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Are Pasadena Home Prices About to Bottom?

December 16, 2008 By 3 Comments
Pasadena Home Sales

Do any similarities exist between the real estate and stock markets?

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.

Pasadena Home Sales

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.

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Pasadena Real Estate Report on November Home Sales

December 13, 2008 By 1 Comment

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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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.

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Pasadena Homes, Key Housing Stats

December 10, 2008 By Leave a Comment
Pasadena December Housing Stats

The month of December has historically been a slow month for the housing market. Holiday parties, shopping and decorating keep many people at home instead of previewing houses for sale or even listing their house during this time of year. For those of you who have decided to put conventional aside, you may find home sellers eager to make a deal as the showing activity on their home begins to decline.

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.

Pasadena December Housing Stats

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Pasadena Real Estate, A Returning Sellers Market?

November 18, 2008 By 1 Comment

It wasn’t that long ago when houses were staying on the market for 21 days and receiving multiple offers. The stock market was reaching historical highs. Home prices were climbing faster than our national debt. You did not hear the words foreclosure and short sale. The skies were blue and the birds were singing.

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!

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Pasadena Real Estate – up2date October Market Recap

November 16, 2008 By 1 Comment

“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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