Southern California home sales crash? There have been several recent news articles the past few weeks all proclaiming the market’s best days are over (meaning home prices will not be going up). Furthermore, one reporter even went as far to say this could be a predictor for the rest of the US since California is a bellwether for trends across the nation.
Maybe in the past, but I don’t think there is any truth in that anymore. After all, our economy is much different, we have the highest gas prices, some of the highest home prices and taxes on our citizens. It is also widely known that California is not the friendliest state for companies looking to do business here as evidenced by the number of businesses that have left the state in search of less regulation and friendlier policies, plus we have a housing shortage.
Meanwhile back at the crash….
I wouldn’t call 77 months of robust growth followed by 1 month of decline a crash. I might call it a breather or a hiccup, but I certainly would use a term as fateful as a crash. Blame it on the heat, the continuing rise of home prices here in So Cal, rising interest rates, and you might as well blame it on George Bush.
Just don’t call it a crash, way too early for that.
Let’s look at the issue on the table and see what the sales figures say. No confusing emotion with facts here.
Pasadena Single-Family Homes
I have included data from 2015, 2016, 2017 and 2018. June has normally been a month when home sales exceed 100 units. It fell short this year, and therefore the crash analogies.
By the end of June, we have achieved approximately 46-50% of our total home sales, so the market is pretty evenly split between the first and second half of the year. If trends continue, we could only end up selling a total of 808 – 815 units this year, indicating a drop of roughly 10%. Unit sales have been dropping since 2015 suggesting as prices continue to rise, homes become less affordable and therefore eliminate potential buyers from the market as the median-priced home in Pasadena now exceeds $1,000,000.
Pasadena Condos and Townhomes
The market for communal living in Pasadena is not as sensitive to market variations, perhaps because the median price is $625,000, much more affordable. Also, newer housing units have offered potential buyers many more options in the last several years.
Unit sales are on track and as of now appear to mirror last years unit sales. Again, similar to the Single-Family market, median prices of condos and townhomes have also increased steadily over the last 3 years, while the number of sold units has decreased.
The overall economy is roaring along however, interest rates have been going up. You cannot find a 3.5% mortgage anymore, but home equity is on the rise and more people are working. Plus it has been hot.
A little early to start proclaiming the sky is falling.
Other Links to check: