A Look at the Current Palisades Leasing Market

For those who are not involved in leasing properties, the level of leasing activity in Pacific Palisades may be surprising. A look at the first eight months of 2011 shows that 250 listings were made available for lease, including homes and condominiums. A total of 157 of those were leased, which is a remarkable 63% success ratio and an average of 20 leases per month! In fact, only 20% of those listed have expired or have been withdrawn from the market.

At the current rate of leasing, the 38 active listings as of September 2 would last for only two months. This is an extremely low level of inventory.

The median price point of the leases so far this year has been $5,500 per month, while the average price so far has been $6,300 per month. The average square footage of those leased was 2,500, and the average days on market in 2011 of the 157 leased was only 39 days. The range of leases so far this year has been $1,295 for a 1-bedroom, 1-bath unit on Palisades Drive to a 6-bedroom, 6-bath property on Ocampo, which leased for $25,000 per month. There have been a total of 27 leases at more than $10,000 per month so far this year.

Some might be interested in how some of these figures compare with last year. During the first eight months of 2010, the rate of leases averaged 23 per month, as compared with 20 per month in 2011. The median price in 2010 was $5,000, and the average price was approximately $6,000 per month. This reflects the fact that prices have continued to slightly increase due to a relatively high demand as compared with the inventory available in the Palisades in recent years.

Many property owners who otherwise would have sold their homes have figured that they might do better to lease their properties for a few years and wait until prices return to higher levels again before selling. Likewise, many buyers find themselves not able to purchase due to the stricter loan requirements, combined with a perceived relative lack of good quality homes at fair prices. Thus the demand for rental housing continues to be strong and results in a rapid leasing of properties soon after they are made available. In fact, due to the continuing strength of the leasing market, more investors are beginning to see a positive cash flow and greater incentives to purchase properties for the potential income which is now possible.

The data used for the above report are based on M.L.S. records, and do not include rentals done directly by property managers, owners, etc.

As published in the Palisadian Post, September 2011