The Following Article is from the Summer 2006 Newsletter
This month we will be focusing on real estate sales data from the Los Angeles Multiple Listing Service. We will be comparing 2005 to 2006 year-over-year and month by month. Overall the marketplace is still strong and healthy but some of the dynamics have changed.
The early part of this year got off to a slower start than 2005 but we are catching up. For all the naysayers, statistically, 2006 looks a lot like 2005. The number of new listings coming on the market in the first four months of 2006 was 20% higher than in 2005 but in May it evened out. The number of properties entering escrow was slightly higher or slightly lower the first four months of 2006 over 2005 but May, 2006 it decreased almost 20%. The number of escrows closing was slightly down in the first four months of 2006 but was about even in May.
The median price of sold listings in 2006 was higher in all of the first five months of 2006 if only by a few percentage points. The median prices are continuing their trend upward. The days on the market before a property is sold was about ten days longer but now is trending downward toward shorter marketing time. The total dollar sales volume in 2005 and 2006 is almost identical with the trend lines appearing almost exactly the same.
What does all this mean? Are there any trends? I think we have a fairly stable marketplace on the Westside and inLos Angelesgenerally. The futuristic viewpoint from UCLA’s Anderson School of Management, Harvard andYaleBusinessSchoolsare for more of the same with possible slight downtrends in prices. The extent of the down trend will surely vary from market to market around the country depending on proximity to zones of new construction where there could be a much higher inventory of homes for sale. The predictions for the Westside are the continuation of a flat market because of the lack of inventory. The only areas for volume new construction on the Westside are in the condominium market which is building inventory. The single family market on the Westside requires the demolition of one home to build another. There is no available land to build housing subdivisions that could bring large numbers of unabsorbable inventory to the market.
Those that need to sell must be realistic in their pricing and be patient with the process. Buyers are not feeling the pressure to jump when new homes come on the market, they are much more patient. The real sense of urgency that buyers used to have is gone from the marketplace.