Market Showing Mixed Signs
Recently DataQuick released its report showing that the Southern California Real Estate Market was still feeling the effects of the collapse we experienced at the end of 2007. In the Southland home sales overall are down slightly in year to year comparisons.
On a similar note the median sales price from across Southern California has fallen modestly from a year ago to today (280K from 285K). The total number of sales in the six county area was down nominally for the 10th straight month when compared to the previous year.
This comes at a time when we are usually building some momentum as we head into the peak selling season. What this tells us really is that there is still some buyer hesitance to be dealt with.
According to DataQuick, “sales have been below average for a protracted period of time. And, there is little doubt that there is a pent-up demand out there”. Buyer hesitation seems to be coming from a continued fear of prices falling further combined with the reality that qualifying for a home loan is not a certainty today.
And then, there is still the foreclosure problem to be dealt with. Like it or not the bank owned properties totaled nearly 33% of the sales during the first four months of the year. This coupled with the overwhelming number of short sale transactions means that the distressed sale is the dominant player in our market today. And, will be for the foreseeable future.
The investor market represents 25% of the buyer activity out there.
I often say that Real Estate is a local business conducted neighborhood to neighborhood. And, that you have to analyze the data on a local level if you really wish to understand the market that you are in.
I regularly receive a copy of “City Overview” published by Jon Sterling. His company utilizes the very finest analytics to determine what is happening in your neighborhood. And, his April report for the South Corona community that shares the zip code 92881 is the foundation of the following.
Currently the median list price in this community is three hundred twenty four thousand nine hundred dollars. There has been twelve hundred ninety five homes on sale for an average of one hundred and thirty seven days (thank you short sales).
According to Jon, inventory and days on market data is basically unchanged. However the Market Action index is increasing. All this means that home sales are outpacing the advent of new inventory. All of this loosely translates to “demand is beginning to exceed supply. And because of this what we are experiencing is most definitely a buyer’s market which is becoming further entrenched.
Jon advises us to keep an eye for improvement in one of the sectors (high end, moderately priced, or low income housing) for improvement, this will most likely be the bell whether of a shift in the market. And, this would also be an indicator that the market is over all on an improving trend.
All of this is further validation of my theory that if you are going to buy in the next six to twelve months, today is the day to become purposeful about it. As I have stated before, no one can accurately guess when the “bottom or peak” have occurred. Your goal has to be to buy before the bottom (already happened) or shortly thereafter, and sell before the peak.
Remember the lecture I give to my agents, the market is never static for long. It in fact is constantly shifting like a never ending pendulum from a buyer’s market (high supply, low demand) to a seller’s market (high demand, low supply).
During a buyer’s market there is a natural downward pressure on the price and concessions made to the buyer. And, in times when demand is high and supply is low, prices tend to be higher and concessions are generally not offered.
If you are a buyer (I’ll say it again) now is the time to buy. Don’t miss this opportunity. It will not last.