Pasadena Housing Market Tea Leaves

In recent posts I have speculated and provided my opinion about the direction of home prices in the Pasadena housing market and which way they are headed. Questions always arise about the direction the market is going and is this a long term trend or short term manifestation?

Prices per Square Foot Are Up & Price Decreases Are Declining
Prices per Square Foot Are Up & Price Decreases Are Declining

Are home prices increasing or decreasing? We can look a median home prices all day long which are easily manipulated by the mix of homes being sold, we can examine “units sold”, “inventory levels”, “the number of homes in escrow”, but most of these will not provide the conclusive data necessary to chart the direction in the future.

I ran a quick report analyzing the number of home sales so far that have recorded in August. I found an interesting fact showing the number of homes which have sold to date through August 19 were 66 units. Of those, 25 (38%) have sold at 100% of their asking price or higher and the number increases to 36 (55%) units selling at 98% of their asking price or higher.

To make an actual determination regarding home prices, the enclosed chart plots “price per square foot” and the number of homes that have taken price reductions. It only looks at homes currently listed for sale and does not take into consideration the actual selling price. Prices per square foot are increasing while fewer homes are having to take price reductions. An important indication that buyers are more eager to enter the market.

I recently attended a conference in which the speaker stated the stock market tends to look 5 months into the future and provides a glimpse of economic news to come. Might we also look at “price per square foot” and see if this increasing or declining trend will portend the direction of the housing market?

Our monthly recaps of the Pasadena Real Estate market include a page on how many homes are listed, and in escrow. The “listed” homes always show higher median prices than homes in escrow. Are prices headed higher? At this point when a long term trend reverses itself and begins to head on the other direction, that to me is compelling evidence that a change is occurring. Stabilization precedes a recovery.

2 thoughts on “Pasadena Housing Market Tea Leaves”

  1. >We can look a median home prices all day long which are easily manipulated by the mix of homes being sold,

    Exactly, I think your idea of price per sq ft is a good one. When it is reported that the median price of homes has gone up, I have often thought, ‘Is that because prices are going up or people are buying more big homes?”

    Another idea, total sales volume. Real estate is the only industry that counts sales as the number of sales. All other industries count the total dollar volume (sales X price. Earlier this year was an excellent example, “Sales” were reportedly up but the average price was still dropping.

  2. Ned,
    Great to hear from you. Median price analysis is easy to report but doesn’t tell much about the homes being sold. There are many variables in real estate to consider before making any snap judgments.

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