Over the past week I have taken an informal poll of realtors from the Palisades to Westchester and the general sentiment is the market has definitely slowed down. Listing agents have seen a pick-up in open house traffic in September over July and August, but offer activity has not increased much.
Offers are still being written but not in the aggressive manner we were seeing over the past 18 months in which buyers were willing to pay a strong premium to get a home. With tight inventory, buyers are still writing offers but closer to the true value of the property. The higher end ($3 million +) has slowed down the most with some unrealistic sellers and others who want to sell but are having a hard time finding an up-leg property.
We do have a few exceptions. The price point around $1 million (areas like Westchester, parts of Play Del Rey, Culver City) is still fairly hot with multiple offer activity. However, unless a list price is under market, the offers are close to the true value of the property with a slight premium.
Inventory should continue to pick up (we are still low compared to historical numbers) and with interest rates seeming on a steady climb, the feeling is that price appreciation will be relatively flat in 2015.
Homeowners obviously want to see double digit gains every year. However, price appreciation slowing down and the market becoming balanced is healthy from a long-term perspective. A 3-5% annual return on a leveraged investment with a tax write-off is still a wonderful thing. Less volatility over the next seven to ten years is good when you consider homeownership is the largest investment most people make. Avoiding another major downturn is critical to the overall economy.