May 2011: Housing Market is "Flat" and "Stable" in Sunset Strip - Hollywood Hills West, West Hollywood, Beverly Center - Miracle Mile, and Hancock Park - Wilshire; Sailing in the Doldrums is Better than Sinking in the Dinghy
Keller Williams Hollywood Hills @ The Directors Guild Building
Our Keller Williams office has just relocated to the ground floor of the Director's Guild Building at 7920 Sunset Boulevard in Los Angeles, between Crescent Heights and Fairfax. Very convenient if you want to catch a screening after work -- with some of the plushest, red velvet seats in LA! Many may know the Griddle Cafe next door, that does a booming busines, and has some of most savory (and spicy) chili in town.
Periodically we like to check in on the residential real estate market in our own backyard. The neighborhoods nearby that typify this "middle" slice of the city are Sunset Strip - Hollywood Hills West, West Hollywood, Beverly Center - Miracle Mile, and Hancock Park - Wilshire. We've done a little "data mining" to try to make sense of the market, and here are our conclusions:
1. Prices have been flat for two years and show no signs of increasing. The median price of a home in this area was $1,335,000 in January 2008, and now stands (according to trendline) at $1,165,00 -- a drop of 13% in 2.25 years. Note that in the Spring of 2009 prices were already at current levels. Large price drops have already occurred; no real price gains are anticipated. It's our best guess that prices in this price range will not change much over the next year, since real estate markets tend to "bottom" over a long period of time.
2. The market has been "tightening" since its low point, the Winter of 2008 - 2009, in the depths of the financial crisis. The chart above covers the percentage of homes under contract from January 2007, when the market was still "hot" (and many would say, "overheated"), to April 2011. The number of homes in contract stands at a robust 11 - 12%, at levels not seen since the heady era of "no documentation", "liar loans".
3. Sales volume has stabilized. The chart above illustrates a 12-month moving average of sales, which has been level for about one year. We are going through a period when there are neither large declines nor large increases in sales of homes.
And how does this "flat", "stable" market feel? Like being adrift in the Doldrums, that belt of "calm and light baffling winds north of the equator". In this "stable" market there isn't much "wind in the sails" to compel buyers to buy or sellers to sell. Sellers find it takes a long time to market and their property, because buyers have no urgency to purchase. But, better to be adrift than in the dinghy with one oar as we were during 2008-2009.