Existing home sales inventories fell 10.8% in August to an 8.5-month supply, the lowest level of inventory since April 2007. However, sales closings slowed 2.7% after four months of rising sales volume.
NAR Chief Economist Lawrence Yun noted that nationwide, the typical mortgage payment for a median-priced home now represents less than 25% of a family’s monthly income. He added that 2009
payment percentages have been the lowest on record since 1978.
California Home sales volume increased 12% in July compared with the same period a year ago, according to the California Association of
REALTORS®. Record affordability and tax
incentives were the primary drivers.
July 2009 sales prices in the state declined by
19.6% to a median of $285,480, compared
to $355,000 in July 2008.
As the tax credit draws to an end, sales are
rising. Month-to-month sales in July 2009
increased 8.1% over June, and median prices
rose 3.9 % to $285,480 compared to the
June median of $274,740.
“July marked the fifth consecutive month
of month-to-month increases in the median
price,” said C.A.R. Vice President and
Chief Economist Leslie Appleton-Young.
“This was the largest increase on record for
the month of July, based on statistics dating
back to 1979. The yearly decline in July also
was the smallest in the past 19 months.”
Foreclosures Pressure Prices
Data Quick Information Systems reports
that notices of default in Southern California
were up 3.8% year over year in the second
quarter of 2009. According to Credit Suisse,
40% of Alt-A loans are due to reset in the
next 24 months. Another wave is due to reset
in mid-to-late 2010. The majority of those
loans are Option adjustable rate mortgages.
First-Time Home Buyers Lead the Way
About 67% of first-time home buyers can
now afford to buy a home in California,
compared to 76% of first-timers nationally.
Homes priced under $500,000 accounted
for 74% of the California market in July —
a testament to the strength of the first-time
home buyer. As of June 2009, California
topped all states with a 10% market share of
all FHA lending in the U.S.
Historical Comparisons Favor Today’s
Housing Recession
Surprisingly, California’s current housing
correction isn’t as severe as the one the state
experienced during the recession of the early
1980s, when housing sales plummeted 61%
peak-to-trough between 1978 and 1982.
In comparison, housing sales volume sank
44% between mid-2003 and 2007, and has
steadily risen since that time.
With improved affordability comes demand.
In July 2009, there was a 3.9-month supply
of unsold inventory across the state — down
dramatically from a 16-month supply in
January 2008.
Advice for Buyers
Cash buyers are making it difficult for other
buyers to compete in certain price ranges.
Make it easy for the listing agent and the seller
by offering a complete package so they don’t
have to wonder who you are and whether
you can afford the home. In addition to a
well-written and complete purchase offer,
include the following to show the seller your
offer is as good as cash:
• A personal letter indicating why you would
be a good fit for this home
• Pre-approval from a major lender,
like HomeServices Lending www.hslca.com
• Pre-approval is better than pre-qualification,
since it requires verification of your
employment, income, credit and
other factors
• An earnest money deposit as close to
3% as possible
• Proof of funds for the down payment
and closing costs
You may also want to consider removing
contingencies earlier than called for in the
contract.
Advice for Sellers
Homes in many price ranges below $750,000
are attracting the most qualified buyers the
market has seen in years. However, it’s still
a tale of two markets. Homes priced below
750,000 are selling quickly; for those priced
above $900,000, the buyer has the advantage.
If your property is in this higher price range,
it’s critical to set realistic expectations based
on market conditions. An experienced agent
will help you price your home properly,
market it aggressively, and make it easy for
buyers to see it.
ORANGE COUNTY
Orange County is one of the fastest-moving markets in Southern California, with a hot seller’s
market* in homes priced at or under $899K, and only 11 months of inventory on hand in homes
priced above $900K.
Not since December 2008 have listings been absorbed faster than they enter the market. The number of
listings on the market was down to 3,290 in August 2009 from 3,453 in July. Listings sold were
up to 3,568 units in August from 3,126 sold in July.
Detached single family homes are in a frenzied
seller’s market under $900K, with fewer
homes on hand at $599 or less than it takes
to close a 60-day sale.
Detached Properties – Inventory in Months
0.0 2.0 4.0 6.0 8.0 10.0 12.0
*A seller’s market is characterized by fewer homes than available buyers, often with firm prices and
multiple offers from buyers. A buyer’s market has more homes for sale than available buyers, often
with weaker pricing and larger concessions from sellers. Detached homes have no shared walls with
neighbors. Attached homes have at least one shared wall with neighbors.
According to the price per square foot, active
listings are still oversupplied in the higher
price ranges, as the majority of closings take
place in the affordable ranges.
Attached homes, according to price per
square foot, underscore the higher number
of active listings in higher price ranges,
compared to the closed and pending sales,
suggesting that prices have further to fall.
Attached home listings are doing very well
with homes priced at or under $799K in a
healthy seller’s market.
Attached Properties – List Prices Per Square Foot by MLS Status
Attached Properties – Inventory in Months
Detached Properties – List Prices Per Square Foot by MLS Status
0.0 5.0 10.0 15.0 20.0
$0 $100 $200 $300 $400 $500 $600
$0 $100 $200 $300 $400
©2009 Prudential California Realty Independently owned and operated. Objective data used in this report provided by Real Data Strategies. Inc. Our
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independently owned and operated member of the Prudential Real Estate Affiliates, Inc. This is not intended as a solicitation if your property is currently listed
with another broker.
Detached Properties – Listings Taken and Absorbed – 12 Months through August 2009
Attached Properties – Listings Taken and Absorbed – 12 Months through August 2009
The number of attached property listings
declined and sales outnumbered new
listings in August. With 1,243 new listings,
a robust 1,437 were absorbed.
For the first time since December 2008,
more homes have sold than entered the
market. Detached home listings ebbed to
2,047 in August from 2,141 in July, while
closed sales leaped to 2,131 units from
1,850 for the same period.
New Listings Listings Absorbed
New Listings
Listings Absorbed
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