Used to be if you studied the real estate market at all, you could predict when the best time would be to sell your property. During the boom years of 2000 to 2005 the selling season would typically get started in April and run through September. This defined the true Seller’s Market. Put your property up for sale and it was usually sold in 2-3 weeks, maybe for even more than the asking price. Buyer’s understood that they could not make unreasonable demands on the seller, the house was being sold “as is”. Someone was usually standing in line to replace them if they decided to exit or were forced to leave. There was a definite answer to the question “When is the best time to sell my home?” The last couple of years however have been different. Now it’s anybody’s guess as to whether or not the spring selling season will return.

Residential Sales Defined

The above chart recaps sales of residential units by month. Let me say that there were a couple of assumptions made. Sometime last year the i-Tech MLS (Pasadena) was combined with the MRMLS (Arcadia/Monrovia) which resulted in some duplication. Spot checks indicated about 10% of the results were reported twice, so adjustments were made. Secondly as I reported in the article about Pasadena real estate our primary source of information is the i-Tech MLS which covers the majority of sale transactions in the Pasadena area.

Now with that said and the formalities out of the way you can see that our real estate market peaked in August 2005. In 2005, there were approximately 1817 sales of residential units including single family homes, townhomes and condominiums. That number dropped to 1602 in 2006, a decline of almost 12%. Then last year it dropped to 1262 units, a 21% decline from 2006 levels. Now if there are 555 fewer homes being sold these last two years at a median home price of $575,000 that equals $319,125,000 in lost sales for 2007. That is serious money where I come from. From a tax perspective, the LA County transfer tax resulted in a loss of $3,510,000 and that is just for Pasadena. Now you begin to understand why Sacramento is in such a budget crisis. Well maybe we will never understand how Sacramento works, but we can provide some obvious explanations.

This Down Cycle Will Run Out of Steam

Periods of growth or decline define most business cycles. If the housing bull market ran for 5 years, the housing recession is not likely to work itself out in the next few months. The housing market needs some good news to help it back on its feet. Maybe gasoline at $2.00 a gallon would do it. It would sure help. If the hangover is preceded by the success and length of the party, then our head may hurt for a while. It was a great party.