The big real estate story on the Palos Verdes Peninsula, and surrounding South Bay area of Los Angeles, is inventory is finally catching up with demand. I greet this news with mixed emotions. First, for prospective buyers it is good news. Not only will there be more homes for them to consider prior to making an offer, the increased supply will allow them to negotiate a bit more on price and terms. There are other homes waiting in the pipeline if their first choice home is beyond their reach and that has not been the case for many months.
On the other hand, sellers may find the incredible seller’s market slipping away from them if inventory continues to build over the next few months. I don’t believe the multiple offer situation will completely go away, but it will grow more selective. Only choice properties will be gifted with several offers. There properties will offer big opportunities either on price, location or condition–perhaps all three.
What does this change in the real estate market mean for sellers? The good news is interest rates are still super attractive. The bad news is you may have to do more pre-listing work, and possibly improvements, to capture the buyers you want to attract. One seller I’m currently working with is courting the buyers by doing a thorough clean out and clean up, painting and taking care of deferred maintenance. He understands if he wants to achieve top dollar in a more balanced market these steps are necessary.
The even bigger value issue sellers may encounter, as the local housing market edges closer to a balanced or neutral market, is one of value. 2013 was a remarkable recovery year for the Palos Verdes Peninsula and South Bay of Los Angeles. 2014 is showing a softening on monthly gains in prices, and as inventory grow that pressure will increase. Pricing over market value, as many sellers successfully did last year, simply isn’t a viable game plan for the second half of 2014. I check the MLS daily to see what is trending. I note more and more of the little red flags pointing downward indicating the property received a price reduction. The daily pulse of the market is sending sellers, buyers and agents a message.
In a nutshell, the local market is still strong, but not as robust as it was last spring and summer. Buyers have backed off and are watching for the right home at the right price. With the higher prices their dollar will not purchase as much, and they are content to remain in their current home while they wait for the home that will make them move. Post-recession buyers are more cautious than pre-recession buyers. Many learned the hard way that real estate prices do not always go up. They have no intentions of overpaying for a property and getting caught in a declining market once again.
Sellers, take stock of the current market conditions. Last year’s market is statistical history. Is the market still strong? Yes, but savvy buyers sense the change and sellers will must have the “wow” factor working for them to move these buyers from home shoppers to home buyers. Seller, the market is still in your hands, but your grasp is slightly weaker than it was a few months ago. In order to strengthen your position you will need to highlight what sets your property apart, prepare the property with today’s buyers’ wants and needs in mind and price the property at today’s value. The gain in property values will only be sustainable if sellers adjust their expectations to align with today’s market.
As a side note as we began 2014 the number of single family homes dipped below 100. Today there are 190 single family homes for sale on the Palos Verdes Peninsula. Inventory has nearly doubled in less than six months. Sellers, make sure your property is flashing buy signals from the curb to the patio and beyond.
– Norma (310) 493-8333