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

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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

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.

Join REMAX

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.

Housing Trifecta Returns to Pasadena

Pasadena home sales which have been on the decline for the last few years have apparently bottomed out and are beginning to show some positive signs. Unit sales for ’09 were 1362 units compared to 1097 for 2008 and increase of 24%.

Total Annual Home Sales in Pasadena

Total Annual Home Sales in Pasadena

What Homes Were Selling?

The market also shifted in terms of price points and the values at which homes were sold with lower price homes comprising a bigger market share of the overall volume. Homes under $600,000 were 64% of overall home sales in Pasadena. In 2006 that number was 42%. It’s not that the under $600,000 market was the just the price of choice, but it is also an indication of the Pasadena housing dollar going further as well as mortgages were much easier to obtain. Many home buyers found that mortgage money available in the $750,000 and above price range was harder to find, especially in the first half of 2009, but conditions began to ease as the year progressed.

Stability Returns

One of the positive signs of 2009 was the consistency of the monthly sales volume. Going back to 2005 and 2006 there was much more of a seasonality factor.

Pasadena Monthly Unit Sales - Residential Real estate

Pasadena Monthly Unit Sales - Residential Real estate

Homes sold in the spring and summer. Last year we really did not see the peaks and valleys in the sales cycle. There were several months where unit volume was centered around 100 units, a good indicator that consumer confidence had returned.

Interest Rates, Home Prices and Time

The adage in real estate has always been location, location and location. However, I think its time we should give careful consideration to introducing a new housing trifecta.

  1. Interest Rates – home prices here in Pasadena are much higher than national averages. As a consequence interest rates have a bigger impact on affordability since we typically borrow more money to pay for our homes. Interest rates this past year have been very low by historical standards, therefore people could qualify for more house.
  2. Home Prices – I think its safe to say home prices have fallen around 20% from their historical highs compounded with the increasing rate of foreclosures. Home prices were more favorable and affordable in 2009.
  3. Time – it takes time to heal a broker heart and for housing markets to recover from the initial shock and bad news that precipatates declines. We spent 2008 adjusting to the shock. When 2009 rolled around home buyers were ready to get back into the market to take advantage of lower rates and prices.

There is much speculation as to the economic recovery and the manner in which it will progress. Lets hope the housing market takes on the “V” shape with 2008 being the bottom and 2010 building on the momentum we have just experienced.

Are Pasadena Home Prices Headed Higher?

Pasadena home prices which were in a nose dive for about 2 1/2 years are rebounding. For all intents and purposes, it appears the bottom was reached in January 2009

Pasadena Home Prices

Pasadena Home Prices

and we have been in recovery mode since then. With the high recorded in December of ’06 at about $710,000 and then falling to $425,000 in December ’08. $300,000 in equity disappearing to the tune of about $10,000 per month.

This of course is an over simplification but it does suggest just how quickly market forces can affect change. Many people thought that if the market did change it would be gradual and exhibit more of a round curve as prices quit rising, began to level off and then eventually decrease.

The Future of Home Prices

Can the same be said when home prices begin to rebound? With the upward spike seen over the last several months the question has to be asked “Are we headed for another bull market in the housing market or are we just seeing short term optimism”? The rise in housing prices during the first part of the decade was associated with low interest rates and a very friendly monetary policy where everyone who wanted a loan and could sign a loan application received a mortgage. It’s not that easy anymore. Now only one of those criteria exists in the form of low interest rates.

Our home prices here in LA County and along the right and left coast may always be more volatile than other parts of the country simply because we have a fixed supply of housing. Our increases will be sharper and our declines will be deeper. Real estate price increases or decreases of +/- 3% are found in middle America.

The recent run up in real estate activity locally and nationally may prove one thing. Low interest rates have the ability to overcome economic conditions that are not exactly ideal. Maybe this has to do more with people’s approach to housing and the fact that you have to live somewhere, you can either pay rent or pay a mortgage and the possibility that when people do buy real estate they are looking long term.

The DOM, Housing’s Most Misunderstood and Abused Measurement

Is it really taking houses that much longer to sell?

Is it really taking houses that much longer to sell?

DOM or more commonly known as Days on Market is one measurement used in the housing market that is often misunderstood. The reason being is it is so easily and often manipulated. Many times the data supposedly represented actually provides false or misleading information. Its intention was to provide a quick indication of how long a particular property has been for sale. Too long and home buyers begin to wonder what is wrong with the house, why it’s becoming stale. The most obvious answer lies with the price, as in overpriced and too expensive. The seller is pricing according to their pocketbook and not to the market. One approach is successful, the other one is not.

Explaining the Numbers

Current vs. Cumulative – For the month of June, the Pasadena MLS indicates of all the properties that were sold the “days on market” were 97/187. The first number is the current measurement. The second number, the cumulative number. The number 97 represents all of the properties being sold in June that are listed under the current listing agreement. The second number “187” indicates the same property may have been cancelled or could have expired, but represents the total number of days regardless of the listing agreement. So say broker “X’ listed 123 main street and it was not sold and expired 60 days later. Then broker “Y” relisted the property two weeks later, but was more successful. The contract went pending in 30 days. Therefore the days on market would be 30/90.

Back Up vs. Pending – one of the main reasons we are seeing such an increase in the days on market activity is not solely because properties are taking longer to sell. It also has to do with the way the status of a property is changed. In this market, when most agents receive an offer they change the status to “back up”. Now for all intents and purposes, most people do not make offers on properties listed in a “back up” position. Even though the property is under contract, the days on market meter is still running. Consider a short sale entering escrow, it is changed to back up and takes the bank 60 days to accept the contract plus the buyer may have another 17 days to inspect. That’s 77 days the property has been basically off of the market, but due to the manner in which the measurement is calculated, it still continues to add days to the total.

Agent Manipulation – If a lisiting agent has had the property listed 90 days and it did not sell, instead of immediately relisting it, they might wait 3-4 weeks hoping the cumulative days would reset, so when it was relisted it would now show as 1/1 instead of 1/91. There have been some attempts to correct this in the MLS along with some new policies implemented that prohibit agents from cancelling the listing, just to renter a few days later as new to reset the current DOM clock.

Many times, most agents have access to the property history that shows when it was listed along with a record of pricing changes and the number of days between changes. One thing common in today’s market is price reductions. Most initial price reductions are in the range of 2.5% to 4%. Before you make an offer on a property that has been listed for a few weeks checking the pricing history is always a good idea and one of the many things to research.

Pasadena Housing Market Reports

The question on peoples mind these days is “where are home prices headed” ? On one hand you have the group who thinks the market has reached bottom and is beginning to bounce. They quote the historically low interest rates we currently have along with an increasing number of distressed properties that are luring buyers back into the market. On the flip side, there are the same number of people who cite the unemployment rate, the current economic situation, along  with the relatively high cost of home ownership here in California compared to other housing markets across the country. For these people the glass remains half empty.

Pasadena Single Family Median Price & Inventory

Pasadena Single Family Median Price & Inventory

It was Robert Frost who penned “The Road Not Taken” in which he stated: ‘”Two roads diverged in a wood and I – I took the one less traveled by, And that has made all of the difference”.

In this particular analogy, he seems to go against the tide and take a contrarian viewpoint. But to have a contrarian view, there has to be some sense of agreement in what the masses or the majority either believe in and therefore follow. Therein lies the disconnect.  I don’t believe with all of the conflicting data we have, a consensus will be reached. From the published reports I have seen recently, most would indicate they do believe the worst is over.

To me, there is evidence the market is turning around as indicated by the latest moves in the median price of a Pasadena home. It now appears that home prices are poised to exceed the $500,000 price point for the first time this year and home sales will once again exceed 100 units.

Pasadena Housing Market Key Statistics

I have assembled some key statistics for the Pasadena single family residential housing market. It is my intention to provide these on a monthly basis so that we may compare our local Pasadena real estate market with other markets across California as well as nationally. These reports provide excellent in depth analysis of what is happening here in our city.

These charts include the following:

  1. Supply & Demand by Month – this provides a quick comparison showing how many homes are available for sale and compares it to how many units were sold in that month.
  2. Number of Under Contract Properties – indicates the number of homes that went into escrow for that month
  3. Number of Properties Sold by Month – How many homes were recorded and closed escrow
  4. Medium Sold Price by Month – follow the median prices in Pasadena as this chart provides “at a glance analysis” of what the history has been with respect to median prices
  5. Average Days on Market – How long is it taking a home in Pasadena to sell once it’s placed on the market. Longer times tend to favor a Buyers market.
  6. Months Supply of Inventory – If we see inventories’ beginning to decline is it due to the seasonality of the real estate market or is it an indication that Buyer’s are returning looking to buy a house?