Low Inventory, Higher Prices

Could low housing inventory replace Location, Location, Location as the primary factor determining home values?

Buying a home today is analogous to enrolling a child in private kindergarten. The enrollment process involves visiting 4-5 area schools, paying an application fee and then waiting to see if your application has been accepted. To help eliminate the odds, you do this several times, hoping that one of the schools will accept your child for Fall enrollment. As you go from school to school, you begin to see the same people vying for those available few spots.

Buying a house today is much the same. A new listing hits the market, the agent holds an open house with a specific deadline to submit an offer. All of the offers are submitted, the better offers receive a counter and then one buyer is chosen. As you move from open house to open house, you begin to see the same prospective home buyers all previewing the same properties.

Another Sellers Market

If you are attempting to buy a house, you are well aware of the issues and obstacles you face. You know how tough it is. If you haven’t been following Pasadena Real Estate, you are more than likely unaware that we are in another sellers’ bull market. It pretty much appeared overnight.

Homes are selling within the first week, with multiple offers over asking price. There is a lot of cash out there all waiting to be invested. The market is advancing so fast that values are moving ahead of appraisals and creating problems for buyers with high loan to value ratios.

Low Housing Inventory is the New Location

Low Housing Inventory is the New Location

This market is anything but predictable, most never thought it would fall to the degree it did, let alone rise like a Phoenix so quickly. Predicting prices has become a moving target.

The house used in this post just closed escrow on April 1. Listed for $399,000 it sold for $525,000. Lots of character and charm in its 1153 square feet with 2 beds & 1 bath. However it sits right on the corner of the 210 freeway access road. This selling price is more characteristic of a home surrounded by other houses away from the busy intersection, speeding cars and emergency vehicles.

But then again, this market is unpredictable.

Homebuyer’s Beware of that New Car Smell

The salesman hands you the keys and says “take it for a spin”. You are now sitting behind the wheel of that new car you’ve been dreaming about. You melt into the seat, the radio plays softly and the smell, oh that new car smell!

Buying a new car and a new house have many emotional similarities with one exception, there is no Lemon Law for that new house you just spent several hundred thousand dollars acquiring. It’s yours with all of the amenities and all of the problems. “Problems, what problems” you say?

Buyer beware the house of cards

Look past the new kitchen and shining hardwood floors

The lure of a new house with its freshly painted grass, manicured flower beds and new granite kitchen is hard to resist, but underneath all of that spit-shine and polish, are you Buying a House of Cards?

Real estate flips, buyers and investors who buy a property, fix, remodel and resell have become commonplace in the last few years. Thanks to the highs, then lows of the real estate market, distressed properties for sale, short sales and bank foreclosures have offered increased opportunities for wealth. These properties are usually very easy to spot.

5 Common Characteristics of the Flip

  1. A Shiny New Appearance – new paint, new windows, new yard, refinished hardwood floors, new kitchen, remodeled baths.
  2. They are Vacant – the previous owner probably lost the home due to the inability to pay the mortgage
  3. Few Disclosures – don’t look for a lot of comments and in depth explanations. It’s hard to define the history of that 80 year old house when you have owned it for 3 months.
  4. Short Sale or Trustee Sale -the current owner purchased the property through a Short Sale or Trustee Sale. It’s much easier to add value and make money if you buy below market price.
  5. Entity Ownership -lastly, the current owner maybe a corporation or some form of Business entity.

Okay, we have identified the characteristics of the real estate flip, but so what?

At this point, most home buyer’s would walk in and immediately succumb to the new car smell. But what is under the hood, what kind of gas mileage are we talking here?

Systems of the House

It’s very easy to address the things you see and have an immediate attraction. But what about the things you may not be so familiar with. What about the systems of the house, more specifically the electrical, plumbing, foundation, HVAC (heating, ventilation and air conditioning) and the roof.

These are the not so glamorous parts of the house. These are items its harder to place a value on because as a home buyer you tend to place a value on the things you see. You can see the value in a new kitchen, but can you see the same value in new copper plumbing?

Chances are you cannot and this is why that shiny new home may have some underlying issues you need to carefully investigate. Real estate investors / flippers are in it solely for one reason…profit. The more money they put into the house, the less that goes into their pocket.

New roofs are expensive as are new copper pipes. There is a certain amount of money someone will invest to turn it around and make money, so you put it into the amenities that add the most value.

The best way to protect yourself is to hire a very good and thorough home inspector. But don’t just stop with a general inspection, check the fireplace and the sewer lines. These require specialized inspections and may prove very costly later on if you are facing repairs.

Of particular note, if some parts or areas of the house, don’t exhibit the same quality as the remodeled interior, that may be a tip off. The owner may have reached their budget and decided to leave those repairs up to the new homeowner.

If that’s you, just make sure you have investigated the condition of the house as best you can. Lemons are for ice tea!

The House of Pasadena..part 1

The phone was ringing early at 8:20am on this Saturday morning. Unusual because it was 8:20 and the phone typically doesn’t begin to ring before 9:00, but also because of it being Saturday. Putting his coffee down, Andy hit “answer” on his cell phone., brought the device up to his ear and said “The House of Pasadena, this is Andy. How can I help you?”

The House of Pasadena

There's more to real estate than contracts and escrow

“The House of Pasadena” was the name of Andy’s real estate brokerage. It was a clever name he thought, because it played off of a couple of scenarios associated with selling residential real estate in the City of Pasadena, California, and it let people know  his office location and along with it, his area of expertise.

The voice on the other end of the line said..”Andy, you don’t know me, but my name is Trish Johnson and last year my cousin Billy bought a home with you”.

“Sure, I remember. How is Bill”? ask Andy.

“Billy is fine”, Trish said, “he wanted me to give you a call because he has a couple of questions”.

Andy thought this was strange that she was calling for Bill. Bill and Andy hadn’t really clicked back when Andy was asked to handle the sale of a lady’s home. It was a For Sale By Owner and this woman had been approached by Bill who wanted to purchase the property. Bill and Andy had met on several occasions to proceed with the transaction, but no matter how Andy had tried to help Bill he just didn’t see it that way. At one point it had even deteriorated to the point when Andy told Bill to get out of his office.

The two were eventually able to put their differences aside and close the transaction. A closing can make the parties forget about their personal differences and at least allow the two individuals to be pleasant towards each other.

“Andy”, the voice continued. “Bill has received a Notice of Default on the property and he ask me to give you a call and to see what could be done about it” said Trish.

Andy began asking the usual questions of a homeowner when they found themselves in this situation.

“Does Bill want to try to keep the house or does he want to sell it and get out from under it”? Andy asked.

Trish’s voice hesitated for a minute before she began to speak. “I might as well tell you Andy, Bill is in the county jai,” she continued.

“He was arrested last week because there was a death,” she said tearfully.

Andy had an immediate flashback. He remembered reading in the paper of a man being arrested for killing his girlfriend. The newspaper account stated the couple had been arguing and the man was arrested and charged with murder. The article stated that the  suspect had thrown his girlfriend out of the second story window to her death.

“Andy, Andy…are you still there”, Trish ask.

Andy’s mind was racing remembering the volatile temper that Bill had sometimes displayed. Then Andy regained his composure and said “Trish, this is an important question, did the victim die on the property or en route to the hospital. Depending upon how you answer will determine what we have to disclose if we sell the property”.

Andy could barely hear her as her voice was still trembling. He could hear the sounds of police sirens in the background as the irony of this entire telephone call continued.

“I think she died on the way to the hospital. I have to go now, they are calling me. I’ll give you a call later this week”. And with that Trish hung up the phone.

Andy’s mind raced to one of the intense arguments he had with Bill and wondered if he was capable of being a murderer. Andy quickly thought next time he enters a hostile situation he needs to try and diffuse it, not heighten the argument to win his point. Certainly not throw someone out of the office as he had previously done with Bill.

It could be life threatening, he thought.

 This is a fictionalized account of The Pasadena Real Estate Market and the life of one of the agents. Any similarities to actual events or individuals are strictly coincidental.

The Debut of “The House of Pasadena”

Should a blog about real estate include exclusive content which only addresses the local real estate market?

Our goal was always to inform and to educate and throw in a little humor from time to time. However, even I must admit market facts and statistics become dry after a while, and dry can be just this side of boring. Over the course of the last several years we have looked at different alternatives to keep things new and exciting. Restaurant reviews, points of interest and entertainment; well there were plenty of other sites doing that, therefore our challenge was to offer articles and anecdotes that no one else was creating.

The “House of Pasadena” to Debut

In consumer products the key to category growth is new products. Authoring a real estate web site is not really any different. You have to produce content that keeps people engaged, wanting to read what you have to say. In the late 90’s, everybody wanted to be a day trader as the stock market reached new highs. Then the bottom fell out and a lot of people lost interest in following the market. Real estate was the same way as many novice beginners loved the label “investor” when in fact the only qualification was just purchasing a book at the book store and had never really owned any property.

If you only offer articles on real estate, people will generally visit your site when they are in the market to buy or sell a home. Our challenge became, “How do we provide creative content that remains real estate focused but also provides entertainment value?

The House of Pasadena

There's more to real estate than contracts and escrow

We will soon introduce an ongoing series about life in the Pasadena real estate arena.

There’s more to real estate than just contracts and escrow. A lot more.

These stories will feature a fictionalized account (could be some truth to that) of our protagonist and the characters he/she has to work with on an ongoing basis. You will experience the dramatics and the emotion that this agent deals with and how they get past the insincerity and the phoniness that has become so pervasive in this business. Many agents outside the Pasadena area have spoken about the “uppity” attitude of agents in the Pasadena area, who single handedly think they are responsible for increasing home values.

The author has assured us that the names will be changed to protect the guilty agents who make this industry so fun, exciting and complete with drama.

Pasadena’s Eaton Canyon Golf Course

Mention playing golf in Pasadena and your first thought is probably Brookhaven Golf Club. 36 holes of golf around the Rose Bowl. Two great options for local residents who want to tee it up and imagine they hear the gallery roar “You da Man” as a tee shot rips of the face of a driver as big as a catcher’s mitt.

Greens at Eaton Canyon are fast and in great shape

Over on the other side of town in the Hastings Ranch area is another option for Pasadena golfers. Eaton Canyon is a 9 hole course which offers several challenging holes and tests your skill at shot making. I had the opportunity to play it last week and like many areas of Pasadena, it too suffered extensive damage from the recent high winds.

Billy, Billy, Billy

I knew I was going to enjoy Eaton Canyon immediately. When I went to the driving range I got to practive of real grass. Not the artificial turf mats that are like a rug remnant and so commonplace. Hitting off of real grass makes such a differnece to me and the purists of the game but from a cost and maintenance standpoint has to be much more expensive to maintain than the shag carpet found elsewhere.

A couple of other things I really liked about Eaton Canyon was the fee for 9 holes was less than $20. Where else can you find a bargain like that? On top of that, the greens were magnificent. Lightning fast, but impeccably maintained. Very surprising for a small 9 hole golf course.

Spending the afternoon at Eaton Canyon is a good test of golf and a fun alternative to the other golf course in Pasadena.

Victory Park in Pasadena

Victory Park Guide
One of the attractions of Northeast Pasadena is Victory Park. I think if you had to map the center of the Northeast Pasadena rea, your compass would fall right in the middle of Victory Park. Located at the intersection of Paloma and Altadena Drive, it provides an excellent opportunity for the weekend athlete to reminisce about the glory days of years past only to be reminded again on Monday morning that our body isn’t in quite the shape we thought it was in.

The facilities at Victory Park provide the youth of the area the chance to develop their skills and sportsmanship through an assortment of activities including AYSO Soccer, Pop Warner Football, and Baseball. For the bicycling enthusiast, paved paths provide a nice tour around the perimeter of the park and there are also picnic facilities available for friend and family gatherings as well as birthday parties. If you plan on hosting an event it is probably a good idea to check with the City of Pasadena to make reservations or acquire a permit.

Saturday Farmer’s Market

From the hours of 8:30 to 12:30 every Saturday, local residents are treated to one of the best Farmers Markets in the area.

Victory Park in Pasadena

Victory Park in Northeast Pasadena

An abundance of fresh fruits and vegetables are trucked in and set up and the process seems to be organized as well as any grocery store you could visit. There are fresh flowers, honey, nuts, fish, some entertainment, coffee and fresh bread. It’s worth checking out and just visiting for the experience. We make it a point to take our guests when they visit so they can get a flavor of what we have here in Northeast Pasadena.

If your desire has been to live close enough to the park you can walk, you might want to check out the local neighborhoods of Daisy Villa, Victory Park or Brigden Ranch.

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South Pasadena Home Sales June 2010

Over the last couple of weeks I have been commenting on home sales in Pasadena, noting that sales have begun to soften and market statistics have been reflective of what was happening on a national level. As is the case, the Pasadena housing market is not an indication of what is necessarily going on in South Pasadena.

Months Supply of Inventory

Take inventory or the number of homes for sale as an example. In Pasadena, inventory increased by 27% from June to July. For the same period, inventory only increased by 3% in South Pasadena. However we need to quantify this number and add some perspective. The past 12 months in Pasadena produced sales of 829 Single Family Homes. In South Pasadena this number represented only about 15% of the market size or 122 unit sales of Single Family homes.

South Pasadena Home Prices per Square Foot

There are several ways to gauge housing market activity. Individually each measure may produce results that are misleading until you have an opportunity to do further investigation. This often leads to an explanation such as “things aren’t exactly as they seem”. In other words, just reading the headlines without the full article may present a distorted and an inaccurate view of current results. Sales price per square foot can often be misleading. The mix of houses which are sold can have a big impact on this measurement. By most accounts, sales per square foot decreased from June to July. In South Pasadena, the numbers were $471 in June, but decreased to $424 in July. Pasadena had the same experience with $391 in June, and $388 in July. Keep in mind however there were 11 recorded home sales in South Pasadena in June and 12 in July. Pasadena recorded 82 home sales in June and 76 in July. Due to the small number of home sales in South Pasadena, monthly variations can be proportionately much, much wider.

The Number of Homes for Sale

One of the best indicators of a slowing housing market is the increasing amount of unsold inventory. Remember, one month does not a trend make. However, when trends develop based upon 2-3 concurrent months and also upon a “this year” versus “last year” basis, its more than just an unexplained monthly blip. This is one area where Pasadena and South Pasadena apparently find some coexistence. Inventory increased 16% for both cities on a month to month basis. The 42 single family homes which were for sale in South Pasadena were the highest monthly level based upon the last 15 months.

What’s Next

The issue that has many analyst concerned about a slowing market is based upon a couple of indicators that normally indicate a very bullish market. Mainly, interest rates are very attractive and people’s housing dollar is going much further. Low interest rates translate into more affordability bringing more people into the housing market, typically. This time of year market conditions dictate we should be witnessing increased activity. Economic conditions however are overriding conventional wisdom.

South Pasadena Single Family Homes For Sale

Take a look at all homes in South Pasadena for sale.
Take Me To The Map


Pasadena Home Prices Trend Higher

Pasadena home buyers continue to express optimism in our local real estate market as evidenced by the housing statistics for the month of April. While “SALES” and “PENDED” Single Family units were basically flat in April ’10 vs April ’09, there were other signs of encouraging news. The median price increased to $710,000 last month compared to only $550,000 in April ’09 (+29%) and was also up from the most recent March number of $629,000 (+13%). Now median prices don’t portend to tell the whole story, but they are a good barometer of trends happening in our market.

Prices Per Square Foot Increasing

A good check and balance is to also see what is happening with prices on a square foot basis. There is more good news here as the Price per Square Foot increased to $426 up from the March number of $379 and well above the April ’09 figure of $384 per square foot. The mix of property being sold also affects the Price per Square Foot. Last year we were seeing a higher number of homes sold in the lower price ranges as many of the foreclosures and bank owned property entered the market below the $500,000 price point. In April 2009 there were 25 recorded home sales at a price of $500,000 or below compared to last month when there were only 17 sales.

Also this year, sales of higher priced homes are beginning to reappear. Qualifying restrictions for a jumbo mortgage has also become easier than it was last year evidenced by the number of homes sold over $900,000. In April ’09 only 11 homes sold in this category compared to 21 last month, an increase of 90%.

Impact of Home Buying Incentives

As we approach the end of tax incentives which are supposedly designed to get people off of the fence and into a house, what will happen once they expire? I don’t believe we will see much of an impact due to the price of Pasadena real estate. Incentives make a difference when you purchase a home for $100,000 as you can in many parts of the country. With our median price of over $700,000 and a return to higher priced homes, incentives are a marginal part of a home buyers decision. The main key to continuing prosperity will be the price of money. In the last few days, interest rates on 30 year fixed rate conforming loans have tested 50 year lows. Interest rates which influence affordability and how much home someone can buy will be the key to continued improvement.

Price per Square Ft Pasadena

Single Family - Average Price / Sq Ft

Single Family, sold and pended

Single Family - For Sale, Sold & Pended

Median Price of Pasadena Single Family Home

Pasadena Single Family Home Median Prices

Where are Pasadena Condo & Townhome Prices Headed?

If your Pasadena home search has been somewhat frustrating trying to find that nice 3 bed, 2 bath traditional for under $600,000, you may want to take a second look at the condo and townhome market. These two markets although similar in

The sales cycle has been harder to predict than in Single Family homes

nature are also marked by sharp contrasts. According to the Pasadena home search, there are about 230 condominium properties for sale in the city. What is not being reported is all of the recent new construction properties that are for sale, but are not listed in the MLS.

There is a very good reason for this. The developers do not want you to see how many of these units are currently unsold. If you knew you might be more aggressive on your offering price. Many of these new units now for sale were being purchased and planned several years ago when the market was red hot and appeared there was no end in sight. The other misfortune assumed that Pasadena had a voracious appetite for high end units. With most of this development happening in the downtown and in the high retail areas, land was selling at a premium. The assumption was people would pay more to live in areas with so many walkable amenities.

Current Market Conditions

These two graphs present different stories. The reason being the top chart is based on actual closed sales and the bottom is based on what is currently “for sale”. The median price of units sold in the last couple of

Increasing Inventory Means Lower Prices

months have ranged form $425.0 to $450.0. Whereas the bottom chart indicated that the median price has fallen about $45,000 since January 1, 2010 and currently resides around $500.0. On the flip side inventory has also increased around 10% from the first of the year also.
So what does this mean?
What this really indicates is some softness in the upper end condo market. It could also be evidence of trade up buyers opting for single family homes as opposed to a different lifestyle associated with communal living.

Price Direction

Unlike the current activity in the Single Family market, we don’t see multiple bids on condos and townhomes, nor do we see evidence of closing prices above current asking prices. Home sellers in this category are going to have to remain negotiable for the foreseeable future and developers may resort to interest rate buy downs in lieu of reduced prices.

REMAX in South Pasadena, Pasadena

The decision to join or affiliate yourself with a real estate company in Pasadena or South Pasadena offers many choices. We looked at several before we made the decision to join REMAX. Ballooncorrected2

Not to say it was an easy decision, but when we considered the strength of the REMAX brand, their ongoing commitment to National TV advertising, the educational opportunities available to the brokers and agents, and the charitable support provided to the Susan G Komen foundation and the Children’s Miracle Network, the decision became quite obvious.


We also considered the advantages REMAX represents in our area and believe the opportunities are numerous. Upon joining REMAX agents have access to the following:

  1. REMAX University – ongoing training from some of the best instructors in the industry, allowing agents to obtain professional designations (ABR, CRS, SRES, etc.) while improving their selling and marketing skills.
  2. REMAX Mainstreet – an individualized portal with industry topics, current news and events and an access point to everything REMAX.
  3. REMAX Design Center – includes thousands of templates and designs allowing REMAX agents to create flyers, postcards, and virtual tours all within a few minutes to successfully market your property for sale.
  4. REMAX Leadstreet – offers each agent a customizable web site, contact management and email campaigns. Plus buyer and seller leads are distributed to each agent at no cost which offers a huge benefit compared to some of the other companies.
  5. CompensationREMAX agents are consistently some of the highest producers in the industry. When you join REMAX, you become part of this wonderful organization that is committed to more than just real estate.

Buying or Selling a Home?

REMAX provides their agents the technology tools necessary to sell your home in today’s market. While most companies leave marketing to the individual budget of the agent, REMAX continues its National TV campaigns and billboard advertising driving consumers to REMAX.com. When would be home buyers see a REMAX sign in the front yard, they know they will be dealing with a professional.

Call Us For A Personal Meeting

We are excited about the opportunities we have and would appreciate the opportunity to speak with you. If you are considering buying or selling a house or thinking about your real estate career, work with the best name in the industry. We can be reached at 626-432-4615.