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May 2006 newsletter – OCBuyersMarket.com PRICES UP, SALES DOWN…WE HAVE RETURNED TO A NORMAL MARKET… Believe it or not, this is the truth. Although many would have you believe that the sky is falling, nothing could be further from the truth. Volume has slowed, this is true, but keep in mind, it needed to fall. Had the market kept spiraling upward, then we would have been in for a rude awakening. As it is, the market has tightened, and there is a more realistic approach to home selling. It is important to point out that the headline of the OC REGISTER on April 19th read, “SELLERS MUST BE REALISTIC ABOUT THE ASKING PRICE FOR THEIR HOME.” It’s important to remember that the market dictates price; not the realtor, or some magic, mysterious formula. Just like stocks, no one is going to buy them higher than they are trading at, just because the seller would like to net more profit. The stabilization that is happening in the market right now is healthy and normal; it’s just that it’s been 9 years since a normal market.
WHAT WERE THE ACTUAL NUMBERS… The median price hit $623,000 which was up a modest $4,000. Sales were off by 22%. Plainly put, the median price rose simply because more homes were sold in the over $700,000 range than any other price range. The total number of homes sold under $500,000 for March was 984 which was off 47% from a year ago. The number of homes sold over $700,000 was 1,497 which was up 6% from a year ago. The total number of sales for March (the most recent numbers available) was 3,910 which was up 46% from February (a very healthy rebound) and off 22% from a year ago March. There were 2,252 single-family resale, 1,048 condominiums and 610 new homes sold. The price range statistics found 431 sold under $400,000, while there were 553 sold from $400,000 to $500,000. Moving up the ladder there were 744 from $500,000 to $600,000 and 660 in the $600,000 to $700,000 range. Finally, as to be expected, the highest number was found over $700,000 with 1,497.
ECONOMIC FACTORS POINT TO A SOLID FUTURE…Well, to be fair, Cal State Fullerton’s forecast is that growth will slow. The main reason for that is slowing growth nationally and consumer spending coupled with accelerating inflation. In fact, we saw the highest inflation jump last year since 1990 at 4.5%. But I have just two words to say about that, houses and gasoline. We saw one of the strongest stock market days in recent months as a reaction to the rumor that the Fed was through rising short term interest rates. However, after the inflation report came out, it looks like one more may be coming. Still, all indications are that other than a couple of segments, inflation is in check. Housing prices are stabilizing and that effect will be felt in coming months. Therefore, housing sales should still be driven by some consistent supply and demand. But we must be careful to avoid a stalemate of sellers refusing to budge on their price, and buyers wanting to lowball offers because they’re reading headlines suggesting there’s more of a downturn then there actually is.
OTHER FACTORS MUST BE WATCHED. PLEASE CALL FOR UPDATES… There are other loose ends happening that should be watched such as interest rates, loan programs and the rental market. For example, interest rates are climbing yet banks are posting lower profits due to competition, and rising short term rates. You can expect loan programs to tighten. The million dollar question posed in the OC Register is, “If the sellers’ hot streak is over, why are prices still so high?” There are many answers. A few answers are incredible weather, a skilled workforce that employers have a hard time duplicating out of state, low unemployment, and more people moving in than out. Southern California will remain in demand. Apartment rents jumped 7% and will continue to climb by about 7% per year in L.A. and Orange counties, according to the Kiplinger Report. Notices of Default are up 28% from last month with 407 and that’s 69% over a year ago, but still only 28 foreclosures. WHAT DOES IT ALL MEAN? The good news is you don’t have to know… I DO! It is my job to synthesize all this data and translate it into what it means to you personally in light of your real estate goals. Please consider me your Realtor for life and a constant resource. All of these factors control the market to a certain extent. But real estate itself is always a constant. People always need to sell and buy, so skill is what I bring to your equation. I look forward to hearing from you. Have a great month!
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