Price Range Differences
The Expected Market Time ranges from 60 days at its fastest to 528 days at its slowest, depending on the price range.
For anyone who travels, there are days when the airport TSA lines stretch a mile through a maze of rope dividers. Before arriving at the airport, almost everyone grows anxious, anticipating how long it will take to get through security. When the lines wrap around the airport, the anxiety grows. There is more than one line, and some lines are moving much quicker than others. General screening is by far the slowest, with the longest lines and the most patience required. The TSA PreCheck line moves a bit faster, has a much shorter line, and does not require travelers to remove their electronic devices from their bags. It is reserved for travelers who have paid for the service and have had a background check. And now there is an even faster lane, TSA PreCheck Touchless ID, that allows passengers to use facial recognition technology instead of showing a physical ID. The travelers who move through the touchless line seemingly walk through security. TSA anxiety depends on which line a traveler can use.
Similarly, before a seller places their home on the market, almost every homeowner grows anxious, wondering how long it will take to sell. Some price ranges are faster than others. There is a considerable difference in the type of home, detached or attached. A seller’s anxiety depends on the price range and the property type.
A detached home that pops on the market priced at $700,000 will receive plenty of attention and has the best shot in Los Angeles County to fly off the market with multiple offers. With the important caveat that it is not only in great condition but is priced appropriately. Yet a condominium priced at $450,000 takes nearly three times as long as that detached $700,000 home and does not garner the same level of fanfare.
There is a wide spectrum of speeds across the Los Angeles County housing market. It is not one-size-fits-all. The Expected Market Time (the number of days it takes to sell all listings at the current buying pace) for the county, both detached and attached combined, is 109 days. Of course, the market is much hotter in lower price ranges, but the higher the price range, the longer it takes to sell a home. The Expected Market Time is the true “speed” of the market. The speed depends on a home’s price point.
The market is the hottest for detached homes priced below $1.25 million, considered the “sweet spot.” There is more buyer activity in these price points than in the rest of the market, with an Expected Market Time that ranges from 60 to 75 days. Homes within these price ranges that are accurately priced with all the bells and whistles, “WOW” properties, tend to attract multiple offers and often sell at or above their asking prices. For detached homes priced between $1.5 million and $2 million, it is not quite as instant, but still faster than the rest of the market. From there, the market slows.
Luxury homes priced above $2 million, the top 10% of the Los Angeles County Market, take the longest to sell. The expectation for these homes is that they will take much longer to sell and require plenty of patience, along with precision pricing. They typically do not fly off the market, and buyers are not tripping over themselves to purchase. The pace is the slowest for homes priced above $6 million, currently stretching 528 days, nearly a year and a half. There are not enough buyers looking for ultra-luxury homes compared to the number of sellers competing against each other.
The attached homes market is considerably slower than the detached market. This is due to rising costs of condominium homeowner associations. Maintenance costs, skyrocketing insurance premiums, and reserve fund issues have resulted in rising monthly association dues and special assessments. In addition, today’s higher mortgage rates have eroded home affordability for condominiums, which many first-time home buyers view as a stepping stone to home ownership. This has translated to longer market times for attached homes. The hottest price range for attached properties is $750,000 to $1 million at 129 days, followed by $500,000 to $750,000 at 133 days. Small, entry-level condominiums priced below $500,000 are sluggish at 160 days. A year ago, it had a market time of 101 days. Similar to detached homes, the higher the price, the longer it takes to sell.
Before coming on the market, homeowners should understand that market speed depends on the price point and whether a home is detached or attached. It also depends on the area. Some cities sell quicker than others for a variety of reasons, including price. Torrance has a market time of 53 days, compared to Pasadena's 102. Most importantly, homeowners need to consider the price carefully. A home that has all the bells and whistles and in turn key condition, yet is overpriced, will languish on the market without success. The best strategy is to price a home based on its Fair Market Value, carefully considering condition, location, upgrades, updates, and amenities, and using all recent comparable closed and pending sales.
The Bottom Line: Los Angeles County housing has a spectrum of speeds that varies by price point, location, and property type. Regardless, price is the most important factor in securing success.
