It’s all about price, time and perception!
By Michael Edlen,
Real Estate Consultant
Buyers and sellers have rarely been as fixed in their positions as they recently have been in the Palisades and in similar markets. Many buyers expect they can buy at great discounts from the list price, having read about the market slowing down. They have been observing that many homes have sold at significantly lower prices than the sellers hoped for months earlier. Often, they are waiting even to make an offer on a home that meets most of their criteria, feeling that the longer it is on the market the lower it will sell for.
During the same recent market period, many homeowners have not actually listed their homes but rather are hoping one of the many agents will come with an offer at a price beyond what they had wished to receive. They have let agents know that they would be receptive to an offer if it was presented at a specifically determined price, or have actually listed their homes at their dream price. These homeowners have no impelling reason to sell, so are content to wait for an enthusiastic buyer to come forth with abundant funds. Like the waiting buyer, they are in no hurry, believing this is a seller’s market, and it is only a matter of time before they get the price they want. In fact, many of them are basing their expectations on what they have been told their homes might be worth which was based on sales that may have occurred several months earlier when the market was stronger.
Thus many would-be buyers and would-be sellers are in a holding pattern, even though interest rates are lower than they have been in the last decade and ideal matches could be made quite readily. Each side is viewing the same market from an opposite perspective. And, in fact, there are a variety of data points that can be viewed in support of the buyers/sellers position as it pertains to them. Sellers point out how their homes are worth more than some that sold months ago, while buyers focus on the statistics that indicate a market slowdown is in process.
Human nature and emotions are playing a greater role today in the disparity of the market, and these are now more of a factor than relevant sales or market statistics alone. As a result, many people are interpreting the market based partially on the outcome they desire, either as a buyer or potential seller.
So what does the picture really look like in the Palisades? Even though interest rates are lower now than they were at this time last year, 16% fewer homes have been bought so far this year and inventory of homes for sale has increased more than 40%. Some local agents now appear to have more than 15 listings to manage, reflecting the changes in the market thus far this year. Not surprisingly, buyer’s expectations of lower prices have been rewarded in recent months, with 45% of the local listings having had price reductions.
In this context, if an owner really wants to sell now, it behooves them to select an agent who has actually succeeded in selling some homes in 2019 and find out what percentage of their listings have actually sold. If the agent was in real estate in 2007 and especially the late 1990’s here in the Palisades, they also will have the advantage of experience in a transitioning market. The homeowner will do well to be sure their home is priced correctly so that it is actually “in the market”, not just “on the market”.
Similarly if a buyer is really in the market, there are many other equally well-qualified seekers who have been looking for many months to find their ideal home, and sellers are often entering into contracts in the Palisades. To wait rather than make an offer when a home meets most of the desired criteria might result in missing out on the best fit that will come available for many months in the future.
Michael Edlen has been counseling Palisades sellers and buyers for 30 years, with a focus on each one’s unique situations and desires. Contact him at 310.230.7373 or firstname.lastname@example.org