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 Income Property

Many self proclaimed real estate investors began looking at income property as a means to increase their wealth. Buying rental property provided a way to spread your risk over more than one property and offered what seemed like a better chance for profit than other investment vehicles. Since qualifying for a mortgage was a relatively easy process, many who delved in ask themselves “Do I have the courage to be rich”? This was an old passage I remember reading from a real estate investment magazine several years ago. The underlying meaning is there is an inherent risk in any future potential reward.

This property, a duplex features two units, each with 2 beds / 1 bath and about 1000 sq ft each. each unit also has its own fireplace. In January ’06 it sold for $750,000. A short sale was approved in November ’08 for $630,000.

This Spanish style duplex was sold in June of 2006 for $795,000. One side featured 2 beds / 1 bath and a bonus room for a third bedroom. The other side was a 2/1. Encompassing about 2200 sq feet, it featured central heat and air. Originally brought on the market for approximately $895,000 in mid 2008, it closed in January ’09 for $535,000. It was listed for $585,000. Another short sale, the bank accepted an offer $100,000 less on this property with more amenities than the above property. As I pointed out in my last article, there is a way to negotiate a short sale and banks are becoming more acceptable to buyers who are eager to make a deal and are well qualified.

Pasadena Single Family Homes

This ranch style home offered many upgrades including newer central heat and air, granite counter tops and new appliances. It also had hardwood floors and upgraded double paned windows. Built in 1959, it offered 3 beds / 2 baths and 1642 square feet. Listed for $575,000, it sold in November ’08 for $559,000. In May of 2006 it had sold for $670,000.

If there is such a thing as an “average” house in Pasadena, this would probably fit the statistical description. The lot size is 7300 square feet, in a picturesque quiet neighborhood.

The last example is a Craftsman style home built in 1905. With 4 bedrooms and 2 baths, it offers 1950 square feet on a 7000 square foot lot. Located more to the west than the other pictured homes, it offers many wonderful upgrades and may qualify for a special property tax exemption. Listed at $525,000 it sold for $515,000 in November ’08. The house was last sold in July 2005 for $640,000

Time for a Property Tax Reassessment?

If you bought your property within the last 12 to 36 months, it would probably be a good idea to contact the LA County Tax Assessors office. If the market value of your property has declined anywhere from $100,000 to $200,000, you could possibly save as much as $2300 in your annual property tax bill.

Is the local Pasadena housing market better or worse than other real estate markets across the country? The factors that must be considered are the number of homes that sell compared to the number of homes that enter the foreclosure process. An increased number of home sales will indicate that consumers are returning to the market and the underlying fundamentals mentioned above are beginning to provide a foundation in which overall consumer confidence is increasing.

The Pasadena home sales for the month of December were just recently reviewed including the median prices and number of units that were sold. I took the single family home sales and plotted them on a map. If you scroll you mouse over the “green pin” and click you can also access the recorded sales price below.

To give you an idea of the disparity that exists in the Pasadena housing market, the second map includes the number of homes where a “Notice of Default” has been filed.

As you can see the problem becomes pretty defined when displayed in a visual context. In addition this may help you understand why the median price of a Pasadena home has declined about $200,000 in the last 12 months.

Several months ago it was almost impossible to find a home in Pasadena under $450,000. There were a few out there, some with 500 square feet or maybe a lot size of 3000 sq ft. If your budget was under a half million dollars a condo or townhome could have been your only alternative.

For some, it seemed they were destined to rent forever. Escalating home prices forced many people to buy now or quite possibly never have another opportunity. Then we entered the equity warp, prices began to deteriorate and home values began their descent as they started to return to more normal levels.

For many, a home priced at $450,000 is still beyond their means. On a national level, that much cash will get you a lot of home provided you can stay away from the west coast or the northeast areas of the county. Even though it’s still high, it does appear that Pasadena is offering more home value for the dollar than in years past.

Locally we have been seeing the median price of a Pasadena single family home fall for several months now. And while $450,000 is a big investment for a home, by historical standards in Pasadena it offers a great opportunity for many who have been hoping one day for the chance to own a home.

I mapped the current inventory of homes for sale less than $450,000. I came up with 50 listings. While most are located west of Lake Street, and north of the 210 freeway new listings are being offered everyday. Some of the newer properties are snapped up pretty fast depending upon the value and the amenities they offer.

I am not going to tell you that now is a great time to buy a house. I will leave that up to the National Association of Realtors. That is a decision only you can make. However, if you are looking for a home, I would encourage you to sign up at one of the many sites available that offers email updates as new Pasadena listings become available.

Just in case you are interested in seeing what your money will buy these days, in addition to the map, you can also check out the pictures and details of all the available
homes listed for sale.

Pasadena Median Price and Days on Market

As indicated, the number of days it is taking a Pasadena property to sell has steadily been on the increase since March of last year. During the same period the median price has dropped about $65,000, as the mix of homes that are sold and in demand continue to favor the lower end of the pricing scale.

The disparity began to increase in November as the two market indicators began moving in opposite directions. Based upon the current direction of these two separate measures, they may continue to move away from each other for a while.

Inventory and Days on Market

The inventory of homes for sale was unusually high for the summer months and has declined considerably as of late. However the declines are not due to an increase in the number of homes sold, but to cyclical factors associated with the winter months as are the increased selling times.

The days on market number measures the current number of days a single family home has been listed for sale and does not include condos or townhomes.

Median Price and Inventory

With the median price and inventory at 9 month lows what is the prognosis for 2009? The months of January and February are usually very low months for real estate activity. However with interest rates and prices corresponding with the declining graphs, it appears this trend could reverse. Only 50 homes were sold in the first two months of last year, so the volume increases could approach twice the previous levels. With the median price off about $200,000 on a 12 month basis, the declines are likely to continue for a few more months. Look for an increasing number of homes sold, but at lower sales prices.

The charts are courtesy of Altos Research LLC, copyright 2009. If you would like to receive weekly Pasadena real estate market reports, send me an email. The reports are courtesy of up2daterealestate.

In stock market jargon it is referred to as testing the bottom or testing the lows. If prices hover around the previous lows without establishing a new benchmark it can be recognized as a positive sign. It may be perceived that price stabilization will occur and that the free fall is over, at least for a while. Maybe it’s just a psychological barrier more than a realistic barometer of market indicators, but sometimes all that may be needed is some innocuous event indicating a market change.

Home prices in Pasadena hit a four year low in October 2004 and then took on a meteoric rise for the next 49 months before returning for a landing in November 2008. With Pasadena home prices in a downward spiral the last couple of months, there seems to be returning momentum in the housing market. Momentum however is a relative term when compared to the recent events of the last few months.

Increased activity has been precipitated by declining interest rates, motivated sellers and plenty of property to choose from. If you were aiming to buy a house a couple of years ago and were priced out of the market, today’s events must be looking pretty good to you.

Look for December home prices to modestly rise or at the very minimum, at least stabilize. Home prices have been known to rise in December if the previous months activity has been slow as evidenced by December 2006 in which prices jumped considerably over the preceding months.

A Discriminating Real Estate Market

The new real estate market is going to pick and choose who benefits. You would think with very favorable interest rates that a re-fi boom would be in the works. Not necessarily so. Consider the plight of the self employed. Today’s refinance rules are based upon one thing….. does your income fall in line with the debt to equity ratios of your new loan? It doesn’t matter that you have never been late on a payment or that your current payment is higher than your new lower refinanced payment would be. Forget credit scores, anyone ever heard of FICO! Now you have to pay to play.

And if you were thinking about a construction loan to build your dream house. Well it seems that you can forget that too. A conversation with a direct lender last week informed me that construction loans were harder to find than consumers paying full retail this holiday season!

I don’t know about you, but I am sure glad the $700 billion federal bailout has retuned a sense of normalcy to our credit markets.

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 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.

If a new house is on your holiday wish list, don’t forget to factor into your equation the cost of money. With interest rates coming down in the last few weeks you may be able to qualify for a more expensive home or find out the one you are considering may have become cheaper. On a $500,000 loan amortized over 30 years, the difference in interest rate payments for the first five years is about $12,500 or $208 per month.

In the next few days, I will report on the November sales of Pasadena homes. While that report focuses more specifically on what has sold, the enclosed chart describes the current market with homes currently listed for sale. The data specifically examines the “single family” market, so condos and townhomes have been excluded. The chart is broken down by zip code and includes the overall numbers tied together to give you an idea of how Pasadena is performing as a city. The data looks at four key indicators of the market including

1. The Median List Price – the number which indicates one half of the homes are listed for less and the other half is listed for more.
2. The Average Price per Square Foot – takes the listing price and divides it by the square feet on the property. A smaller house will typically sell at a higher cost per square foot than a larger house.
3. The Average Days on Market – the meter is running indicating the time a house has been on the market
4. Total Inventory – the number of homes listed for sale at this time.

If you would like to receive free Pasadena Market Reports, just enter your information for a complimentary subscription.

The numbers are current as of 12/8/08 and are a courtesy of Altos Research LLC, Copyright 2008.

About 40 years ago the Clampett’s loaded up the truck and moved to Beverly, Hills that is, swimming pools, movie stars. Jed knew that California afforded a unique opportunity he couldn’t find elsewhere. The same can be said of the opportunities available today in the Pasadena real estate market and surrounding cities. It is a Seller’s market characterized by multiple offers and homes being sold over their asking price. There is however only one problem, the sellers are not there.

As many home sellers still grapple with declining equity, bank owned homes and short sales are driving the market. In the October market report on sales of Pasadena homes, sale prices under $500,000 are having a negative impact on median prices, but also on surrounding home values as well. If you are a homeowner who still has equity in your property (congratulations by the way), the rising inventory of distressed properties may be forcing you to rethink your sale price. It’s very hard to compete when you have 20 – 30 properties in some stage of the foreclosure process, in a quarter mile radius of your home.

Buying a bank owned home or distressed property can offer the opportunity to buy the house under market value. Banks generally are concerned with only the selling price. No emotional attachment with the property. Strictly a business decision. In other words “mark it down and leave town”. Imagine having some instant equity on the day of closing.

Many investors and home buyers find themselves in a real estate market many thought we would never see again. Homes are becoming more affordable. If you need to invest your money, what are your options these days? People who have been forced to leave their homes need someplace to live. Paying rent is more easily done than paying property taxes on a declining asset along with the possibility of a mortgage reset and higher payments, down the road.

However, one needs to proceed cautiously. The feeding frenzy that develops may force you to pay higher than what you had anticipated, defeating your initial purpose. Know the market prices in the area and set parameters on what you are willing to offer. If you are in the market to purchase or just want to see what is available, we offer free foreclosure listings of property in California. Someone once said “you make money when you buy, not when you sell”.

Y’all come back now, hear!

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.