Real Estate Market Update- February 2011

As we begin a new month, and take a look at the palisades market so far this year, a few interesting observations can be made.

There have been 238 local homes sold in the last 12 months, which averages 20 per month. As of February 28, 2011 there are 47 homes in escrow, which appears to be consistent with the last 12-month rate of sales. There are 103 active listings as of February 28. At what appears to be the current rate of sales, this equates to slightly more than 5-month level of inventory.

Since most real estate economists agree that a market is roughly in balance between buyers and sellers when the inventory is about 6 months level, in theory the Palisades is once again slightly favoring sellers. It is far too soon to guess if this is a trend beginning much sooner than expected, though it is interesting to observe.

It is also interesting to note that the median price of homes that have closed escrow this year is below $1.6 million, as compared to $2 million for the first two months last year.

Real Estate Market Update- January 2011

As the first month of 2011 has passed, and although there have not been enough sales to draw any conclusions from, the following is the initial picture:

The number of sales (16) in January was 38% lower than last year at this time, and the median sale prices were 33% lower. Prices per square foot were approximately 12% lower during this first month of 2011. There is a 7% larger inventory of homes available this year. Some indications that the market may be leveling out are that the average days on market is 37% shorter than it was at this time last year (now 86 days). One tangible sign that the market may be approaching its bottoming out level is that at the current rate of sales, there is a 6.5 month inventory of homes available in the Palisades. It has generally been agreed that when the number of months of inventory is above 7 months it has become a buyers market. Where as below 6 months it tends to benefit the sellers.

New Listing: Contemporary Mediterranean Home

Large, bright and open 5-bedroom, 4.5-bath Contemporary Mediterranean with unique and romantic architectural details. Private grass yard with charming entertaining patio.

374 Arno Way, Pacific Palisades, CA 90272

Offered at $2,450,000

For pictures and information of this and other wonderful properties

please go to Michael Edlen's Featured Homes webpage

New Listing: Cape Cod Charmer in the Palisades

Charming and romantic 3-bedroom, 2-bath with office and den. Wonderful indoor/outdoor flow. Just three blocks from Palisades Village.

15001 Bestor Boulevard, Pacific Palisades, CA 90272

Offered at $1,825,000

For pictures and information of this and other wonderful properties

please go to Michael Edlen's Featured Homes webpage.

Palisades Housing Market Update 10/20/10

As of today there are 149 homes for sale in the general Palisades market area, which is slightly lower then last year at the same time.  At the current rate of sales per month, there is now approximately seven-month inventory of homes for sale, which reflects the market which is almost in balance between buyers and sellers.

There are 38 homes in escrow, with a median list price of $2,200,000 and there have been approx 200 sales so far this year with a median price of $1,950,000. (Which is about 5% lower then last year at this time)

There have been several cases of multiple offers in the past month.  For example, about seven of the current escrows involve multiple offers! (Which is close to 20% of those in escrow)

The Palisades’ areas with the greatest number of sales so far this year are the Highlands, El Medio to Marquez area, and the Alphabet Streets.  Prices have ranged this year so far from $635,000 to $26,000,000!

The above summary verifies that the Pacific Palisades remains robust in homes sales, and decidedly is a market that could be moving up at any time in the near future. 

Current Financial Pressures on Homeowners & Some Available Solutions

We have recently been asked more and more frequently what alternatives there are for people to try to maintain their homeownership under tremendously stressful situations. Correspondingly, many prospective buyers are “looking for a deal”, and think that it may be found in all situations where a home is being marketed as a short-sale. The short-sale of property occurs when the market value is less than the loan currently owed by the owner. The issues are complex and not simple to explain. The following gives an overall picture of the current market conditions.

The recent history behind the current foreclosure problems is well-known and it may appear that the problems are getting worse. A lot of the pressures are the result of five-year adjustable rate mortgages (A.R.M.s) that have been and are adjusting to higher rates of interest between 2008-2013. Additionally, job losses have contributed to even more pressure on homeowners even in Pacific Palisades. We have identified 10-12 bank-owned properties (R.E.O.s) in the Palisades which have not yet come on the market. The impact of such a small number will not likely affect market prices very much, although if the prices of these sales are significantly lower than previous comparable sales they eventually will have an impact on appraised values. More significantly, there are more than 30 additional local properties in various stages of pre-foreclosure which could present challenges to local market values later this year. Pre-foreclosure means a notice of default (N.O.D.) was filed against the property to indicate an owner is 30+ days late in making their mortgage payments. The lender could schedule a trustee sale within 120 days of the date the N.O.D. was filed. The trustee sale enables the lender to either sell it to a third-party buyer or buy the property themselves if no acceptable offer is made on the date of the trustee sale.

When homeowners experience financial stress, it is critical to identify a real estate agent who is knowledgeable and experienced in helping people become aware of various alternative solutions. Those who do not seek help in a timely manner quite often end up having even greater challenges down the road. A few of the local bank-owned homes were foreclosed at values significantly below the market value at that time. Some of these properties could have sold at higher prices and would have prevented the owners from having a foreclosure on their record had they been appropriately informed. The foreclosure could also delay their ability to purchase any other real estate for approximately seven years).

We were all surprised by the magnitude of the problems that have occurred and many people are experiencing serious challenges. Some agents have become expert in working with lenders on behalf of their clients toward various solutions. Some of us have had numerous experiences in actually negotiating short sales with lenders, and there are certifications that real estate agents can now qualify for to more expertly help their clients in these types of situations.

Not everyone facing a foreclosure can qualify for a short-sale. Those who don’t qualify for a short-sale may still be able to negotiate what is termed a “work-out” with their lender whereby they agree to pay the balance of their debt in a renegotiated manner. Contacting a real estate agent or attorney knowledgeable in the negotiation of short sales will start the process and help to identify which of these alternatives is an option available to them. There are many guidelines that can be utilized, and it is highly advisable for individuals considering a short sale to seek an experienced real estate agent’s advice regarding the feasibility of proceeding in this manner as soon as possible. Any real estate agent involved in this work must be organized, highly focused and, if possible, certified in working with people who are in a financially distressed situation.


Some real estate companies have prepared extensive informative materials to aid in educating people about the different alternatives available, procedures that must be followed, and guidelines for agents to maximize the probability of being successful in negotiating with the lenders on their clients’ behalf. The process is complex and challenging due to the tremendous log-jam of files that the banks’ loss mitigation personnel have to deal with. For this reason, it is also vital that any negotiations be done with great care and thorough adherence to the procedures that are essential for success.

While some buyers find excellent short sale purchase prices, it is not for those who are faint of heart or needing closure quickly. Although several lenders have streamlined the process recently, it can easily take up to several months for some to complete the approvals. Buyers who are not willing or able to be patient with this process may lose interest and withdraw their offer prematurely.

Bank-owned property sales differ from short sales in several respects. Buyers purchasing bank owned properties need to be prepared to take action swiftly, often pay more than the initial listing price, and unconditionally purchase the property in its present condition. Competitive bidding is not uncommon, and thinking they can get “a deal” because it is a bank sale is often a frustrating exercise.

The potential overhang of such types of properties in Pacific Palisades may be small enough that at the current rates of sales the increased inventory will be absorbed by the market without much negative impact. If dozens of foreclosures come on the market in a short period of time, however, there could be a fairly significant impact on prices.

For the past 24 years Michael Edlen has provided real estate counseling services to prospective buyers and sellers. More tips and information are available on MichaelEdlen.com. He can be reached at 310.230.7373 or Michael@MichaelEdlen.com.