The percentage of homes listed at $1 million and above that are under contract in the Sunset Strip - Hollywood Hills West, West Hollywood, Beverly Center - Miracle Mile and Hancock Park - Wilshire areas has fallen to 4% – one in 25 homes.
18 - 24 months ago, 13 – 15% of homes in these areas were in contract – approximately one in 7 homes. At that time, jumbo mortgage rates and downpayment requirements were low, loan underwriting was lax and borrowers could rely on “stated” not “fully documented” income.
The current glacial market for properties priced $1 million and over in these areas is reflected in the months supply of inventory, which has risen from 4 – 6 months to 20 – 24 months over the past two years.
This trend will likely worsen as buyers are impacted by lay-offs and cutbacks in employment, high jumbo mortgage rates, and stringent loan underwriting requirements. Buyers have also been blind-sided by the economic crisis and are feeling less wealthy than they did one year ago.
The bright spot in the Sunset Strip - Hollywood Hills West, West Hollywood, Beverly Center-Miracle Mile and Hancock Park-Wilshire areas is that properties under $1 million are selling, and the market is picking up.
During the past 18 months, the market slackened from 3 – 6 months of inventory to 8 – 13 months of inventory, a much smaller drop-off than for higher priced properties in these areas. Based on January’s sales, there was only six months of inventory, a far cry from the 22 months of inventory for the over $1 million market.