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North Santa Monica Real Estate Update: Higher Prices, Fewer Days on Market and Low Inventory

Posted by John Hathorn on June 18, 2013
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I am happy to report a very solid second half of 2012.  In fact, real estate sales activity in Santa Monica, North of Montana Avenue was the very best it has been since the recession began in 2006. housing market

While the first half of the year showed a shot gun race for properties, the second half did not disappoint, surpassing by far the 1st half of this year.   Not surprising is that 9 out of the 72 total sales were off the market or private sales (no MLS) with Partners Trust proudly representing a third of them. 

Predictions of a strong Seller’s market have been accurate as the overall real estate market and specifically 90402 have been marked with shorter days on market, higher sale prices, and bidding wars for properties.  As expected, the trends have continued more so in each of the three categories above.

Pence Hathorn Silver brokered several of the most expensive sales in the zip code including  2202 Georgina for $9M and 2515 La Mesa for $9.4M.

There were a whopping 13 sales (includes the SM Canyon) that closed for $5M or more in 2012. In 2011 there were only 6 sales for $5M or more.  And as if the recession never even happened, land value is currently nearly $300 per sq. foot for average sized lots – blowing away the pre-recession $250 per foot average. There are way more many Buyers than Sellers for land value properties.

The following is the breakdown for the second half (not including December):

90402

2012 2nd Half

2012 1st Half

Percentage Improvement

SFR Sold

53

53

0%

SFR D.O.M

42

55

23%

SFR Listings

82

84

2%

SFR Highest Sale

$8,600,000

$9,000,000

-4%

SFR Median Sale

$3,435,518

$2,834,731

18%

 

*Stats do not include Santa Monica Canyon or Condos

2nd Half PRIVATE SALES  totaled 14 with a Median Sales Price of $3,722,000.

Overall, for a single family homes in 90402, we have seen the same number of homes sold from the first quarter of 2011 and 20% increase compared to 2010. The median sales price saw an increase of 22% compared to the 1st half representing a new median sales price high of $3,435,518.  To give you an idea of how much the market has changed, the 2011 median sales was $2,693,889, and 2010 had an average of $2,441,703. While Median Sales prices are good indicators of market trends, they also average in all home prices in all ranges.

Lastly, private or off the market sales represented the largest percentage of total sales at 26% for the 2nd Half , a percentage not scene as high since the last peak of the market.  If you look at the whole year in the single family home category, then private sales represent 23% of the total sales which can be interpreted as a very high number.

Still growing is the number of buyers. This is most likely due to the strengthening economy, foreign buyers, record low interest rates, and other positive indicators.  Therefore, the multiple offers and bidding wars are more prevalent, pushing prices well above asking prices, especially in the 3 million and under market.  For the properties that are purposely listed at, near or slightly under market value, the strategy is working almost 100% of the time in generating multiple offers.  In fact, when you read or hear that the inventory or number of homes for sale is too low, a large part of the reason is that these days, properties have very little market exposure time. Meaning, as soon a property is listed for sale, it often goes under contract with a Buyer within days, not weeks or months.  If you look at the average number of days on market, the 2nd half went from 55 days to 42. Thus, this quick process does not allow the inventory to build up, supporting an opportunity for Sellers as the only mistake they can make is overpricing their properties – a Seller cannot list his/her property too low since the multiple Buyers bidding for each home is extremely likely to raise the eventual contract sales price to over-valued levels for the Seller.  There are several closed sales that show this is happening.  Properties have closed escrow recently at a list price to sales price ratio of 132%!

As far as what price points are the most active, the following is a breakdown. The 2-4 million range represented the most sales at 33 total sales in the 2nd half.  The 4-5 million range saw 7 total sales and 5+ million had 4 total sales not including December.  Overall, The largest jump for the 2nd half occurred in the 3 million and up range at 12 total more sales than the 1st half, which is a staggering increase for higher end homes. By comparison, no sales took place in the $5M arena on 9,000 lot properties from 2007 until 2012.

The information provided is intended to show trends of prices and sales in Santa Monica / 90402.  There are pockets within Santa Monica that may not be reflective of the averages in the data provided but the trends can still be applicable.

Here is a recap of some of the trends in the 2nd Half of 2012:

  1. Days on market is significantly shorter, averaging 42 days for single family homes in 90402 meaning homes are selling extremely fast.
  2. Overall in Los Angeles and in a majority of zip codes on the Westside, we are seeing a Seller’s market, multiple offers and low inventory to accommodate the larger than normal pool of Buyers.
  3. Refinances have been very active for the year but expect to slow down since most owners having already taken advantage in the past 2 years of low rates.  With the Fed announcing rates to be tied to unemployment and remain low through 2015, there should be an even bigger future rush of Buyers not wanting to miss out on the low interest rates.

Regardless of mortgage interest deductibility and fiscal cliff concerns, I expect the market to continue to improve for Sellers with price appreciation and high Buyer demand.

Please call me @ 310-924-4014 for a free, no obligation comparative market analysis for your property.

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