These past twelve months have seen historic lows in interest rates, coupled with 14-year lows in inventory, to generate an upsurge in property values not seen in many decades. Yes despite these reports that appear in the newspapers, a careful analysis of high-end condo sales paints a completely different picture, going against the grain. Let’s look at the upper-end of the condominium market, the Wilshire Corridor. Known for its lavish penthouses, celebrity owners and full amenity services, the Corridor has come to epitomize the ultimate high rise condominium experience, or at least until The Century came online.
At a reported average on The MLS of $1,111.68/sq ft, The Century remains far ahead of the Corridor average of $521.29/sq ft over the past six months. Drilling down deeper on the numbers, the gap narrows on some of the buildings such as The Californian, which reported in at $707.26/sq ft for the same period.
The most interesting stat to notice is the average increase over the past twelve months. Americans love their 5 second snippets of important events, summarizing mountains of data into simplistic ten word phrases. Detailed analysis almost always generates a different story in any economic news, real estate included. For the past year, the average $/sq ft on the Wilshire Corridor has only risen by $36.27, or 7.48%, from an average of $485.02/ sq ft to $521.29/sq ft. While it represents a better ROI than you’re getting on your personal checking account, it pales in comparison to the 26% increase of June ’12 to June ’13 for California, as reported by Dataquick. Yet, one would think that the corresponding lack of inventory was reflected as well. Once again, the Corridor went against prevailing winds and reported an uptick in unit sales in the past twelve months, from 58 in the first half to 88 in the second half. Even existing inventory went against the prevailing winds, from 9 units in the first half to 66 in the past six months this past year. Average Listing Price versus final Sales Price also slightly tightened up in the second half, as the differential moved from 7.70% the first six months of the past year, to 6.10% in the second six months. You may dismiss a 1.6% difference as inconsequential, but that’s $16,000 for every $1M in reported sales price. Go figure.
Detailed analysis of property values is crucial for all decisions in real estate. The basic five data points we measure by are reflected in the “Buildings” tab at my website www.wilshirecorridor.com But if you need a deeper analysis, call us so we can discuss