A message from Jeff Culbertson, President of Coldwell Banker Residential Brokerage’s Los Angeles Company and Executive Vice President of NRT’s Southwest Region:
Sellers See Huge Window Of Opportunity With Demand Exceeding Supply
If you keep up with the real estate headlines, you may have heard that Southern California’s housing market is experiencing low inventory right now. According to the California Association of REALTORS®, Los Angeles County’s housing inventory dropped in March 2012, with the Unsold Inventory Index for existing, singlefamily detached homes decreasing to a 4.3-month supply, down from 5. 7 in February and 5.5 from the same time a year ago. Declines were also seen in Ventura County’s inventory, where it dropped from 8. 2 in February to 5.8 in March—compared to a 7-month supply in March 2011. Santa Barbara County also saw lower inventory than usual, with a 4.6-month supply in March, down from 6.7 in February and 6.2 the same time a year ago. (A 7-month supply is considered normal.)
The low inventory indicates that Southern California sellers— especially affluent sellers on the Westside of Los Angeles—are taking a cautious, wait-and-see approach to the market right now. Their hesitation is understandable, on the one hand. There is still some uncertainty about the market despite many promising signs of recovery in recent months. On the other hand, their hesitation could be costing them the opportunity to sell their home for a good price and move onto the next phase of life. Wary sellers may be encouraged by some of the stories coming out of our current market. The spring buying season is in full swing—with well-priced, well-presented homes in desirable Westside neighborhoods selling for higher values than they would have six months ago. Many of our local agents also tell us that they are seeing increasing numbers of multiple offers on homes priced over $2 million.
Mary Lu Tuthill, a Coldwell Banker sales associate in Brentwood, has reported multiple offers on several listings, including a $3.6 million listing in Brentwood Flats with four offers over the asking price; a $1.6 million ocean view property in the Brentwood Hills with 11 offers; a $5.5 million home in prime Brentwood Park with five offers over asking price; and, finally, another $1.89 million property in Brentwood Flats that sold for $2.2 million with several offers. In the end, these properties sold between $155,000 and $305,000 over asking price.
“The recent surge of multiple offers is further proof that if a home is priced correctly, then the buyers will be inspired to offer full price or more,” said Mary Lu. “Buyers are well-educated. They see every home in their price range and they are very savvy about values. For a seller, it is certainly the best time to sell since the spring of 2008. There are more buyers looking, there is more optimism and the low interest rates make a home more affordable.”
Other Westside sales associates report having properties with multiple offers in the $2 million and up range. Stacy Gottula, a Coldwell Banker sales associate in Beverly Hills, has been involved in two multiple offer situations in the last month, including a $2,975,000 property in Hollywood Hills that pulled in four offers and ultimately sold for at least 25% over asking price, and a $7,250,000 property in Beverly Hills that is currently in escrow above asking price.
“In the last eight weeks, activity has really picked up and it seems to be driving prices up,” said Stacy. “In L. A., building permits are up 30% due to new construction or remodels, which shows that confidence is coming back into the marketplace. Because inventory is low right now and a lot of buyers are looking, it’s a great time to sell your home.”
Clearly, sellers have a unique window of opportunity today since they have less competition and high demand. There are many selling opportunities to be had (or potentially missed). Before letting the window of opportunity close this spring, I would encourage sellers to at least speak with their local Coldwell Banker sales associate about the pros and cons of putting their home on the market right now. It could be a great decision in 2012.