April 4th, 2020
Palos Verdes Home Prices vs Case-Shiller Numbers
There was an article in the Los Angeles Times a couple of days ago referencing the “Case-Shiller” economic numbers for home prices.
They found that home prices increased 5.6 percent in July from the year before. That number is down 11% fom the 6.3% increase in home prices from June to June.
There is a definite slowdown in rate of price appreciation across the nation. We can see this even locally as the proprietary “Market Action Index”** has weakened
But I’ve always maintained that “Real Estate is All Local” so let’s compare the “national market” (whatever that is) to the entire Palos Verdes Peninsula home prices. Even though I have much more recent data, I will compare apples to apples with this article’s June 2013 to June 2014 and July 2014 to July 2014 home prices
The median price of a home sold on the Palos Verdes Peninsula in June of 2013 and June of 2014 was $1,200,000 and $1,375,000 respectively. And for July of 2013, July of 2014 the median sale prices were $1,230,000 and $1,375,000 respectively. That’s a difference of 14.58% June to June and 11.7% July to July. So where as the nation’s rate of appreciation slowed 11%, for the Palos Verdes home prices, the rate of growth slowed 19%.
What does the future hold? Who knows. Let me know when your crystal ball makes you your next billion dollars!
So while the rate of increase has slowed, in most cases across the country, the appreciation rate is exceeding the inflation rate. To me, having experienced now in my 34 years serving my clients on the Palos Verdes Peninsula and Beach Cities, we’re transitioning into a more “normal” pace of appreciation compared to the wild swings of recent years. Ultimately this will be healthy for the market. Applying these observations in advising my current clients looking to sell, pricing your home right is more important than ever. It’s easy to get it wrong on the high side. So when the market is not providing you lots of showings or offers, don’t waste time – reduce your price or take your home off the market
Palos Verdes Home Prices
**Definition of the Market Action Index, I pay for this service for my clients, you can sign up here https://www.bestpalosverdeshomes.com/palos-verdes-home-prices-trends-by-altos-research/
Market Action Index Definition (MAI)
We developed the MAI so you immediately know if it’s a Buyer’s or Seller’s market.
30+ indicates a Sellers market.
One of the unique market statistics provided in the Altos Market Reports our proprietary “Market Action Index” (MAI). Some of our subscribers ask about this stat and why we created it. In short, there are times in a market (both city and zip code level) that some of the key market stats that we use to analyze a market run counter to each other.
Perhaps median price is increasing at the same time that inventory levels are increasing while days-on-market is relatively flat. Using these three market stats individually makes it difficult to determine what is exactly is going on. We developed the MAI to roll together some of these key stats (and a few others) to generate a number, indexed to “30″, to determine if the local market is trending towards a “buyer’s market” or “seller’s market.”
From our reports:
“Residential house prices are a function of supply and demand, and market conditions can be characterized by analyzing those factors.”
“The Market Action Index (MAI) illustrates the balance between supply and demand using a statistical function of the current rate of sale versus current inventory. An MAI value greater than 30 typically indicates a “Seller’s Market” (a.k.a. “Hot Market”) because demand is high enough to quickly absorb available supply. A hot market will typically cause prices to rise. MAI values below 30 indicate a “Buyer’s Market” (a.k.a. “Cold Market”) where the inventory of already-listed homes is sufficient to last several months at the current rate of sales. A cold market will typically cause prices to fall.”
Keep in mind that an MAI value close to “30″ probably means that the local market is balanced or neutral. So if the MAI for your local market is somewhere between 27-33, then it’s likely to be either a buyer’s market or seller’s market based on the individual street or home area that a particular property is in.
We recommended using the Market Action Index with your clients to support your presentation about listing prices, offer prices, or other important client conversations where you might need some supporting data to back your argument.
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