The first quarter statistics for 2014 from The MLS continue to verify something we already know; it’s still a strong Seller’s market, the Buyers have fewer choices from a lower level of listings, and the trend will continue but not at this pace.
The Wilshire Corridor closed 154 condos along the Wilshire Corridor in 2013, averaging 38.5/quarter. The 1st quarter of 2014 only showed 29 closings, thus another further drop of 25%, which is a huge lack of inventory for the Buyers to choose from. If you really analyze the data, a large part of the current inventory of 75 condos for sale include a large number unacceptable to Buyers; grossly overpriced or in terrible disrepair. It’s no wonder that a lot of Buyers are pushing back and refusing to be caught up in a tight market that only results in the setting of new comps, unless they absolutely have to. As long as inventory is as tight as it is, this will be the story of the Wilshire Corridor.
How about the trend? That’s strongly favoring Sellers as well. The best measure is always $/sq ft, because it’s hard to quantify the differentials between the amenities of the buildings, the north or south exposures and the elevation of the unit. Overall, 2013 closed with an average of $588.77/sq ft, while 1st quarter 2014 closed at $620.17, thus moving up 5%. It’s actually more, because the 2013 closing data was a blended figure for the entire year. No market can sustain that kind of increase resulting in an annualized 20%+ escalation in value.
Another reason to get depressed if you’re a Buyer? The Days on the Market. Buyers are getting more desperate and grabbing the inventory at a faster clip, thus leaving the condos on the market for a shorter period of time. Days on the Market data from 2013 show the average condominium on the market for 118 days before they went into contract. That shrunk substantially in the first quarter down to 81 days, or only 69% of the time needed in 2014 to sell the same average condo in 2013
The numbers aren’t skewed by the sale of a large Penthouse in an “A” building either. For the 1st quarter, the range of closings reported a low $415,000 to a high of $3,200,000, which is the heart of the condo 2+2.5 market on the corridor.
What does all of this mean, along with the mountains of other data that I analyzed? Condos did not experience the big run up in 2013 that single family residences did, and lagged behind them as they historically have. Following the same scenario, it’s now their turn to shine and they are catching up to homes as a value option to potential Buyers. They’ll probably continue this run up for another quarter, while SFRs began to subside and cool off with a larger amount of new listings about to hit market in the next 60 to 90 days. Then they’ll cool off as Buyers sense better options at better value in the SFR market.
If you’re a Buyer for a condo, wait about 60 days and look at your options at that time. Lynn and I are launching 6 new listings in the next 3 weeks, and if that’s any indication of what’s coming down the road, the Buyers will have a lot more to choose from than they currently do.