South Coast real estate outperformed last year. The 841 homes sold in 2024 is up a significant 14.4% from the 735 sold in 2023, and the median 2024 sales price for those properties is up 2.4% to $2.15 million.
An increase in year-over-year median price, even a modest one, is always a positive story for homeowners.
A closer look at 2024, however, shows indexes like number of listings, absorption rate, sold to list ratio and sold sale volume all trending down during the last half of the year.
The market is quieting here and it will be interesting to see what 2025 brings.
There is no question that 2025 data for Los Angeles will be negative beyond our imagination.
As we watched with astonishment the wildfires rage, we can’t help feeling both empathy and also a very real fear that we could be next.
The Thomas Fire was not that long ago. At a recent Santa Barbara Association of Realtors meeting, Mayor Randy Rowse was was asked if the Fire Department is ready for what may come. He was certain it was.
The firefighters in Los Angeles and, in fact, all California firefighters and their administrative support departments, including here on the South Coast, are considered the very best trained in the entire country, and they believe they were as prepared as possible.
With no rain to speak of since last spring, and the extraordinary wind velocity experienced, there is never enough water or firefighters to contain this kind of event.
Certainly, all factors regarding the Los Angeles fires will be examined and perhaps corrections can be made so that the inevitable “next one” will be less impactful.
The undergrounding of electrical lines will certainly be debated. Yet droughts and subsequent wind events and wildfires are not new to California, and we know a lot about them.
Tragically, the rate of increase — size and occurrence — continues to grow. In fact, nine out of 10 of California’s largest infernos have occurred in just the last decade. They resulted in the 2019 bankruptcy of PG&E, the largest electric utility company in the country.
In the last few years, we have seen a retreat by many insurers as a result of past major California wildfires and disasters, including the 2017 Thomas Fire and the subsequent Montecito flash flooding and debris flow that killed 23 people.
In addition, insurers don’t like that California, unlike any other state, limits the amount they can raise the cost of coverage. As a result, they canceled coverage for many of us, and refused to write new policies for others.
California just adopted new rules in hopes of increaseing coverage. It is a bit more involved but, going forward, when insurers underwrite a minimum percentage of high-risk policies, they can now raise premiums to reflect the associated risk.
The hope is that insurers will return to all markets.
The downside, however, is increased cost. Allstate, for instance, was just approved for a 34% rate increase.
Despite this, with the Los Angeles fires’ impact perhaps in the hundreds of billions of dollars, it is too early to know if insurers will return or choose to remain, forcing more homeowners to look to the California FAIR Plan for coverage, inadequate as it may be.
After all, fires like this aren’t supposed to happen in cities.
To make this even worse, the projected statewide increase in premiums will likely reduce property values by 15% or more.
In riskier areas, many here on the South Coast, projections are higher where some homeowners will not be able to secure appropriate mortgage insurance that all lenders require, decreasing the fair market value of their homes.
According to Redfin, 67% of Pacific Palisades home owners’ insurance were canceled last year and median sale prices fell by 15%.
Real estate markets rarely act predictably, and whether home prices are reduced by these climatic events remain to be seen, but it looks to me like the “all cash buyer” is going to become even more popular, and many might be former Angelenos looking for a new beginning.