I think what we have been seeing and experiencing with home prices and market activity defines the new normal. For those home sellers who continue to think we are only experienceing a dip and a rebound is just around the corner, are you also waiting for gasoline to return to $2.50 per gllon? Prices are going to fluctuate a few percentage points above and below the flatline for a while. Perhaps a long while.

Housing Market Characteristics

For the last couple of years if you were trying to sell your house, your chances were much better during the January – June period than they were during the July – December months. Could it be back to school, could it be the holiday season? Whatever it was, there was a tapering of demand in the back half of the year.

Annual Number of SF Sales in Pasadena

The other thing to point out is that monthly home sales are characterized by sizeable volume swings. So the next time you hear a media report that says monthly home sales increased or decreased by X %, you will understand that its nothing to get alarmed or excited about. That is one thng that has remained normal in either a bull or bear housing market.

Signs of Improvement?

For the housing market to begin appreciating again (and we are not speaking in terms of 2004-2006 appreciateion) certain things have to happen:

• interest rates have to be favorable. There is no doubt that current interst rates have never been more appealing. If you have not refinanced or if you have deceided to buy, what are you waiting for? Your housing dollar will never go farther.
• easier access to money – current lending policies and qualification requirements are keeping many people out of the housing market and placing a lid on demand. As business runs in cycles lending policies will eventually loosen up but it will be a slow process
• employment numbers will need to improve. Until more people are working and can meet the qualifications (see above) there will be a sluggish housing market.
• distressed properties – as long as there are plenty of short sales and foreclosures available for sale, price apprciation will be harder to obtain. Looking at markets where there are reported signs of a turnaround in housing, the market is either defined by fewer distressed propertis or a healthly local economy.

While our economy in Pasadena may be better than ther parts of California, we do have an above average inventory of homeowners who are either behind or underwater on their mortgage.

There is a reason it is called a Squirrel

Reporting on housing market trends might not be the most exciting thing to many readers, so the challenge becomes how to get someone interested and capture their attention. How do you take data and make it interesting for the reader? Many of the most effective presentations I have seen tell a story and present an analogy that people can relate to. They begin to see themselves doing the same thing or experiencing the same moment. Therefore a squirrel and the housing market are no exceptions. How many times have you been driving down the street and up ahead 50 yards is a squirrel sitting on the side of the curb. As you approach the rodent begins to run out in the middle of the street. As you begin to rely on your instincts and drive defensively you begin to swerve in the opposite direction or hit the brakes risking your own life and property to save the life of the animal which has no emotional attachment to you. Just plain action / reaction response. Now the squirrel has managed to make it to the middle of the road. Appearing undisturbed and without warning, he begins to reverse course and heads back to the curb in which he initiated your 10 seconds of torment.

The Housing Market Squirrel

We currently seem to have a housing market that has taken on “squirrel” like tendencies. We have a few months of momentum and it appears we are finally crossing the street to the other side. Then a slight pullback while the dust settles and we start again.

Pasadena Single Family Sales/Inventory

After a disappointing November, December and January have bounced back pretty well. January, which is historically one of the slowest months of the year as homebuyer’s don’t usually shop for houses in the month of December. However we did see a lot of momentum last month compared to January in 2010. Inventory increased by 68 units or 33%, but sales also increased by 40%, plus properties in escrow or “pended” increased by 57%.

Of the homes that sold in January, 30% were distressed properties, either bank owned or a short sale. As of today, ForeclosureRadar is reporting 537 homes in Pasadena have either a Notice of Default filed against it or are scheduled for a foreclosure auction. Despite the national reports of fewer foreclosure filings, the situation in Pasadena doesn’t seem to be improving very quickly.

Pasadena Single Family - Price per Square Foot & Median Price

The advantage of adding the price per square foot is this measurement will trend along the same lines as the median price of homes sold, but the peaks and valleys are not as pronounced. By eliminating the highs and lows, you will see the natural progression of pricing as we move through the year and seasonality that Pasadena home sales experience. Now having said that the month of May price per square foot of $522 seems way out of line. I went back and checked my numbers and it appears to be at least $100 too high.

Pasadena Single Family Homes - Inventory and Sales Levels

Pasadena’s Leading Housing Indicators

1. Units Sold – The fact that unit sales rose quickly and seem to be declining just as fast is probably not cause for concern. It’s not uncommon for home sales to peak in July or August and then slowly decline through the end of the year.
2. Inventory Levels – With a current inventory level of 4.4 months based upon the current rate of sale, inventory levels are very moderate if not on the low side. I wouldn’t anticipate much change as we approach the holiday season unless we begin to see more foreclosed inventory hitting the market. This could be more of a factor this year due to the moratoriums that were placed on banks foreclosing last year during the fourth and first quarters.
   

   Summary

   

   Single Family, Townhome and Condominium Inventory and Sale Units

   
   Overall the outlook for the Pasadena real estate market at least where residential is concerned is much more favorable than this time last year. The forecast for next year could be quickly forthcoming as Congress may or may not extend the $8000 home buyer tax credit. Since we may see the fed begin to withdraw from purchasing mortgage bonds, some type of incentive may be needed to continue the momentum in the housing market. Consumers have become accustomed to interest rates in the low to mid 5% range and without any incentive from Uncle Sam may be contented to sit on the sidelines and wait for the next program to come their way.

   And now you’re up2date on Pasadena real estate.

   The source for the market data used in the graphs is from TRENDGRAPHIX,INC.

   ]]> http://up2daterealestate.com/2009/10/23/pasadena-home-sales-for-september/feed/ 3 http://up2daterealestate.com/2009/09/24/pasadena-condominium-sales-rebound/ http://up2daterealestate.com/2009/09/24/pasadena-condominium-sales-rebound/#comments Fri, 25 Sep 2009 03:49:12 +0000 Doug Willis http://www.up2daterealestate.com/?p=3625 Most media reports are stating that home sales declined in the month of August. What the media is not reporting is that it is not uncommon for home sales to dip in August. Compared on a month to month basis, a seasonality does exist in the reporting of home sales. People prepare for back to school, vacations are taken and August is just plain hot.

   The bottom is not falling out of the housing market.

   Considering the fact that unit sales did decline from July to August, the flip side is the median price rose significantly. Up over $50,000 to $570,000 form July’s $516,800. Plus the median price has increased every month this year. So, despite the fact that unit sales decreased from 104 units last month to 83 units in August (-20%) it is hardly cause for concern.

   Condo/Townhomes

   You have probably seen some of the newer units around town which are finally beginning to grab consumers attention This segment of the housing market which has been on the doldrums for quite sometime even surpassed the single family market and had a slight increase in the median price in a year over year comparison.

   Homes in Escrow

   Homes under contract are still at very high levels while the number of homes available for sale continues to decline. The 4th quarter does not typically see a lot of homes coming on the market. If home sales remain strong, we could even see a shortage of homes for sale. Also the housing stimulus targeted at first time home buyers is set to expire November 30. There is speculation that Congress will extend the benefits or even increase them to include a wider home buying public, not just first timers. Lastly, it appears that the Federal Reserve will attempt to keep interest rates low into the first quarter of 2010.

   There seemed to be much speculation that the early positive results we were seeing in real estate were built upon a house of cards. It certainly appears to have a stronger foundation than many us initially thought.

   Pasadena Home August Home Sales

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   ]]> http://up2daterealestate.com/2009/09/24/pasadena-condominium-sales-rebound/feed/ 0 http://up2daterealestate.com/2009/08/11/pasadenas-july-home-sales-are-highest-since-2006/ http://up2daterealestate.com/2009/08/11/pasadenas-july-home-sales-are-highest-since-2006/#comments Wed, 12 Aug 2009 00:40:40 +0000 Doug Willis http://www.up2daterealestate.com/?p=3506 I don’t think there should be any doubt left in the minds of local residents, the seasonal home selling season has returned. Little did we know or realize that it was going to be 3 years to the day when the market started to fall, or that it would correct itself 36 months later.

   It was July 2006 when real estate markets began to soften. A gradual decline eventually turned into a market free fall. However, all of that appears to be behind us as we head into the back half of 2009. The good news if you are a property owner is to look at the median price. In August, months of anguish will soon come to an end as the median price scenario will correct itself. This will probably produce more of a psychological lift than a monetary, but since home buying has much to do with people’s perceptions and where they think the economy is headed it should be treated very positively. If you are in the market to buy a house, the last thing you want to hear is that home prices keep dropping. News like this could very easily make you decide to postpone your purchase. Why buy now if you feel that in a few months you can save some money?

   July’s positive news about the Pasadena housing market includes

   1. a 26% increase in unit sales from June
   2. a single family median home price of $600,000
   3. a strong August based upon the homes in escrow
   4. and another strong performance in the townhome and condominium market

   The presentation below includes a 5 year pricing history in terms of median prices and unit sales for the Pasadena real estate market.

   Pasadena Homes July '09 Analysis

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   ]]> http://up2daterealestate.com/2009/08/11/pasadenas-july-home-sales-are-highest-since-2006/feed/ 4 http://up2daterealestate.com/2009/06/14/pasadena-home-sales-increase-in-may/ http://up2daterealestate.com/2009/06/14/pasadena-home-sales-increase-in-may/#comments Sun, 14 Jun 2009 21:50:36 +0000 Doug Willis http://www.up2daterealestate.com/?p=2745

   Unit sales along with the median price make positive gains in May, continuing an upward trend in 2009.

   Predictability, which was absent in the Pasadena real estate market during the last two years appears to be making a return. Predictable that is, when the seasonal home buying months once again become the months of May thru August. The median price of a Pasadena home exceeded $500,000 for the first time since November 2008.

   The housing market which has exhibited some positive trends of late still offers a few inconsistencies. For example, the market for single family homes is outselling the condo/townhome market by a ratio of 2:1. In terms of months of supply, single family is about 6.75 months, and the condo market is closer to 10 months. Also sellers of condos and townhomes are having to be more aggressive in marketing their properties, evidenced by the final sales price achieving only 90% of the original asking price.

   The catalyst for this market remains homes under $500,000. One of the most telling statistics is how the market has changed. As an example in May of 2008, only 13 homes sold at a price below $500,000. In May of this year that number increased to 28.

   In the market for homes over $1,000,000 there were 18 homes selling in May 2008 and the number dropped this year to 11. Whereas “declining” used to be the adjective of choice to provide a one word label that summed up the Pasadena real estate market, I think the new word now becomes “shifting“.

   Pasadena Homes May 09 Sales Report

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   ]]> http://up2daterealestate.com/2009/06/14/pasadena-home-sales-increase-in-may/feed/ 1 http://up2daterealestate.com/2009/03/11/pasadena-ca-real-estate-up2date-market-report-for-february/ http://up2daterealestate.com/2009/03/11/pasadena-ca-real-estate-up2date-market-report-for-february/#comments Thu, 12 Mar 2009 03:47:36 +0000 Doug Willis http://www.up2daterealestate.com/?p=1151 What if you walked into the department store and found everything on sale, only to find you not in the mood to buy anything. Now apply that to the Pasadena housing market. Many properties for sale have reduced their price at least once, in effect putting themselves on sale. What happens if no one buys? Maybe after awhile it’s marked down again until finally someone buys it or it’s taken off of the market. This is the dilemma many home sellers find them self in.

   The federal government has even thrown in an incentive – an $8000 tax credit if you purchase a home this year. An $8000 credit has much more meaning if you are buying in Oklahoma. For this credit to be applied properly it would be indexed based upon the sales price in the area. A note to our State representatives – next time negotiate harder.

   As stated in the January report, the Pasadena real estate market was close to yelling U N C L E. Sales results for February finally indicated some stability in the market. The steep declines we have seen the last few months subsided and pricing began to level off with the exception of townhomes and condominiums. I think Buyers are weighing their alternatives and deciding that single family homes offer a much better alternative to the current selections available in other areas of the housing market.

   My charts include median pricing as far back as 2004. However with the median price of Pasadena home at $435,000, I would have to go through the archives and see when the last time prices were this low. There has been a moratorium on foreclosures recently, however there is some speculation that we could begin to see an increase in activity now that the Obama housing plan has been unveiled. This puts to rest who will benefit, which I think the market has been waiting for.

   Enclosed below is the complete recap with median prices and units sold. In the coming week, we will look at the forecast for the next few months.

   Pasadena Homes Feb09 Sales Report

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   ]]> http://up2daterealestate.com/2009/03/11/pasadena-ca-real-estate-up2date-market-report-for-february/feed/ 4 http://up2daterealestate.com/2009/01/14/pasadena-home-sales-in-december-not-so-joyous/ http://up2daterealestate.com/2009/01/14/pasadena-home-sales-in-december-not-so-joyous/#comments Thu, 15 Jan 2009 02:08:01 +0000 Doug Willis http://www.up2daterealestate.com/2009/01/14/pasadena-home-sales-in-december-not-so-joyous/ Retail sales for the month of December were released today. Year on year sales indicated a decline of 9.8%. A 10% decline in the price of Pasadena homes would be welcome news. Actually a 15% decline would be nice to see. Isn’t December supposed to be the most wonderful time of the year?

   Other than sharing a name and a freeway, the Cities Pasadena are the antithesis of each other at least in terms of home prices. The South Pasadena real estate market can sell fewer homes and maintain an increase. On the other hand, Pasadena sells nearly twice the number of single family homes and prices fall $200,000 or 27%.

   Pasadena Single Family Home Sales

   The road to recovery begins with an increasing number of homes being sold. This is happening at least in the single family category and a positive sign. The housing market has been similar to a car wreck. You take an immediate inventory of your senses to see if you are okay to continue driving. Most people are moving past the housing freefall. Lower interest rates are getting people back in the car.

   We are beginning to see some evidence that selling times are slowly decreasing. Inventory currently stands at about a 5 month supply, again a sign of normalcy returning. If only we could find any positive proof that prices would begin to stabilize. I actually thought the December median price would be closer to $515,000. Looking at January, it appears that the median price could fall to $460,000 based upon the median price of homes currently in escrow.

   Pasadena Townhomes and Condominiums

   If you are a Buyer in this market you have a tremendous amount of leverage. Property owners have got to be desperate for an offer. If this were horse racing, bet the trifecta, prices are down, the number of sold units is down and selling times are up, way up. I think homebuyers are making their choice very clear, a single family residence offers a much better value in today’s market than a condominium or townhome.

   Pasadena Real Estate Outlook

   I am polishing the crystal ball with another coat of Windex this month. At the beginning of 2008, the number of homes that were sold were at some of their lowest levels in years. Look for sold units to double at a minimum. Prices will continue to drop compared to the previous 12 months, however we will begin to see more consistent median prices on a month to month basis.

   In any market one of the great unknowns is consumer sentiment, and how do consumers feel about investing in the economy and spending money. Lets home the new administration begins with an increased consumer confidence. After all, if you believe it you can see it.

   Pasadena Homes Dec08 Sales Report

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   ]]> http://up2daterealestate.com/2009/01/14/pasadena-home-sales-in-december-not-so-joyous/feed/ 1 http://up2daterealestate.com/2008/12/13/pasadena-real-estate-report-on-november-home-sales/ http://up2daterealestate.com/2008/12/13/pasadena-real-estate-report-on-november-home-sales/#comments Sat, 13 Dec 2008 21:43:18 +0000 Doug Willis http://www.up2daterealestate.com/2008/12/13/pasadena-real-estate-report-on-november-home-sales/ It was said many years ago people could look at the position of the sun and tell the time of day. Pasadena real estate is no different. Just look at the poor performance of home sales and it must be November.

   Traditional sales of Pasadena homes in the past have resembled more of a bell curve, low on both the right and left ends, (January & December) but higher in the middle (May – August), indicating a seasonality to home sales. But then again we haven’t seen traditional for about two years.

   The data for November is disappointing. There did seem to be some momentum building in the market as unit sales were increasing, albeit the brakes were applied. Not a slow rolling stop, but more of a skid.

   What Effected the Cause?

   When analyzing results, I look for triggers. What happened in October that resulted in poor sales results in November? Could it be the federal bailout, reduced gas prices, decorating for Halloween? Or could we just be in the infancy stages of normalcy, a return to seasonality, the home buying lull after the return to back to school? It’s hard to make a single determination as so many external factors have to be considered.

   Pasadena Real Estate November Home Sales

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   Click the Full Screen Icon in the lower right corner above for easier viewing

   Pasadena Median Home Prices

   The median price sank to $500,000 for November. The last time the median price was at this level was 4 years ago. Homes priced under $500,000 are generating most of the activity, while homes in the $600,000 to $1,000,000 range have slipped into hibernation.

   All of the market statistics are included in the 11 page presentation. If you would like to receive complimentary Pasadena market reports updated weekly, enter your contact information.

   ]]> http://up2daterealestate.com/2008/12/13/pasadena-real-estate-report-on-november-home-sales/feed/ 1 http://up2daterealestate.com/2008/11/16/pasadena-real-estate-up2date-october-market-recap/ http://up2daterealestate.com/2008/11/16/pasadena-real-estate-up2date-october-market-recap/#comments Mon, 17 Nov 2008 04:08:09 +0000 Doug Willis http://www.up2daterealestate.com/2008/11/16/pasadena-real-estate-up2date-october-market-recap/ “It was the best of times, it was the worst of times”…Charles Dickens

   The same can be said of the Pasadena real estate market. The market overall continues to pick up steam. We continue to see unit volume increases, indicating that buyers are returning to the market which is good news. On the flip side those buyers are opting for many of the foreclosures and bank owned properties in Pasadena.

   Unfortunately we can not confuse an increase in unit sales as being beneficial. Currently an inverse relationship exists with the number of houses that are being sold and the median price. Right now as more homes are sold, the median price continues to decline as short sales and foreclosures are eliciting multiple offers.

   Market Action

   In a slower market homes that are priced in the mid price ranges ($700.0 – $999.0) are usually prone to slower selling times. The reason is many buyers and investors look for opportunities to buy below market value in the the lower price ranges. In the higher end homes above $1MM, home buyers are not as susceptible to the increased demands of loan qualification, therefore homes are more likely to turnover.

   The big question to which there is much speculation is “Is Pasadena real estate close to a bottom?”

   If the projected sales numbers for November are any indication, the answer is “not yet”. Of the homes currently in escrow the median price appears to be lower than what was recorded for the month of October.

   Pasadena Homes Market Report

   The enclosed slides break out the numbers for the overall residential market. Included are single family along with condominiums and town homes. The report is best viewed by using the full size icon in the lower right hand corner.

   Pasadena Real Estate – up2date Market Recap for October

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