Wednesday, May 31, 2017

Real Local Real Estate Market Update

What's going on in our market right now? It's still red hot, but it's a tale of two price points.

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It seems like everyone wants to know what's happening in our real estate market right now. Think of it in terms of two scenarios. For example, let’s say a nicely upgraded home in mint condition comes on the market for $650,000 and the initial open house is crazy, creating urgency among buyers. By Monday morning, there are multiple offers on the home, and by week's end, the seller accepts an offer that's over asking price that will close in fewer than 30 days. Next, picture a stunning luxury home listed for $1.8 million. A few people come through the open house and the traffic is solid in the first week, but there are no offers until it's been on the market for three to four months. After going back and forth on negotiations, the seller accepts an offer that's $100,000 below asking price, taking 60 days to close. Both of these scenarios are typical in our market for their respective price ranges. The market is hot, but the higher the price, the longer it takes to sell a home. It all depends on the price points, and if it's not compelling, it's not selling. The market is sizzling hot for homes priced below $750,000, with these homes receiving multiple offers. The lion's share of sales we've seen this year has been at that price point below $750,000, too.

The market is still sizzling hot, but the higher the price, the longer it takes to sell a home

The $750,000 to $1 million price range is still hot, depending on the city. However, on average, it takes a couple more weeks (or even months sometimes) to negotiate a deal compared to the lower price range. There simply aren't as many buyers looking to purchase a home in that price range.
It's a completely different story above the $1 million price point. That market is decelerating as we speak. The expected time for a home in this price range to sell is four months to a year. There aren't enough buyers in this price range for all the competing sellers. Regardless of the price range, though, there will be a lot of new homes coming on the market now through September. The active supply of homes will grow, but demand will stay about the same. The expected market time it takes to sell a home will grow as well, and you can expect to start to see some price reductions for more serious sellers who realize that more homes on the market means more competition for them. No matter the price point, it's imperative for sellers to price their home according to the marketplace with an exemplary marketing plan to avoid wasted market time. Interest rates are still low and homes are still selling, but the window of opportunity won't stay open for much longer. If you have any other questions about the market or you're thinking of buying or selling real estate in the LA and Orange County market, give me a call or send me an email today. I'd be more than happy to help you!