Santa Monica Market Update - January 2026

Supply Metrics

Demand Metrics

Pricing Metrics

Market Timing

Showing Activity

Challenges

• Plummeting inventory supply – New listings down 27.3%, indicating sellers are holding back, creating less market momentum
• Longer days on market – Properties taking 35 days to sell, up 29.6% YoY, meaning buyers are more selective
• Pricing pressure showing early signs – Median price down 2.3%, average price down 9.3%, suggesting the upper end is softening faster
• Increased price negotiations – Homes selling at 97.5% of original price, down 2.5%, showing more concessions during negotiations

Opportunities

• Near-list price execution – Properties still selling at 99.9% of last list price, proving well-priced homes command strong offers
• Explosive closed sales growth – +75.9% increase in closings shows robust transaction activity for properly positioned homes
• Limited competition – With new listings down significantly, well-priced homes face less direct competition

Seller Strategy

• Price aggressively from day one – The 2.3% median price decline and longer DOM require realistic initial pricing
• Expect 35 days on market – Plan your timeline accordingly; quick sales under 30 days require exceptional pricing
• Prepare for 2-3 showings before contract – Higher showing requirements mean staging and presentation are critical
• List now while inventory is low – The 27.3% drop in new listings means less competition if you act quickly
• Be ready to negotiate – Expect to come down 2-3% from original list price to secure a buyer

Opportunities

• Inventory drought creates negotiating power for patient buyers – Active listings down 17.2%, but longer DOM of 35 days (+29.6%) means sellers feel pressure
• Days on market climbing – Properties sitting longer give buyers time to conduct thorough due diligence without rush
• Reduced showing competition – Only 2.6 showings per listing (vs. higher in hot markets) means less bidding war intensity
• Softening at the high end – Average price down 9.3% vs. median down only 2.3%, showing luxury segment weakness

Challenges

• Persistent low inventory – Only 2.1 months of supply remains well below balanced market levels (5-6 months)
• Limited new options – New listings down 27.3% restricts choice and creates urgency when desirable properties hit market
• Strong pricing fundamentals – Homes still achieving 99.9% of last list price, leaving little room for aggressive lowball offers
• Transaction volume surging – Closed sales up 75.9% shows competition remains real for well-priced homes

Buyer Strategy

• Move decisively on properly priced listings – Homes at market value still command near-list offers within 35 days
• Leverage extended DOM on overpriced properties – Use the 35-day average to negotiate on homes sitting 45+ days
• Offer 97-98% of asking on fresh listings – This aligns with the 97.5% of original price metric while staying competitive
• Focus on new inventory immediately – With only 48 new listings monthly, act within the first week to avoid competition
• Target properties with 3+ showings and no offers – Shows to contract at 2.0 suggests homes needing multiple showings are negotiable

Market Classification: Cooling Seller's Market

Pasadena's residential market remains a seller's market, but significant cooling signals are emerging. The 27.6% drop in months supply to just 2.1 months confirms ongoing seller leverage, yet the 27.3% plunge in new listings and 17.2% decline in active inventory suggest sellers are hesitating—uncertain whether to capitalize on today's prices or wait for recovery.

The explosive 75.9% surge in closed sales appears contradictory at first, but reflects pent-up demand breaking through as inventory-starved buyers rushed to close deals in December. However, this was accompanied by a 9.3% drop in average sales prices and a 29.6% increase in days on market, signaling that velocity is slowing and pricing power is shifting.

The most telling indicator: shows to contract doubled to 2.0 (+100.0%), and showings per listing jumped 73.3% to 2.6. Buyers are being more selective, conducting more showings before committing, and sellers are feeling that hesitation in the form of longer market times. The market is transitioning from urgency-driven to evaluation-driven buyer behavior.

Pending sales down 12.7% forecast a softening Q1 2026, as fewer contracts in the pipeline will translate to reduced closings ahead. For sellers, this is the moment to price competitively and move quickly before spring inventory floods the market. For buyers, patience is finally being rewarded with negotiating room—but act decisively on quality listings before the seasonal uptick shifts momentum back.