Hancock Park, Windsor Square, Larchmont Village and Brookside are small 1920s residential neighborhoods, centrally located between Downtown and Beverly Hills . Today, the multiple listing service defines the broad "Area 18” as La Brea to Western, Melrose to Pico.
Overall, the statistics for January – October 2009 show that virtually the same number of single family homes traded hands this year (145 this year vs 149 last year). The average time on market was 2+ months, similar to last year. Yet, well over half or 57% all sales were under $1 million versus 38% under $1 million in the prior year. Lending requirements are MUCH more stringent, inventory is higher and a disproportionate share of homes on the outskirts of the prime neighborhoods sold, often in multiple offers. The price segment under $1MM continues to be driven primarily by first time home buyers due to government stimulus: low downpayment FHA requirements, low 30 year fixed interest rates and the $8,000 tax credits. Some home owners took equity out of their larger homes, downsized and locked in a smaller conforming 30 year fixed loan at less than 5%.
At the high end, over $2 million, was much slower. Only 20 homes sold versus 36 in the prior year. The average price per square foot was down over 9% and time on market was 3.5 months, over 30% longer than last year. Downpayment requirements for jumbo loans usually start 25%+ and fewer people are willing to make this cash commitment in light of current macro economic trends. It follows that the prime homes that are up to the minute done are the ones chosen.
A summary of the numbers:
TOTAL MARKET OVER $2MM
YTD ‘09
YTD ‘08 YTD ‘09
YTD ‘08
Number of Sales 145 149 20 36
Median price
$
898,000 $1,218,000 $2,458,500 $2,745,000
Median price/sq ft $
394
$ 685 $ 579 $ 586
Average price
$1,230,774 $1,628,354 $3,262,621 $3,271,228
Average price/sq ft $ 468
$ 587 $ 598 $ 660
Days on market 67 66 107 65
Implications for Sellers:
Proper positioning has never been more important.
Sellers must present their property in the best possible light in order to compete with other properties on the market – in your local area and citywide. Nice landscaping, a fresh, uncluttered interior and strategic pricing are critical to get selected. Spending a little extra money for finishes (or possibly staging) may be the difference between getting sold and languishing on the market. An agent with neighborhood expertise and a solid track record of closed transactions will help you prepare your home based on real time market insights. Remember "days on market" is the time it takes to secure an accepted offer, then factor in another 45-60 days+ for the property to close escrow. Lenders and buyers are often waiting until just before funding to release the loan contingency which can make planning for the next move challenging.
It is
important to do your homework and make sure that you hire the best local
professional to get the job done in a timely manner in order to yield YOU
the highest net profit.
Implications for Buyers:
There is a window of opportunity for qualified buyers today.
For the first time in 7+ years,
there is choice. Not only is there more inventory, but
there is less competition among buyers due to current lending requirements and
economic conditions. This gives you time to be discerning
and to make thoughtful decisions. Cash is king and can be additional
leverage with sellers today. For those with solid credit and cash
flow, the cost of money is near an all time low and loans are available.
There are also some Sellers who must sell and may be more flexible.
It is a particularly advantageous
time for move-up buyers; you may have to sell in order to buy and
possibly for a lower price than a few years ago but you will also pay less for
your next purchase.
What, where, when and how to buy are
the variables that together make the home buying process complex. A
knowledgeable professional is essential in navigating and advising you through
the intricacies of the marketplace.
