The Southern California housing recovery continues to make gains. New home sales have surged 38% since last year, hitting a five-year high in June, according to the newest figures from the Commerce Department. The first half of the year we saw low inventory, buyers and REO agents were expecting phantom inventory to be released. We all know now the inventory was sold out the back door to institutional investors. Buyers panicked with low inventory and we saw a double digit increase in values.
Tight inventory and low interest rates made overbidding a reality. As the crisp fall air is upon us, the inventory has slowly built up. I feel we're returning to a more "traditional market". For the last seven years we've had a distressed market, short sales and bank owned were 70% of the market. Newer agents with less than 7 years experience don't understand why we have active listings. In a traditional market it took an average of 45 days on the market. We attended broker caravans to pitch our property, held open houses, and would even knock on neighbors doors. We use to call this marketing time and if done correctly we'd pick up another listing and found two buyers that would buy from us.
Here's what to expect in the fourth quarter. Expect inventory to continue to rise and prices to recede slightly. Interest rates to stay in the 4.25%-4.625% range. Homes will be on the market 30-60 days to get top dollar. Sellers will need to be realistic on pricing. Buyers will be in a good position to get a good home, a good price with a great interest rate. Buyers need to get in the market NOW! In 2014 we expect interest rates to rise, a rate of 5.25%(2014) vs 4.5%(today) on $300,000 will be an increased payment of $136 per month or $48,960 over the life of the loan!!
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