ranges. Therefore, owners who may be considering selling property in 2015 would do well to meet with an experienced local real estate agent to assess where their particular property fits into this picture before deciding on timing and price positioning.
Michael Edlen has sold nearly $2 billion, 1,200 homes, and his team has more than 90 years of combined experience in real estate. He provides real estate counseling services to prospective buyers and sellers. More insight and information are available at MichaelEdlen.com. He can be reached at 310.230.7373 or Michael@MichaelEdlen.com.