For Sale Vs. Sold
In the last 15 months, inventory levels topped out nearly a year ago in June 2008. Since then, they have been on a steady decline, fueled by seasonally consistent and steady sales. April's pending home sales are also high, indicating that May's closed sales will be in line with the continuing sales trends.
Days on Market - Sold Vs List Price (as a Percentage)
The average days on market indicates how long listings are remaining on the market before they are sold. One important point to note is that these numbers do not take into account those listings that do not end up selling, and instead indicate how long fairly priced homes will take to sell.
You will also see on this graph how much a home sold for, versus its list price. An obvious trend indicates that homes are now selling for less than their list price, which is a different story than what we saw a few years ago. In the last 6-7 months, this number has decreased on average by 1%, with most home sales selling on average at 96% of the list price, whereas it was a bit higher last year.
In the last quarter, we see a nudge up in the number of average Days on Market, from around 65 days last year to around 78 days.
Average Price - Sale Vs. Sold
This is a very interesting graph. The Average List Price (green line) has been on a steady and significant increase. The Average Sold Price (red line) was on a steady decline until January of this year. In January, the Average Sold Price then started increasing, and has been doing so for 2009.
Some people may look at this and think that we have hit the bottom of the real estate market in the Greater South Bay. I caution against that assumption as the Greater South Bay encompasses so many different cities and micro-markets. These numbers could be skewed by high sales in one area, but lackluster sales in another area. It is recommended that a more focused analysis be done to determine the state of the market for a specific area.
Months of Inventory
Anytime inventory is more than 6 months, it is considered to be a buyer's market.
The Months of Inventory have been very steadily declining since July 2008, with a few small blips in January and February 2009. Strong sales and the continued reduction of inventory are the prime reason for this steady decline. It will be interesting to see what comes in the next few months as we enter the summer real estate season.
Summary
I can't believe it has been since November 2008 that I have assembled my market reports! So many interesting things have happened: strong sales, reduced inventory, buyer incentives, record-low interest rates.
The graphs in this report are undeniable evidence that homes are selling! But what we don't see is something that I have observed through my experience - most of the homes that are selling are doing so in the lower price points. I would venture to say that the $300,000-$500,000 price range makes up the majority of the home sales.
Far fewer homes are selling in the $2,000,000+ price range. That's sad news for builders, of which a fair part of the higher end inventory is made up of. This could present some opportunities for buyers looking in this price point. Many builders are open to "creative financing", considering lease options or even carrying part of the loan. These are financing opportunities that would have been laughed down just 2 years ago.
I also want to comment on a recurring experience that I have with my buyers. My buyers who are actively looking for homes right now are getting frustrated. Why? The inventory that is on the market is not of the best quality! Many short sale listings aren't left in the best condition, and the same goes for bank owned homes. There are numerous "fixers", but very few homes that are in move-in ready condition. However, when a home comes on the market that is move-in ready and it is priced fairly, it's like a feeding frenzy! In the last 6 months, every single offer that I have submitted for my clients have been a multiple offer situation! So even though it is a buyer's market, there is big competition for the attractive, move-in ready homes.
So, you are probably still wondering, "Are we at the bottom?" In my opinion, I don't believe so - but we are getting closer! But as I cautioned earlier in the report, a more focused analysis of smaller areas/markets is recommended. Also, the industry is expecting to see a large number of bank owned homes hit the market in the next few months, just in time for the summer season. This is just a prediction, so only time will tell if we are correct about that.
If you are considering a home purchase, or you need to sell, I would love to earn your business. My team and I have the knowledge and expertise needed to help you make an educated and comfortable real estate decision. We would be happy to arrange a no-obligation consultation with you.
Tiffany Wilson has lived in the South Bay of Los Angeles County for almost 10 years. She and her family enjoy the safety and rich family features that the beach communities of the South Bay have to offer, including a close and neighborly community. Also, having experienced an out-of-country move to California over 10 years ago, she is perfectly positioned to assist out-of-state and foreign buyers in their search for real estate in the South Bay and the additional surrounding communities of Los Angeles and Orange County. She can be reached directly at tiffany.wilson@shorewood.com or 310-503-0557.
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