If you read a newspaper or hear a news report it’s easy to be confused about the status of the real estate market. Every positive report seems to be countered with one of increasing despair. When many of the economic opinion

leaders can’t agree on a direction, how can we begin to understand what the markets have in store for us?

The market indicators I am looking at tend to point in a more positive direction at least for the local real estate market here in Pasadena. I have compiled a list of why “optimistic” is my summation of where the market stands today and where I think its headed.

1. Median Price – based upon the last few months of data reports, the median price of a Pasadena home is beginning to level out and actually may be beginning to trend upward. The median price for March was $475,000 compared to February’s price of $435,000.
2. The February-March Increase – the spike in sales reversed a trend we had experienced for the last several years. Home sales actually increased when they typically fall. In fact they had fallen for the previous 5 years for the February-March period.
3. Interest Rates – with rates at historic lows, home buyers are deciding it’s time to take advantage of this opportunity. Lower rates make homes more affordable and also increase the numbers of people refinancing> Property owners get lower payments and more disposable income to spend or to save.
4. $8000 Tax Credit – first time home buyers can take advantage of an $8000 tax credit. If you are buying a $400,000 house and finance it with an FHA loan with 3.5% down, your $14,000 deposit will actually amount to $6000, once the tax credit is applied.
5. Affordability – a precursor to any turnaround is the affordability factor. Since the median price has fallen over $200,000 in the last couple of years, prospective homeowners are asking the inevitable question “Is now the time to buy?” Consumers vote with their pocketbook and it is looking like they are pointing themselves in the affirmative direction..
6. Foreclosure/Short Sales – lender owned homes are creating opportunities for many people in the lower price ranges and what is sometimes referred to as the “first time homebuyer”. Multiple offers on homes below $500,000 have become more frequent and are not usually characteristic of a “Buyers Market”. Also recent evidence suggests banks are beginning to be more cooperative with short sale offers and ridding themselves of potential burdensome inventory.
7. Current Inventory – the current inventory of homes for sale has dropped considerably compared to this time one year ago. Inventory levels of single family homes show about a 24% decline according to the graph from Altos Research.
8. Volume – the number of recorded monthly home sales has grown considerably over last year. Last year consumers were being inundated with a crescendo of bad news affecting both the real estate and financial markets and understandably they stayed on the sidelines.
9. Condominiums / Townhomes – this category which has been dormant for the last 12 months suddenly sprang back to life in March. The current status of homes in escrow tends to affirm the numbers will be repeated for April.
10. Consumer Sentiment – and finally consumer perception has a lot to do with market dynamics. If you are in the real estate market meaning you are either selling a home or buying a new one, you are beginning to hear the early signs of optimism. The word is being spread that the actual happenings in the market don’t appear to be as dire as what is being reported on a national basis. Remember all real estate is local.

Of course it’s too early to predict the market has stabilized and now beginning to bounce off the floor. However a cycle begins with a trend and this is some of the most positive news I have seen in the local real estate market for a couple of years.