Pasadena Home Sales in 2014 – Residential Real Estate

RE/MAX Open House in PasadenaHow did the Pasadena Real Estate market perform in 2014? Are prices still increasing and if so, are prices rising proportionately or are some areas appreciating faster than others?

If you happen to be a first time home buyer with $500,000 to spend, is it possible to still find a home in Pasadena? Maybe you think you think you can find that diamond in the rough and buy a bank foreclosure or short sale. Are those still available? And lastly, how have home prices rebounded since the highs of 2007 – are we there yet?

Pasadena in 2014

For this recap I am only using data that pertains to Single Family residential. No townhomes, condos, or duplexes. It appears that the benchmark for home sales in Pasadena is right around 1000 units annually. If 1000 homes are sold, then it has been a good year; buyer demand, interest rates and inventory seem to be in harmony. To get an idea , lets look at the last three years:

201220132014
Unit Sales9781034 +6%910 (12%)

(unit sales increased 6% in 2013 over 2012, but decreased 12% in 2014 vs 2013)

Pasadena Median Home Prices

Generally, I believe most people would have probably agreed that 2014 was a good year for local home sales, however when compared against 2012 and 2013, it appears that 2014 was only average in terms of actual unit sales.

Lets go back a little further to 2006 & 2007 when it seemed that prices would rise forever. In 2006, a total of 1195 Single Family Homes were sold with a median price of $742,000. Sales declined in 2007 to 927 units, but the median price continued to climb reaching $765,000.

This scenario will replay again as we look at 2013 vs 2014, prices increase but unit sales decrease.

There is an explanation as to why unit sales have declined and I think it has to do primarily with resale and flipped properties. Investors who dined at the trough of adequate supplies of distressed homes were able to pay their tabs in cash. They made some quick improvements, restored curb appeal and added some granite and carpet then sold for a quick profit. Rinse and repeat. Those days are just about gone and therefore the number of homes which have sold twice in a 6 month period have declined. In other words they were sold in their “as is” condition to the investor/flipper who then was able to restore the property and resell it. This time frame usually happens within 3-6 months.

All of this investor activity along with bargain interest rates have also had a big impact on home pricesPasadena Median Home Prices

According to these numbers supplied from the i-Tech MLS, Pasadena homeowners have basically regained the equity in their homes that was lost when the market tanked in the back half of 2007. Most of us thought those days would not reappear for a long, long time. Nobody thought values would be restored to their pre-crash highs in just 5-7 years.

Short Sales and Bank Owned

With price appreciation, many homeowners who were underwater several years ago, now find that misplaced word “equity” has returned. As a result, the sale of distressed properties, meaning those that were either Bank Owned or listed as “Short Sales” are now harder to find than the Dallas Cowboys in the NFC Championship game.

This by no means indicates that a “Notice of Default” has become extinct, but it does appear that most banks have lost their appetite to evict a homeowner for not paying their mortgage.

Pasadena Distressed Home Sales

Pasadena Zip Code Activity

The Pasadena Real Estate market is very diverse as evidenced by its unique character homes, geographical boundaries and landmarks as well as its subset of small neighborhoods, historic and otherwise. Akin to this uniqueness is also the price of housing and the resulting appreciation.

Displayed below is the median price by zip code for the last 3 years:

201220132014
91103$395,000$471,000 19%$515,000 9%
91104$507,500$600,000 18%$644,000 7%
91105$892,500$1,080,000 21%$1,175,000 9%
91106$860,000$1,020,000 19%$1,232,500 21%
91107$605,000$705,000 17%$803,500 14%

The largest area of appreciation for both 2013 and 2014 was in 91106, where the median price of a single family home is over $1,000,000. In fact, 91106 has now surpassed 91105 as Pasadena’s most expensive zip code.

Now, compare median prices by unit sales:

201220132014
91103
159181 14%153 (15%)
91104290294 1%266 (9%)
91105136137 flat115 (16%)
9110610393 (10%)84 (10%)
91107285323 13%268 (17%)

(Note: for Zip 91107, Year 2013 shows 323 units sold and an increase of 13% over 2012 sales of 285 units. Year 2014 shows 268 units and a 17% decline over the sales of 2013)

Notice now that 91106 has had unit sales declines in the last two years, probably a good reason why values have appreciated to the degree they have, fewer homes available for sale and more potential home buyers bidding prices up.

Pasadena, A Move Up Market

Most first time home buyers are characterized by saving enough money for a down payment and purchasing an entry level home. I know we have had the opportunity to work with several who meet this qualification. It has been difficult for those who fall into this category to find a home.

Offers are not accepted due to competing buyers with higher down payments, and more favorable terms. In the mean time, prices keep rising, making it harder for them to accept what their limited budget can purchase.

Pasadena by all accounts is a trade up market, and not a market friendly to first time home buyers. There are a few exceptions, but they do seem to be becoming fewer and fewer. Back in 2005 and 2006, many homebuyers who were out priced began looking eastward to Glendora and as far as Ontario and Rancho Cucamonga in search of affordability.

Has it only been seven years?