The Craze Has Calmed Down
A report from the Ventura County Star in California. “Home sales and median housing prices slightly declined throughout Ventura County and the rest of Southern California last month. Ventura County sold 947 homes at a median sale price of $595,000 last month, according to CoreLogic. The county’s home sales and median housing prices slightly declined from June to July. Ventura County saw a 0.5 percent drop in home sales during that period, though the difference was only five home sales, while the median home sale price decreased by 3.3 percent from June’s $615,000.”
“The same holds true for the rest of Southern California, which also saw slight declines in median housing prices and number of homes sold. Southern California’s median housing price was $530,000 last month, a 1.3 percent decrease from June’s $537,000 median housing price. There were 21,277 sold in Southern California last month, a 6.6 percent decline from June’s 22,786 homes sold.”
“Buyers may be hesitant to buy into Southern California’s pricey housing market, which could be responsible for the middling year-to-year sales growth, said Andrew LePage, a CoreLogic research analyst. ‘While low inventory is still constraining sales in some areas, the overall trend in recent months has been toward more listings, suggesting that sales also remain weak relative to current housing demand because more and more would-be buyers are unable or unwilling to buy,’ LePage said.”
The Los Angeles Times. “The Southern California median home price slipped in July from June’s record high, but it was still up 5.8% from July 2017, according to CoreLogic. The report showed that last month’s median price — the point at which half the homes sold for more and half for less — clocked in at $530,000 in the six-county region. That’s down $7,000 from June’s all-time high. Some agents say the market is slowing as families increasingly find it difficult to afford a home.”
“‘The craze has calmed down,’ said San Fernando Valley real estate agent Matt Epstein. Epstein said more homes are coming up for sale in the southeastern area of the San Fernando Valley he specializes in. As a result, buyers are being more selective, causing some properties with ‘unrealistic’ asking prices to sit. ‘I have seen a more patient-level buyer instead of that feeding-frenzy buyer,’ Epstein said.”
“Unless there is a recession, economists generally expect prices to continue rising. Gains may slow as more people become priced out. The economy is too healthy and the shortage of homes for sale is too severe to expect a drop, they say. ‘I definitely don’t foresee a dip,’ said Selma Hepp, chief economist with California brokerage Pacific Union International. ‘It goes back to the inventory question — there continues to be a lack of inventory.’”
From the Orange County Register. “Another curious puzzle in the purportedly supply-short Southern California housing market has popped up: Why are sales sluggish and inventories rising as local builders construct homes at their fastest pace in a decade? According to data from MetroStudy, builders completed 3,336 homes for sale in Los Angeles, Orange, Riverside and San Bernardino in the second quarter. That’s up 19 percent in a year and the highest standing inventory since the early days of the economic recovery in 2012’s second quarter.”
“But the added inventory comes amid an unusual year for existing homes coming to market and depressed overall sales activity. Inventories for existing homes actually rose during the prime homebuying season. ReportsOnHousing found an average 29,684 existing homes listed for sale in the four counties in the second quarter, as inventory rose by 1,922 homes since the start of the year. In the previous five years, the traditional springtime homebuying rush lowered supply by an average 1,739 homes through June.”
“A key reason for bloated supply? Buyers balked. CoreLogic reports sales of all residences — new and existing — in the four counties in the April-to-June period were down 4.8 percent vs. the previous year.”
“But developers aren’t blameless in their current supply dilemma. In their return to serious homebuilding, they may have misread the market’s thirst for higher-end new homes. Note: The median price of a newly constructed Southern California home sold in June: $581,000 vs. $537,000 for the overall market.”
“This all translates to builders now controlling a swollen share of homes for sale. Across the four counties, newly constructed residences made up 10.1 percent of all homes — new and existing — available to buy as of June. Two years ago, builders controlled just 6.8 percent of regional supply.”
“Orange County has seen the biggest swing. Builders had 1,022 homes for sale as of June, up 340 homes or 50 percent in a year. That meant new builds made up 15.7 percent of the options for house hunters. Two years ago? Just 6.5 percent. The growing inventory of unsold homes might create painful flashbacks of the real estate bubble that burst a decade ago.”
The Half Moon Bay Review. “Let’s face it, everybody wants a deal. It’s human nature. The Bay Area and particularly the Peninsula has been hot for years. So, are there any deals out there in real estate today? I’d focus on homes that have had price reductions and have been on the market for more than 30 days.”
“As I write this, there are 66 available homes and 96 homes in total on the coast. Inventory levels have been low for a few years now. In fact, today’s levels have been relatively the same for the past 3 years. Of the total inventory, 28 percent have had price reductions and 52 percent have been on the market over 30 days.”
“Not surprisingly, the market gets softer as the price gets higher. More than one-fourth of all the price reductions have taken place in homes prices over $2 million, another 30 percent have taken place between $1.5 million and $2 million, 37 percent between $1 million and $1.5 million and only 7 percent are under $1 million.”
“The same thing can be said for homes sitting on the market more than 30 days. The market gets softer as the price gets higher. The difference between the percentages of homes having price reductions and lengthy days on market has to do sometimes with seller reluctance to making adjustments based on lack of activity over time. While there can be many reasons why homes sit on the market such as style, condition, location but it usually boils down to one thing: price. Everything will sell at a price.”
“If you look for homes that have been on the market longer I think you will find less competition or possibly be the only bidder. The seller may be starting to realize that the asking price isn’t going to happen or it would have already sold. And best of all, instead of paying over asking price with little to no contingencies, you can buy it for below asking price on your terms. Isn’t that a nice change?”