A few weeks ago we observed there were some indications that the Palisades housing market may have begun to turn in favor of sellers. With the benefit of two complete months of home sales records available now, we are able to verify that indeed a market shift may be in progress. The number of sales for the first two months of 2012 were identical to the same period last year, but the time it has taken to sell them is 13% less this year.
Of greatest significance is the fact that both median sale prices and average price per square foot are substantially higher than they were at the beginning of 2011. Even though the median sale prices may be affected by having only 28 sales to calculate from, the average price per square foot is a more reliable measure that indicates a 16% jump in prices.
Last month we noted that there had been several instances of multiple offers, which surely is more typical in a “seller’s market” than a “buyer’s market”. Recently, there have been several more such instances in the Palisades, with prices moving higher in each of these occasions. Notably, there are several investors/developers active in the local market and they have yet to satisfy the desire for properties to develop. As a result, even homes which need a tremendous amount of work, but are in relatively good locations with reasonable size lots, are finding a strong demand if the price is fair. There again, multiple offers have been the rule rather than an exception.
Another indicator of underlying market strength is the time it would take to sell the homes available at the current rate of sale. While it would take nearly two years to sell the homes available above $5 million, below that level it would take less than four months. Typically when there is more than seven months of inventory, it is considered a “buyer’s market”. Less than five months is generally considered a “seller’s market”.
Whether this will continue to be a predominant pattern through the rest of 2012 remains to be seen due to a few unknown factors. For example, there are still a fair number of bank-owned Palisades properties as well as a substantial number in various stages of pre-foreclosure activity. If the number of homes available increased considerably over the next few months, as it typically does before the summer, the upward moving price trend may level out once more. Only time will tell.