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What Comes Next: 2022

Q&A with
Shamon Shamonki.,
Global Real Estate Advisor,
Sotheby’s International Realty
What comes next…

Being on the forefront of the luxury real estate
industry for the past 18 years and previous to that,
a veteran of Wall Street, Shamon Shamonki has a
unique perspective that has evolved over his career.
As a Senior Global Real Estate Advisor at Sotheby’s
International Realty, he has seen many trends and
dramatic moments in the real estate market.

Q: What is the driving narrative of 2022?
A: The overarching theme for 2022 is the evolution of
consumer sentiment and the transition of economic
perspectives. The real estate market remains
relatively healthy with generally positive consumer
sentiment, low inventory and high demand. Looking
closer, however, I’ve noticed that we have begun
a transition that is seemingly irreversible. Due to
rising inflation, higher interest rates and a general
sense of concern over the lasting repercussions of
the Covid event of 2020, consumer sentiment is no
longer as positive as it used to be. Put simply, 2022 is
the year that sellers are becoming less aspirational
with their asking prices and buyers are beginning to
see price appreciation slow down as interest and
inflation erode their buying power. The once
universally understood belief that, ‘it’s purely a
seller’s market’ is no longer the theme. At some
point in the next few years, if interest rates continue
to increase, property values may stop appreciating
then start to neutralize and possibly retract a bit.
That will be the beginning of a buyer’s market.

Q: How do you think this is affecting our market in
the Palisades?
A: In the Pacific Palisades we enjoy a more
insulated market than others around us. Generally
speaking, insulated markets are always the last to
depreciate in value and the first to rebound. During
the historic economic collapse of October 2008,
most neighborhoods felt a dramatic impact with
real estate prices depreciating, including Pacific
Palisades and other affluent neighborhoods. But
within 18 months after the 2008 economic collapse,
buyers and investors were descending on Pacific
Palisades as a primary location for their next real
estate acquisition while other neighborhoods were
stagnating with a limited amount of buyer interest
for another year, or more. The Pacific Palisades
is unique in a variety of ways. Currently one of
the most desirable places to live in California, it
offers a family-friendly environment that is almost
impossible to replicate anywhere else in the world.
The Palisades blends small town Americana, with a
high level of sophistication, and an understated level
of elegance, with a relaxed coastal lifestyle. Here, we
are still exhibiting signs of a generally bullish and
optimistic impression of the real estate market. We
continue to have a dramatic inventory shortfall of
homes available for sale versus a plethora of buyers
looking to acquire homes in our neighborhoods.
Due to this inventory crisis, if a seller prices their
home accurately, they can still expect multiple
buyers to pursue the property. Although rising
interest rates have an impact on a borrower’s buying
power, I don’t believe that this impact will affect
property values in the Pacific Palisades in the near
term, as we are still servicing a strong percentage
of cash buyers; and for borrowers, interest rates
today are still near historic lows.

Q: Which area is seeing the most growth?
A: The Palisades Highlands is the neighborhood
to watch today. In the past, many Palisades buyers
would exclude the Highlands from consideration
in their search for a new home. With today’s
social and political climate in flux, many people
are now preferring the privacy, insulation,
safety and anonymity of this neighborhood over
the immediate conveniences of higher density
neighborhoods closer to town. Many families
enjoy the variety of outdoor hiking and biking
trails, and value the 24-hour armed security
patrols throughout the Highlands, along with the
resort-like amenities that many of the Highlands
HOAs offer.

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