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Simi Valley Homes For Sale - Why Number of Escrows Does Not Indicate A Hot Market

By
Real Estate Agent with Keller Williams Realty Simi Valley 01224852

Simi Valley Housing Market is it selling like hotcakes?Those looking at Single Family detached Simi Valley homes for sale are confronted with mixed reports from the media and the real estate industry as to whether or not it is a good time to buy.   Sometimes looking at the number of escrows (Simi Valley homes under contract) may seem like a logical place to forecast the strength of the market. However, as I've pointed out in several blog posts, breaking down the number of escrows into the proper categories shows that the Simi Valley housing market still has many issues to work out. As of this evening there were 181 Simi Valley homes in escrow in a contingent status and an additional 107 Simi Valley homes in escrow in a pending status. It would seem that with 287 homes in escrow, March will shape up as a very positive month indicating a full recovery ahead. Let's break down the numbers and understand what a very shortsighted view that analysis is.

The following number of Single Family Detached Simi Valley homes closed escrow each March since 2006

Simi Valley Homes for Sale Recent Historical March Sales Volume

Now in 2010 with only two business days left in the month, 52 homes have closed escrow.  Looking at 2007, 2008 and 2009  significant improvement this March is not likely.

2007 was really the turning point year in the Simi Valley housing markets. This is when inventories dramatically increased and sales stalled. If there are 287 homes under contract in escrow why are there only a meager 50 homes closing escrow this month?  The answer really lies in a few blog posts I have written recently.  

Contingent Simi Valley Homes in Escrow out number Sales 3 times, Why?

Second Straight Month Simi Valley Home Sales Drop Inventory Edging Up

Next, let's look at the average days on market these Simi Valley homes in escrow have lingered. Our MLS pre-formatted statistical report providers give a very general overview.   Those reports are not detailed and often skew reality.  Where these reports come from currently is very important. Simi Valley is on the edge of two completely separate MLS databases. While these databases will be combined soon, currently any reporting done on Simi Valley market trends can only be done with data pulled from the Ventura County Regional Data Share.  The CARETS or SoCal MLS which neighbors us to the southeast has only partial data from Ventura County. We expect the integration of VCRDS with CARETS to be completed before the end of April, however until I can see the reports first-hand, I will be skeptical of the data.

Simi Valley homes for sale in escrow Status = Contingent.  65% are short sales.

under $300,000 = 121 days on market

$300,000-$400,000  = 107 days on market

$400,000-$500,000  =  134 days on market

$500,000-$600,000  =   134  days on market

$600,000-$700,000  =  140 days on market

$700,000-$800,000  =  42 days on market

$800,000-$900,000 = 109 days on market

$900,000-$1 million =  no properties  in escrow

over $1 million = 330 days on market

Remember, those days on market times listed above are for Simi Valley homes in a contingent backup or contingent first right status. When we look at the homes in escrow with a pending status. The days on market are significantly shorter. The average  days on market for those homes pending up to 700,000 is about 50 days however that number almost doubles for all homes pending in escrow over $700,000.

So how hot is the Simi Valley Housing market?  Can we say buyers are depleting inventories?  Not Quite. Sure we've all heard about the properties with multiple offers.  Sure we've heard about buyers who've been making offers on properties for several months with no success. But as a wise friend told me years ago there two sides to every story and not all properties have multiple offers and many of those buyers making multiple offers without success are either professional lowballers or they are FHA/VA buyers.  FHA/VA offers are not seen as strong at Conventional financing.

Is the Simi Valley housing market due for another correction? Here's why I think not or at least if there's any pullback it will be extremely short-lived. Affordability is at all time 40 year record levels. I saw this firsthand last May 2009. My client purchased a  single-family detached home on the East End of Simi Valley for $250,000. If that home was put on the market at $250,000 today it would be bid up closer to $300,000.   it seems that the Simi Valley single-family detached housing market has hit a pretty predictable stability point however upward appreciation from this point will be very minor if any.  The advantage to those shopping for a Simi Valley home in this market is that they will not need to be pressed into a hurried decision in anticipation of missing the market.

Today, Buyers must be able to prove their income in order to qualify for a loan. The prior run-up in pricing  earlier this decade was tied to the buyer's ability to obtain financing not tied to their income. Appreciation in home values from here on out are umbilicly-tethered to the strength of the employment market and the rates of compensation. Interest rates if trending higher will keep appreciation in check as well.

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