As we enter the fall season, it's important to reflect on the real estate trends we've observed this past summer in Palms, 90034. For the month of August 2024, Palms recorded an absorption rate of 44%, indicating that homes in this desirable West Los Angeles neighborhood are still moving steadily. With 34 active listings and 15 homes sold, it’s clear that while demand remains strong, there is also a healthy amount of inventory on the market.

The average sale price for homes in Palms in August came in at $1,750,000, a significant figure that underscores the ongoing desirability of the area. Additionally, homes spent an average of 29 days on the market (DOM), suggesting that properties are selling relatively quickly, which is great news for sellers.

But what does this absorption rate mean for buyers and sellers?

What Does the 44% Absorption Rate Tell Us?

Absorption rate is a key indicator for evaluating the state of the market. It’s a measure of how quickly homes are being sold, and it gives us insight into whether we’re dealing with a buyer’s or seller’s market.

• 44% absorption rate: This is considered a fairly balanced market, though slightly leaning toward a seller’s market. A rate between 20-40% is typically balanced, while anything above 40% suggests stronger competition among buyers, which can drive up prices.
• With 15 homes sold out of 34 active listings, buyers have some options but might find themselves competing for homes, especially in highly sought-after areas of Palms. Sellers, on the other hand, can be confident their homes will move quickly, especially if priced competitively.

What About the New NAR Commission Law?

In addition to these local market insights, it’s crucial to address the recent changes in real estate commissions brought forth by the National Association of Realtors (NAR). The new NAR law regarding commissions, which took effect this year, mandates greater transparency around how commissions are structured and paid.

Under this new regulation, homebuyers are now more directly responsible for negotiating and paying for their buyer’s agent’s commission. Traditionally, the seller would cover both their agent's and the buyer’s agent’s commission, but this shift will likely lead to significant changes in how transactions are negotiated.

How This Could Affect the Real Estate Landscape

1. Buyer Sensitivity to Commission Costs: Buyers may become more conscious of commission costs now that they’re responsible for a more visible portion of it. This could mean buyers might want to negotiate lower commissions or be selective when choosing their agents, prioritizing those who offer more value for their fee.

2. Pressure on Agent Fees: With more transparency around commissions, agents may feel increased pressure to justify their fees. Expect to see a shift toward agents offering more specialized services or bundled incentives to remain competitive in this new environment.

3. Impact on Property Prices: In some cases, buyers might request concessions from sellers to offset the additional cost of paying their agent’s commission, which could slightly affect property prices. However, in a market like Palms, where homes are selling briskly, sellers still hold leverage, making it less likely for such concessions to become standard.

4. More Negotiation: We could see more back-and-forth in negotiations, as both buyers and sellers adapt to the new commission structure. Buyers may ask sellers to cover part of their agent's fees, while sellers will need to weigh these requests against the competitive nature of the current market.

Navigating the Market in Palms

If you’re a seller in Palms, this is an opportune time to list, given the 44% absorption rate and the relatively low DOM. Homes priced well for the market, especially those in the $1.75M range, are still in high demand, and you’re likely to see solid offers.

Buyers, on the other hand, should be prepared for potentially higher out-of-pocket costs due to the new commission law. That said, having a knowledgeable agent who can guide you through the process and negotiate effectively on your behalf will be key to securing your ideal home.

If you have any questions about the Palms market or the new commission law, feel free to reach out. I’m here to help navigate these evolving changes and ensure you make the best real estate decisions possible.

Nathan Derry
Realtor, JohnHart Real Estate

📍JohnHart Real Estate

📞(424) 303-0440

📧 nathan@jhagents.com

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