The real estate news for October just seems to get worse. Not that it wasn't unexpected, considering the current market conditions and the time of year. People just are not buying houses.
One of the primary decisions in the purchase of a home is how much the payment will be and the factor that determines that is the interest rate. Interest rates are very favorable these days. Lender's have been offering 6 - 6.25% with no points for the past couple of weeks on a 30 year fixed rate conforming loan. Despite the fact that interest rates are historically low, most would be home buyer's seem content to sit on the sidelines and see if home prices will fall as the result of the ever increasing list of foreclosures continues to grow.
Single Family Homes
Unit sales for the month of October were off 55% from last year. That is the biggest drop we have seen to date. Although the median price does show an increase over last year, it was down from $815,000 or close to 13% from last month. Median price swings are not that uncommon from month to month, but a 55% decrease in sales volume is dramatic.
Townhomes & Condominiums
Townhomes & condominiums were also affected by the October slowdown. This particular housing segment had faired well due to some of the new construction in town with the median price running around $550,000 for the past few months, but dropping considerably to $450,000 in October. Sales of townhomes and condominiums mirrored single family with sales declines in excess of 50%
What Effect is Real Estate having on the State & Local Economy?
You may have seen the article about upcoming budget cuts. You may not realize it, but when a property is sold, there is a documentary transfer tax applied. Here is Pasadena, it is usually paid for by the seller. It amounts to $1.10 per $1000 of valuation. An $800,000 sale price would generate a tax of $880. Now if every city in California is selling 50% fewer homes, you can begin to see the shortfall created on the local and state tax rolls.
The housing market has a tremendous amount of momentum, albeit negative momentum right now. And you have to hit bottom before you can begin to the climb back up. The question on everyone's mind right now is "When will we hit bottom?"
Visit up2date for the latest information on the Pasadena housing market.
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