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Pacific Palisades Housing Market: New All-Time High Prices Posted On :Feb 01-2015

In line with nearly all Westside areas, Palisades home and condo values have just surpassed their previous highs of 2007-2008. Double-digit increases for the third year in a row have brought local home median prices above $2.5 million, and average price per square foot nearing $900.

 

Although the rate of price increases has noticeably begun to slow since October, the upward trend is likely to continue for at least a few months. This is due to a continuing shortage of homes available to meet the steady demand. At the current rate of sales, there is close to a 2.5 month level of inventory. As long as the inventory level is before five months, it is a “seller’s market”.

 

Some people ask why the inventory is so low. Logically, since sellers could get 40% higher prices than they would have just three years ago, it might be expected that more homes would be on the market. One reason is that many local owners would love to get such high prices for their homes, but are not willing to incur the capital gains taxes, even though those taxes are still at relatively lower rates. Another reason is that many of these potential sellers have not yet determined other places they might prefer to live.

 

Perhaps the main reason there is a continuing shortage of homes available is that investors are still active in our area, and their greatest interest is in properties they can buy between $1-2.3 million. Another factor is that the lease market is again near all-time highs, resulting in some owners deciding to lease for a while rather than selling.

 

Looking forward, buyers are still likely to feel frustrated in their effort to identify and succeed in purchasing a home. Many of them are out-bid by other all-cash buyers or investors seeking profitable opportunities. Some good news for buyers is that investors are reducing their purchases as their anticipated profit margins narrow.

 

In general, sellers are likely to enjoy a continuing market climate in their favor. Until interest rates and/or average price levels increase significantly, it is reasonable to suppose that the strength of the buyer pool will still be great enough to offset the seasonal increase in new listings that will begin within a month.

 

Of course, there are varying degrees of market balance between sellers and buyers at different price ranges and in different Palisades neighborhoods. Therefore, owners who may be considering selling property in 2015 would do well to meet with an experienced expert to assess where their particular property fits into this picture before deciding on timing and price positioning.

Michael Edlen has been the leading Palisades agent since 1994, and has sold nearly $2 billion of real estate. He and his team of licensed agent/experts can be reached for consultation or property information at 310.230.7373 or

michael@michaeledlen.com.

 

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