Hollywood Riviera Real Estate Market Update – June 3, 2013:

Someone asked me today if I thought home prices were heading down?  I seriously thought she was joking around with me when she asked that.  She then tells me that there are 20 homes for sale in the Hollywood Riviera that haven’t sold yet.  (As if that might be why home prices were heading down?)  Seriously, all I had to do was start spouting statistics to her.  If she followed the numbers, she might not have asked me this question.

So – here are the numbers and I don’t make these up.

Currently in the Hollywood Riviera there are 19 single family homes for sale.  The average price of those actively listed 19 homes is $1,195,989 with average days on market being 62 days.    Now, while this may be double the inventory of this time last year, one needs to know that our frenzied market began in May 2012 last year and has been running hot since then.  For instance, there were 27 homes for sale on June 5th, 2011  and 34 homes for sale on June 10, 2010 – just to go back a couple of years.  So, ultimately 19 homes for sale out of approximately 3000 is not a lot of inventory.  For most of the first half of 2013, we have had 10 or fewer single family homes to chose from here in the Hollywood Riviera.

When we take a look at the pending or the currently in escrow homes of the Hollywood Riviera, we start to see why the inventory is so low.  There are 21 homes currently under contract/pending/in escrow right now.  The Average price of those 21 pending homes is $1.179K (and that is with the outlier of $4.2 million taken out. Yes, a home here in the Riviera is under contract in this price range.  It sold very quickly, which leads me to believe it will sell close to this price if not for this list price.  It was right on the Bluff sitting above RAT beach looking out upon the lovely Pacific Ocean.  What a dream home!)   Back to the numbers – the average days on market of these 21 pending homes is only 24 days.  That is basically half of the normal marketing time we’ve been experiencing over the last few years.

Next level is to look at the solds – and this is what the appraisers weigh heavily  when comparing properties.  January 1st through June 3rd 2013 has seen a total of 42 single family homes sold here in the Hollywood Riviera.  This represents a 15% increase over this same time period last year.  The average price of those 42 sold homes is $1,038,160 – or a 3.5% increase in price over the homes sold last year.  When we add in the homes that are pending, I know this average increase in price will be quite a bit more.  (That outlier will calculate in as well as a $2 million dollar sale.)  The days on market of the sold homes is only 41 days and that’s down 39% from this time last year.  Another impressive fact about these 42 sold homes is that 14 of them sold “over asking price!”  (7 homes sold over their asking price January 1 – June 3, 2012)

There you have some of the reasons that I believe prices are heading up right now and not down.  One other item this person pointed to that I thought was interesting and why she thinks prices are heading down – she talked about how interest rates are headed up right now – as if that was some new, scary fact.  Well, indeed interest rates have inched up lately, interest rates have been ticking up and down for the last 5 years on a regular basis and historically interest rates are still way below their average levels.

This chart shows a small snippet in time from the last couple of years and it’s very clear that rates have been going down over this time period – which is clearly not sustainable – but we are talking about rates that were in the 4.5% range down to 3.25% range with peaks and valleys in between.  Does this mean our market is about to all of a sudden collapse because rates are up a fraction of a point?  I’ll let you decide whether prices of real estate are going up or down right now.  If you would like to discuss, please don’t hesitate to call me.  I like to run the numbers and have been collecting the Hollywood Riviera Real Estate data for many years now.  While the Hollywood Riviera is a small micro-segment of the South Bay, it’s fairly representative of the entire area.

If people sat down and looked at the facts from a historical basis and not just facts frozen in time, then maybe it would be evident that the pendulum is now swinging the other direction.  It is a great time to sell right now.  Buyers are out there because it is also a great time to buy right now.  Interest rates are still very low and will remain that way for at least another year according to all the ‘expert opinions’ out there.  Prices have inched up, but isn’t this what makes it more attractive?  Generally, that means we now know the ‘bottom’ has been reached and prices are digging themselves out of a hole.  Who knows how long it will last, but again just look at history.  Most of the real estate cycles last 5-10 years.  Seems to me we’ve been in an up-market for one year now.