Was June the Turning Point for Pasadena Home Sales?

It had appeared the momentum in the Pasadena real estate market had been building. Sales were increasing, buyer’s were becoming increasingly optimistic, and sales were beginning to move away from just the lower end of the market.

The number of homes in escrow was increasing and stories were developing of multiple offers and quick sales. And we are not just referring to distressed properties. There is really no other term to describe the month of June than just an old fashioned “blow out”.

Almost every indicator showed a positive increase. the number of home sales increased 45%, the median price of a single family home was up almost $50,000 over last month. Even the townhome / condominium market which has been a major drag on reporting, sprang to life with approximately a 50% increase in the median price and unit sales over May.

Now that Newsweek has finally declared the recession over, I guess we have cause for celebration. Housing inventory, a closely watched barometer regarding the health and trends in the market is now down to about a 5.5 months supply.

It seems very puzzling to me that our local housing market can be so strong. Considering the local and national economic situation, what is it that is creating the demand for housing? Consumer confidence is not exactly at its highest levels but there is something that is driving people to buy houses.

What do you think it is?

3 thoughts on “Was June the Turning Point for Pasadena Home Sales?”

  1. It’s good to remain skeptical when there are no apparently hard facts to support and end to the recession.

    In fact, none of the indicators of an ending recession are here, so I find it hard to believe Newsweek’s assessment as anything more than a report that says “someone else says the recession is ending, so who are we to argue?”

    It’s quite likely we have a mini-bubble inflating its way through Pasadena. We have brand new, “funny-money” lending now being backed by the FHA with 3% down-payment loans. That’s not sustainable long-term.

    But the real good news is that perhaps this will be the end of the perception that the economy is in tatters and that it needs government intervention to survive. With luck, the government will roll back its programs to shove money down peoples throats and we can return to real, actual market forces working again.

    That in turn will result in a more sustainable market, with eventually lower home prices over the next decade.

  2. It’s funny. I was surprised for a while about the apparent “strength” of the local housing market. However, as Tim points to one good indicator with regards to the lower end. But for the higher end, I think some people actually have cash in hand and there still are banks giving larger and jumbo sized mortgages to those with enough down and able to put more down if their bank says so. Another thing about consumers, we’ve witnessed an unprecedented increase in house prices. People have already forgotten what prices were like pre-bubble. So naturally when the NAR and most Realtors say now is a great time to buy because prices are lower they’ve been in years, there will be many people susceptible to this.

    I still don’t think prices are at a sustainable level, but with the government’s intervention who knows. Between Bush and Obama, it looks like they’ll do all they can to prop us up as a debtor nation.

    Now that Newsweek article. What a joke! Somebody should be shot for approving that cover and title. By most optimistic economists’ predictions, the recession is over. Mind you, these are the same economists who couldn’t foresee the pain and carnage looming, thinking we weren’t in a bubble economy. I think the only thing clear is that the economy isn’t falling off a cliff, but to say things are going to roll back to the “good times” is madness. $50K increase in June’s median price? If you’re correct, we’ll be back to peak bubble prices in no time. I just don’t see that happening.

  3. There are still a lot of people that don’t understand what is going on and believes it when agents tell them Pasadena is one of the few places that won’t be affected because it’s “desirable”. There are also a lot of foreign investors with cash that are buying homes knowing that 500k invested into a house that can rent for $2500/month or 30k/year which = 6% return is better than putting it into the bank. Banks won’t lend to people knowing that the value of the home might still go down. This is great for people with money. Bad for the hard working people in the area that still have a job and need to finance. But no matter how convenient Pasadena is a 1400 sqft condo/townhome/single family house is NOT worth 600k…or 500k…or even 400k. At some point, people will have to realize that for $500k will get you a GINORMOUS home anywhere else in the country. This will only happen when people realize how much money they need to earn and how hard it is to earn that amount in order to have so little.

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