Prices saw a small drop MoM, which isn’t all that surprising as the buying frenzy from the Palisades buyers has subsided. There are still some big sales taking place, but not as much as in February. That market was caused by the buyers who had the means to pay all cash, and now we expect the next wave of buyers who have started to receive their insurance payouts to enter the market.
|
Year-over-Year (YoY) |
Month-over-Month (MoM) |
|
|---|---|---|
|
Homes for Sale |
+30% |
+8% |
|
New Listings |
+26% |
+10% |
|
Homes in Escrow |
+2% |
+14% |
|
Closed Sales |
+2% |
+17% |
|
Median Sale Price |
+6% |
-2% |
Despite the small dip in prices MoM, we are still at record-high prices. The westside demand alone might be enough to keep those prices elevated for the rest of the year unless a large percentage of the Palisades buyers decide to take their insurance money elsewhere.
Tariffs and the Real Estate Market
This will be a hard topic to discuss as, more than likely, what I write now will be different a week from now. We were already starting to feel some hesitation in the market from buyers, and now, with even more noise to contend with, it’s possible that some buyers will continue to wait it out. Throw in the high likelihood that buyers have lost a significant amount of their net worth in the past week, and some might not even be able to afford the downpayment anymore. Or perhaps don’t want to sell stocks that have lost so much value. The silver lining to this should be lower interest rates. However, at least for now, that’s not the case. The 10-year bond has been on a roller coaster ride the past week, and it’s anyone’s guess as to what will happen next.
Inventory
Thankfully, inventory continues to increase. March this year had significantly more inventory than the same time in the past 3 years, with inventory similar to the years preceding Covid. If this trend continues we could be finally heading towards a market that’s more favorable to buyers. Keep in mind, the years before Covid were still seller’s markets. But at least this is a glimmer of hope for buyers as a lot of buyers, including mine, are continuing to struggle to find a home. When a home does hit the market that gets them excited, it’s all hands on deck to see it. The thing is, because inventory is so low, they’re never the only ones, and the property goes into multiple offers. Alternatively (and this happens a lot), the home doesn’t end up being as good in person as in the photos, so they understandably aren’t interested. Now, if the house is overpriced, in a bad location, or even in a bad location in a good neighborhood, then yes, it will sit. The problem we’re facing is that many sellers still think their homes are worth more than they are. We are still in a very challenging market, and this tariff drama isn’t helping.
Palisades
There has been a significant amount of land properties hitting the market, and as of writing, there are around 145, with only 13 in escrow. With this amount of inventory increasing daily, the land value will inevitably start to decline, and it will come down to how long those affected owners can hold out before they need the money and have to start reducing the price to sell. The same could be said when the new homes start developing. There will be so much inventory to choose from buyers will be able to pick and choose what they want. It will then be up to the developer (and, in some cases, the affected homeowner who decided to spec build their property to sell) how hard they want to negotiate with the buyers. It’s such an unfortunate situation for these affected owners, and it continues to drag out for them when I’m sure all they want is closure so they can move on with their lives.
