Pasadena's housing inventory has hit the lowest point in 2011. And, we are not alone. Wall Street Journal just wrote an article stating that the national housing inventory dropped to the lowest point of the year in August- down 1.9% from July 2011 and 19% from same time last year (data used Realtor.com). Pasadena is definitely following the trend, but our numbers are quite a bit higher. Take a look at the data below:
July 2011 - 554 housing units
August 2011 - 533 housing units
3.8% drop in inventory from last month for Pasadena's real estate market.
Now, let's compare this to 2010:
July 2010 - 805 housing units
August 2010 - 803 housing units
That's a whopping 33% drop in available Pasadena homes for sale comparing same period year over year!
So what does this mean to you?
To answer that question, let's look at some additional statistics that will help us glean more information. Usually, when the housing inventory goes down, more demand is created and home sale prices go up. Here's where Pasadena real estate falls:
August 2010 - Average Sales Price $655,000
August 2011 - Average Sales Price $704,000
The price of a home sold in Pasadena increased by 7.5% from last year!
Even though there were less Pasadena homes available on the market this August, the number of homes actually sold this August was 21.3% higher - 114 homes (20 homes higher than in August of 2010.)
Wall Street Journal says "Normally, a decline in inventory would be a positive sign, but in the current market, that isn’t necessarily the case. Instead, low sales volumes and declining inventory suggests that there aren’t many opportunities for “price discovery.”"
I would argue this point in Pasadena. Obviously, Pasadena real estate has seen a bit of that "price discovery" looking at the increase in sales price and the number of units sold. However, being an active real estate agent and working with home sellers and home buyers daily, I would agree that we're seeing a lot of buyers and sellers still on the sidelines, trying to see if this is the right time to buy or sell.
My advice would be, if you are a home seller and do not see an absolute need to sell over the next 7 to 10 years. Hold on to your home. Pasadena is a very desirable area and prices will go back up. If you do think that you might need to sell within the next few years, then now is the time. With the interest rates at the historical lows - a bit over 4% fixed for 30 years! - the buying power for home buyers is immense and they are out there shopping. Once the interest rates go down and the potential "foreclosure shadow inventory" is released, home prices will stagnate.
If you are a home buyer, what a great opportunity for you to take advantage of the amazing interest rates. Remember that each 1% increase in interest rates will mean a 10% decrease in your buying power. Take advantage of these unbelievable rates! They will not be here for much longer!
READ MORE: Pasadena Real Estate Guide - Everything You Need to Know to Buy or Sell Your Next Home
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