I’ve been hearing a lot about us being at the bottom of the housing bubble and Santa Monica homes for sale seem to still be a valuable and sought after commodity. Alright, maybe commodity is the wrong word – sometimes people buy Santa Monica homes because they want to live near the beach, be in a good school district, or have an incredible Santa Monica lifestyle.  Regardless, it got me thinking on a bigger picture.

A lot of clients of mine are cautious buyers as of late. Considering what has happened in the market over the last ten years, I can understand why people want to make certain that they get the best value at the best price, just in case the market should stay flat or god forbid, deflate. So, often what I am hearing from my clients are comments like, “If we had to be here for ten years, this home could really afford us…(fill in motivation for buying a home)” OR “This is such a good deal, even if the market goes down a bit, we’ll be ok, because we are getting a really good value in this home.” I love hearing these things – its such a pragmatic way to look at what is arguably your biggest purchase in life.

So that being said, I took some time this morning to look at the past decade’s worth of Santa Monica real estate data to see what kind of discounts buyers could expect from the peak of the market.

Real estate is like the price of gas – it sometimes goes down, but usually goes up. Here’s an interesting chart from the New York Times at the height of the market in 2006 that illustrates the boom and bust cycles.

Screen shot 2011 02 13 at 6.53.40 AM 300x251 Santa Monica Real Estate Values Over the Past Ten Years

I particularly like how there has always been a recovery fairly soon after the peak booms.  The right side of the graph illustrates the top of the market in 2006.

Obviously, we have come way down from the peak, so lets look at a micro-market, Santa Monica Homes for Sale.

Since there is some difference of opinion about when the height of the market really was, I did two analysis as the peak – one for 2005, and one for 2007.

Screen shot 2011 02 13 at 7.42.10 AM Santa Monica Real Estate Values Over the Past Ten YearsScreen shot 2011 02 13 at 7.42.21 AM Santa Monica Real Estate Values Over the Past Ten Years

You can see here that the price per square foot cost in Santa Monica seems to have stabilized in the last year and that the average price of a home has corrected itself from the drop in 2008.

It occurred to me to take into consideration Days on Market (DOM) and the average sales price in relation to the average list price.

Days on Market is defined by the number of days it takes for a property to be listed on the market and then go into escrow.  These days, it is usual for a 30-45 day escrow to close once going under contract.  You’ll see that in the peak years in the middle of the decade, homes were selling at a much brisker pace than they are today.  So that tells us it takes longer to sell a Santa Monica home now.

However, saavy sellers in this market can take an aggressive approach to listing their home by listing it under market value, and still going into multiple offers.  Often times, it is this strategy that attracts strong buyers who compete for the home, often driving the price up.  Consult with WestsideDB if you are looking for a deal or just looking at a property to see if its priced to sell quickly.

Screen shot 2011 02 13 at 7.53.14 AM Santa Monica Real Estate Values Over the Past Ten Years

The average sales price vs list price also tells us something.  Those middle years in 2004 and 2005 people were getting full price and sometimes over on average because the market was so hot.  That’s not the case today.  In 2010, 95% of list price is the average that homes are selling for.  This means that on average, buyers can get a discount if you have a good negotiator on your side.

 

 

Screen shot 2011 02 27 at 8.02.27 AM Santa Monica Real Estate Values Over the Past Ten Years

 

 

 

So if we are looking at today’s pricing off of the peak of the market,we see that there are fewer homes that sold and that the average price has dropped back in line.  Overall, I believe that this is telling us a few things:  That fewer homes are selling in Santa Monica and at a lower price from the peak.  Also, it is taking about twice as long for them to go into escrow.  And finally, that the average price per foot has dropped about 6%.  I would say this is actually a pretty good indicator that the residential market here on the Westside is pretty good and if you are looking to invest or sell your home, you have a great indicator that the market here is a good one.

(Please note, your results may vary if you hire anyone other than WestsideDB!)

Whatever you decide to do, whether it be selling your home or buying a home in Santa Monica, make sure you are well informed and have a real estate agent on your side you actually cares about you and your needs.  Someone like WestsideDB.  Contact me today for more information and for a free consultation to help you achieve your goals.

 

See you in the neighborhood.

 

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May 4, 2011 at 4:50 pm

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