As we began 2015, the number of homes available for sale in Brentwood was not as low as it was a year ago. However, there are only 50 homes on the market, which is the same supply as at the beginning of 2013.
Due to the high demand for Brentwood houses especially under $2 million, the median $3.7 million list price is almost unbelievably 70 percent higher than it was two years ago, and 23 percent higher than one year ago.
In 2014, we experienced another year of fewer sales as compared with 2013, with average sales prices increasing by 15 percent.
With just 50 homes on the market at the start of this year, it would only take only 2.5 months to sell all the homes available at the current rate.
When the inventory level dips below six months, it is generally considered to be a “seller’s market.”
As of January 2015, sellers nearly have the most favorable market environment that we’ve had in decades. With home sales continuing to exceed new inventory in 2014, it is no surprise that prices have continued to increase so much.
A number of factors have contributed to this continuing lower supply. One is that some owners who have been leasing their home rather than selling in the down market have not yet made them available for purchase. Another factor is that the level of purchasing by investors has continued to increase through 2014, putting pressure on the market in many Brentwood and other Westside neighborhoods.
Additionally, banks own only a few Brentwood homes, which have not yet been listed for sale. Also, 20 local homes are either in pre-foreclosure stages or already have had bank auction dates scheduled.
Looking forward, buyers are likely to experience a continuing high level of frustration in their effort to identify and succeed in purchasing a home.
Although interest rates are still near low levels, which has made home purchasing much more affordable, many prospective buyers have often found themselves being out-bid by either all-cash buyers or by investors/developers seeking more business opportunities.
Some good news for buyers is that investors are beginning to reduce their purchases of homes as their profit margin narrows and inventory of local distressed properties has declined.
Of course it may take several months before enough homes are listed for sale in the more affordable price ranges, but the increase in home prices will gradually encourage more homeowners to put their homes up for sale.
As could be expected, local sellers are likely to continue enjoying a very solid market in their favor for at least several months. Until interest rates and/or average price levels increase more significantly, it is reasonable to suppose that the current strength of the buyer pool will be great enough to offset the seasonal increase in new listings that is now beginning.
Of course, each neighborhood has its own price dynamics. Also, there are varying degrees of market balance between sellers and buyers at different price ranges. Therefore, owners who may be considering selling property in 2015 would do well to meet with an experienced local real estate agent to assess where their particular property fits into this picture before deciding on timing and price positioning.
Michael Edlen has sold nearly $2 billion, 1,200 homes, and his team has more than 90 years of combined experience in real estate. He provides real estate counseling services to prospective buyers and sellers. More insight and information are available at MichaelEdlen.com. He can be reached at 310.230.7373 or Michael@MichaelEdlen.com.
