The main cause of concern at the moment happens to be the median price of a residential home here in Pasadena. In the just recently published up2date February sales report the median price has gone from about $600,000 in February 2008 to $435,000 in February 2009, discounting the fact that unit sales increased 28%. The graph below can provide an idea of how the market has shifted towards the low end and the resulting impact on median prices.

This analysis only used data from single family homes and did not consider condos or townhomes. If we look at the height of the market in ’04 and ’05 we see that very few homes were sold less than $249,000. A visible rise is also seen as more properties were sold and prices increased. The market really began to slow in the first quarter of ’06 as prices began to level off and activity considerably slowing in ’07, with very few housing units being sold under the $500,000 threshold.

A Turning Point in 2008

What happened in 2008? We saw the beginning of the foreclosure market establish itself as the market driver. Foreclosure activity started in some of the lower income neighborhoods, where a higher degree of leverage was used to buy homes. As the market slowed, foreclosure activity increased and homeowners with equity began to see their equity erode as distressed property set the new market rates. Homes selling in the high $500,000′s were now selling in the mid to high $300.000′s. The foreclosure activity rolled across the North side of Pasadena from West to East, and then to the Southwest in a clockwise motion.

While the new market dynamic has helped increase the affordability for many wishing to enter the housing market, it has also delayed the plans for those wishing to sell and move up. In an upcoming post we will look at the housing market between $500,000 and $1,000,000 to see what impact the economy has had upon the middle to higher end of the real estate market.

However steady or predictable unit sales can be, they have no bearing on sold prices. All you have to do is look at July 2008.

Pasadena Single Family Homes

In the overall market of Pasadena California real estate, single family homes are outperforming condos and townhomes. July unit sales were 65 units compared to 52 units last year, an increase of 25%. On the downside, the median price of $685,000 was 17% lower than last year’s median price of $826,750.

Contributing to the median price decline is the return of the low end market. Absent for the last couple of years, it is making a comeback. As an example in July 2007, a total of 4 single family homes were sold under $500,000. This past month the number increased to 20 units, or now 30% of the market below $500K. Of these 20 units, 14 properties appear to in some form of foreclosure that are either bank owned or short sale.

Current inventory levels indicate about an 8.5 month supply of unsold homes compared to 6 months supply last July.

Pasadena Condos and Townhomes

Unlike the single family market that showed an increase over last year in unit sales, the condo and townhome market declined. Last year 54 units sold, compared to only 38 units this year. The weakness is coming from properties available for sale exceeding the $500,000 price point. Analyzing the lower end of the market $500,000 and less, a total of 21 properties sold last year and 20 sold this past month. Low end sales remain fairly steady, but there is weakness above the $500K benchmark with only 18 unit sales this year compared to 33 last year.

Inventory levels show approximately 8.4 months supply compared to about 5 months last year.

Pasadena Real Estate Forecast

The median price of a single family in August ’07 was $792,000. Currently of the 550+ units available for sale, 51% are below the current median price of $685,000. As banks become more aggressive in liquidating their inventory, the low end of the market will continue to influence prices. Until we see more buyers enter the market, home sellers will find themselves more negotiable.