WHERE IS THE MARKET GOING???

On a national level I like the Standard & Poors/Case-Shiller Home Price Indices. Granted, it is always two months behind (May/2009) but I find it to be consistently reliable real estate market information. In the May 2009 report it stated:

The pace of descent in home price values appears to be slowing…. There is a clear inflection point in the year-over-year data, due to four consecutive months of improved rates of return, after the steep decline that began in the fall of 2005. This could be an indication that home price declines are finally stabilizing.

While many indicators are showing signs of life in the US housing market, we should remember that on a year-over-year basis home prices are still down about 17% on average across ALL (Emphasis Added) metro areas, so we likely do have a way to go before we see sustained home price appreciation.


Looking at the local South Coast County (Carpinteria thru Goleta), we see signs of market improvement, but like the overall national housing market we still have a ways to go before we once again see a strong real estate market.

For the month of July we note the difference between the Original List Price and Eventual Sales Price for the month of July to be -13.4%. This suggests a disconnect between real estate agents and their sellers and current market conditions. The second benchmark of note is the fact that we are currently running at about 7.9 months of housing inventory on the market. The tipping point between a Buyer’s Market and a Seller’s Market is 6 months signaling the fact that we are still in a Buyer’s Market but not overwhelmingly so. During the month of July the majority of sales centered between $550,000 and $1,100,000, or the lower end of the market resulting in a Median Sold Price of $885,000 compared to the 2008 July figure of $944,500.

The figures are even more telling if we take an average of the previous 4 years for the months of January thru July and compare them with this year for the same time frame. Doing so we note a -21% drop in sales, and a -29% drop in median sales price. If we look at the median sales price for the last ten years for the months of January thru July compared to 2009 we note that we are slightly higher than the 2003 year figure ($822,500 vs. $850,000).

The good news is that houses are becoming more affordable, interest rates are low and houses going into escrow are picking up steam, while lenders and appraisers for the moment are somewhat relaxing their overreaction following the self-induced severely inflated housing market. Those studying the market are keeping their eyes on such things as the brittle consumer confidence, interest rates, unemployment, inflation, and how long homeowners can hold on or whether we will have another round of foreclosures.

One factor does shine thru as we study neighborhoods and prices is that at the lower end of the market housing inventories are thinning out and it is edging more toward a Seller’s market in this arena with multiple offers occurring on many properties that are aggressively priced in today’s market.