Southern California Home Sales – “The luxury market was the first to recover from the housing downturn, and now it’s a bellwether of slowing price growth for the rest of the market. Sales at the top end of the market continue to soar, but prices are downshifting …”
Southern California Home Sales:
Luxury Home Prices Fall Nationwide
Southern California Home Sales Are Among Most Drastically Effected
This week we’ve been taking a look at California home sales in 2015 and 2016. We’ve been highlighting how Southern California home sales have performed this year and what to expect from the California real estate market in the coming year. In general, we’re looking at a housing market that is growing in sales and value, but at a slower rate than before. In short, we appear to be experiencing a “rest” in the market. All in all, that’s a good thing.
There is one section of the California Homes for Sale market, however, that is not performing like the rest. Prices of Luxury homes fell during the 2nd half of 2015 for the first time since 2012. Over at Redfin, they have been analyzing this and have come up with some very interesting numbers. As you can see from the chart above, Los Angeles is among the hardest hit areas as far as falling prices of luxury homes.
There are several causes for this, and one is the slowdown of activity from foreign investors. Here in the San Gabriel Valley we’ve noticed a distinct pull-back of activity since the fall of the Chinese stock market and the crackdown of the Chinese government on money being invested overseas. With that slowdown, prices began to pull back in an effort to attract buyers.
Check out this detailed article by Alina Ptaszynski over at Redfin. We’ll conclude our analysis after the jump.
“Home prices in the luxury market fell 2.2 percent in the third quarter compared to last year, the first time prices for the nation’s most expensive homes have fallen since the first quarter of 2012. The luxury market, which we identify as the priciest 5 percent, was shown up by the bottom 95 percent, where prices grew 3.8 percent over the same period. The bottom 95 percent of the market has seen consistent price growth of around 4 percent in each of the past four quarters.”
Southern California Home Sales: Is Luxury Real Estate A Leading Indicator?
As I mentioned in earlier posts this week, there are a few … not many, but a few … analysts of the real estate market who are convinced that we are currently experiencing another “real estate bubble”, and that prices and activity are both about to fall. One of the things that they point to is the recent decline in prices in the area of Luxury homes. The upper end of the market has long been considered a “leading indicator” for the rest of the market. The top 5% market area was among the first to recover. Could this recent drop in prices among luxury homes signify a coming downturn in the rest of the market as well?
Personally, I don’t subscribe to the extremely pessimistic view of some. All markets adjust. No market simply moves upwards in a straight line. No market moves downwards in a straight line. Whichever way the market trend is going, there will be “retracements” and “market adjustments” along the way. What’s more important than these adjustments, is the trend itself. This market action among Luxury Homes is certainly a heavy adjustment, but it falls far short of signifying a trend reversal.
The Southern California Home Sales market … along with real estate in the rest of the nation … is on an upward trend. The fact is that Luxury Home prices had become very inflated and overblown by last June, and they have adjusted over the last few months. The rest of the market may be a bit overpriced, but not to that degree. Yes, we may see some adjustment in prices throughout the rest of the market over the next few months, but it’s not the bursting of a “bubble”. It’s not the reversal of the current trend. It’s the normal activity of a healthy market making needed adjustments, and after a brief pull-back the upward trend should continue.
Southern California Home Sales.
Home Sales – “The National Association of Realtors said on Thursday existing home sales increased 1.3 percent to an annual rate of 4.65 million units, marking the second increase in sales in nine months.” …
Nationwide Numbers For April
Summer “Selling Season” Is On The Way
We focus in these pages almost exclusively on the Southern California real estate market, and most specifically the San Gabriel Valley. However, once in a while it can be constructive to take a step back and look at the bigger picture.
Nationally, the real estate market is looking solid. US Home Sales were up in April for the 2nd time in 9 months. The gains have not been as much as some economists were predicting, but it’s still positive movement. That’s important when you consider that the market was actually exhibiting some fairly shakey behavior during the second half of last year.
Sales are still down when compared to this time last year, and it appears that most “First Time Buyers” are sitting out the dance because of high home loan prices and the rising price of homes themselves.
Here’s a Reuters report with the detailed numbers that just appeared at NBC News:
NBC News May 22nd 2014, 7:42 am
Though an usually cold winter depressed activity, a dearth of homes for sale also stymied demand. Sales are expected to gradually trend higher for the rest of 2014 as job growth and the overall economy accelerate. … And there is reason to be optimistic. The inventory of unsold homes on the market increased 6.5 percent from a year-ago and the median home price increased at its slowest pace since March 2012.
2014 Home Sales Forecasts Are Optimistic
Nationwide, the supply of homes has grown, which will probably serve to free up demand somewhat. A larger inventory will create pressure that could keep rising prices in check and lead to a more balanced market. All in all, the national numbers are encouraging. If unemployment continues downwards and the general economy continues to improve, we could see some good home sales numbers posted by year’s end.
California Home Sales:
May Numbers Post A 7 Year High
Prices & Activity Hold High Numbers As Several Influences Bolster California Home Sales
The California home sales market is still posting impressive numbers. Buyers poured lots of cash into the market in May and activity posted a 7 year high while prices held a 9 year high.
There are many things bolstering the market right now. The economy is generally stronger than it was last year, mortgage rates are still relatively low, prospective buyers have built up a lot of demand over the last few years, and many folks are looking at the California home sales market and seeing a home as a good investment. There are those who feel that some or even all of these influences might be changing soon, but for right now they are contributing to a very strong market.
Here's an article by Gregory J. Wilcox in the San Bernardino Sun that will give you all the numbers:
"We're deep into uncharted territory: Amazingly low mortgage rates, a razor-thin inventory of homes for sale, and the release of years' worth of pent-up demand. Plus there's a seemingly endless stream of investors and non-investors who pay cash and thereby avoid the loan-qualification process. How this all plays out is educated guesswork at this point," John Walsh, DataQuick president, said in a statement." …
What's The Future For California Home Sales?
There is agreement right now between most analysts that the California home sales market is finally healing. However, there is also uncertainty. There are those who foresee sunny days ahead and those who forecast outright doom. As usual, the reality will most probably lie somewhere in the middle of those two extremes. The market has sustained a long upward push from the depths at this point and a "resting" period, or even a compensating "pull-back" is certainly not out of the question. Only time will tell when this period begins and how long it will last.
California Home Sales.
California Home Sales:
Median Price Sees Largest Jump In 33 Years
At Least 34.5% Of California Home Sales In May
Were $500K And Up
More good numbers in California home sales in May were just reported. The California Association of Realtors reports that the state's median home price increased to $417,350 from $316,460 in May 2012. This is an increase of 34.5% over may of last year, and that's the largest year-over-year jump since February of 1980. Additionally, the percentage of sales over $500K increased.
Here's a Video from the National Association of Realtors with some good numbers from a couple of weeks ago:
More currently still, here's an article from Gregory J. Wilcox in the Los Angeles Daily News with those numbers and a lot more:
"The median price of a previously owned house in California soared 31.9 percent in May, the largest year-over-year increase in more than three decades as sales of more expensive properties increased and inventory remained tight …"
Other Factors Also Support California Home Sales
There are other good things going on in the California Home Sales market as well. The market numbers are currently being supported by fewer REO sales and continuing low interest rates. Good news in the coming months can be supported by the fact that Buyers are using more conventional financing strategies and are also investing higher down payments than they have previously.
California Home Sales.
San Fernando Valley Home Sales:
Prices, Activity Rise From
Last Year's Numbers
Good Numbers Support
San Fernando Valley Home Sales Market
In April of this year the San Fernando Valley home sales market posted good numbers as both sales activity and prices increased over last year at this time. The average price in the area has been over $400K every month this year as prices were buoyed by reignited interest in the market combined with low inventory.
Here's an article from Gregory J. Wilcox in the Los Angeles Daily News with all the numbers:
"Last month the median price of a previously owned house increased 15.3 percent to $460,000 from $399,000 a year earlier, said the Van Nuys-based Southland Regional Association of Realtors. The median also rose $30,000 from $430,000 in March."
Numbers Indicate A Good Summer Buying Season For
San Fernando Valley Home Sales Market
We are now entering the traditional "Selling Season" for the San Fernando home sales market, and for California home sales as a whole. Buyers know that the inventory is now at the highest it will probably be for the year, so now is the time they'll have the most choice. Traditiionally, people prefer to move in the summer when most schools are out. The year-round school areas have dampened this effect somewhat, but not greatly as most all schools do have some period of time off in the summer.
Put this all together and we can expect some good numbers in San Fernando Valley home sales as well as other regional areas during the next coming months.
San Fernando Valley Home Sales.
California Home Sales:
Foreclosures Decline Again
California Home Sales Numbers Show Foreclosures Down While Prices Climb Again
RealtyTrac shows more good numbers for the California home sales market. The first quarter of 2013 shows that foreclosed properties made up 30% of the market, down from 40% a year ago.
Here's an article from "The Westside Story" that will fill you in on the numbers:
"The number of foreclosed home sales in the state of California went down while the median sales price increased. The news came from Realty Trac, a real estate tracking service. The firm said 30 percent of California sales in the first quarter of 2013 …The Westside Story"
Rising Prices In California Home Sales Market Help Some Avoid Foreclosure
Some homeowners who were looking at foreclosure have been assisted out of their situation by rising prices. They were either able to re-finance or sell their homes because they now had equity as the price floor rose beneath them. There are stiill a lot of foreclosures in the California home sales market. In fact, the state is still #3 of the states with the highest percentage, but the numbers are moving in the right direction.
California Home Sales.
Pocket Listings Surging Experts Say
Pocket Listings As A Home Sales Style
Can Have Repercussions for Sellers
Those with experience in the labyrinthine world of home sales will be familiar with the term "pocket sale". If you're not an agent, broker, or you've never sold or purchased a home this way, the term may be new to you. A "pocket listing" is the listing of a property where the broker witholds the property information from any multiple listing service or advertising. A pocket listing may be closed ended or open ended. In other words, the agreement may state the listing will be witheld from the MLS and advertising for a specified period and then information will be distributed, or the entire listing period may be involved. Whatever the individual case, pocket listings are becoming more and more prevalent in home sales in our current market.
Why creat a Pocket listing? Well, the advantages to the broker are obvious. If a broker can sell the property to one of his own clients, he keeps the entire commission by "double ending" the property. Some brokers with who do these types of home sales and hold these listings will open them up to other agents in their office. In this case the broker keeps the entire commission within the brokerage. Additionally, the agent doesn't spend any money on advertising the home.
The advantages to the Seller are more difficult to see. Some people find the process of home sales difficult. They don't like hordes of prospective buyers and "lookey-loos" traipsing through their property, or they are uncomfortable with "the public" knowing their home is for sale. This type of Seller may appreciate the quiet efficiency of this type of home sale. However, there may be disadvantages as well.
Here is an article by Kenneth R. Harney in the Real Estate section of the Washington Post which discusses the in's and out's of Pocket Listings:
"Pocket listings are surging, real estate experts say, because of historically low inventories of homes for sale in major metropolitan areas, …"
Is A Pocket Listing Your Home Sales Style?
There are many forces pushing Pocket Listings into the ranks of the more popular forms of home sales. However, if you're considering it, you should be aware of the benefits and the drawbacks. Pocket listings can restrict the number of potential buyers who will see your home, thereby restricting the number of offers and finally your selling price as well. You should also be aware of the potential conflict of interest that happens unavoidably when both sides in a transaction are represented by one brokerage. But, if those things are all right with you and you're more concerned with crowds and publicity, then the pocket style of home sales may be for you.