Attempting to define the Pasadena real estate market is akin to watching air run through a clear tube. You know its moving, you just can’t see it. I think that is what we are experiencing right now with Pasadena home sales. Conversations with other brokers and escrow agents indicate that there could be a small level of increased activity taking place. Call volume has picked up and it is usually a good indicator of the current market situation, in other words are potential home buyers inquiring about homes listed for sale?

However we look at the empirical data, one of the things we are attempting to identify are trends. Trends such as; are things beginning to improve, are the new increased loan limits now beginning to have an effect, are buyers beginning to return to the market?

Looking at the current housing market barometers, there is very little change with respect to (1) days on market (2) current inventory and (3) median price:

Days on Market

The days on market took a significant dip about 4-6 weeks ago, this could be the result of some properties that have been on the market for many days and have expired and are now no longer for sale. The fact that this has ticked up again indicates no real significance or change.

Inventory

Inventory is still high compared to last year but has been declining as of late. I don’t believe this is attributable to a sales increase, rather I believe it was due to many homes being expired or canceled. The recent rise in inventory seems to indicate this. Single family inventory has been centered around 500 units:

1. week ending 3/28, 497 units for sale
2. week ending 4/18, 511 units for sale
3. week ending 5/2, 492 units for sale

Median Price

Prices still appear to be falling. Once the market begins to pick up this line will begin to flatten as many of these indicators will move in unison. Days on market will begin to fall and inventory will begin to decrease. But until we see that begin to happen, we will take any little bit of good news the market will allow.

Look for the April recap of the Pasadena real estate market within the next couple of days. We will see if the April results show any improvement.
Graphs courtesy of Altos Research, Copyright 2007

Tags: pasadena california homes for sale, Pasadena homes for sale, Pasadena real estate

As foreclosures increase and housing sales and values continue to decline its time to ask ourselves, “Where’s The Beef”? So far we have had a tremendous amount of proposals and opinions from our Presidential candidates, plus we have a government that’s intent on applying band aids to a patient that many perceive is already on life support.
Currently it appears the attempts to forestall and delay foreclosures are not having any positive effect. The problem can be corrected, but the question is “Does our federal government really want to solve the housing crisis”?

The other day I was listening to radio talk show host Hugh Hewitt when he spoke of his proposal to allow individuals to use their 401K money to pay down their mortgage debt. He went on to mention that this proposal was under review by Rep Barney Frank. Unfortunately it seems that Mr. Frank’s current priority is the American Housing Rescue and Foreclosure Prevention Act, which in essence is just another government bailout, which will help many who have disregard for their own responsibility and doing what is right.

Mr. Hewitt’s proposal is very similar to a post I wrote including my own recommendations to pull ourselves out of this morass and allow homeowners the flexibility to use their existing retirement funds as necessary to resolve their own financial issues. That may seem like forward thinking to some and as a society we may not be ready to accept allowing individuals to manage their own money, money that they earned through each persons individual efforts.

Forget a Government Bailout

The only real reform that will produce positive change in the housing and real estate market is to provide incentives that encourage people to want to invest. Incentives that come through tax breaks. Tax breaks that encourage people to purchase, repair and fix up deteriorating property. Vacant homes reduce neighborhood values and encourage vandalism; home owners need incentives to invest money for improvements. Most of all we need tax breaks that reward people when they sell and make a profit. Risk must have its reward.

Solutions to the Housing Crisis

We must have real tax reform. We need Washington to get the message and provide the following benefits to home owners:

1. Penalty Free IRA & 401K Withdrawals - allow individuals to utilize their money to pay down debt or buy property. Allow us to invest in other avenues than an anemic, volatile equity market.
2. Loss Carry Forward - if a property owner has a loss on a property allow these loses to be deducted from the federal tax return. Currently if you lose money on your home, too bad. No deduction is allowed.

Housing Crisis One Year Anniversary

This has been developing for one year now. The situation has not improved at all. Its time to realize that we need some new policies to address a dire situation. Americans can be very resilient, they just need the opportunity. Otherwise we will be uttering line made famous by Ms. Peller in the Wendy’s commercial “I don’t think there’s anybody back there.”

Tags: housing market incentives, housing reform, jumpstart the housing market, tax reform

Home buyers are scarce and hard to find these days. The word is they soon may be declared an endangered species, by the local Realtor Association if home sales don’t increase soon. As inventory levels increase, many real estate agents will inform clients that they must increase the amount of commission offered on your property. In other words, you need to dangle a carrot out here as an incentive to sell your home. The question is “Does paying 6% insure your home will sell any sooner?”

Fact or Fiction?

It does appear after many months of decreasing commissions; rates are beginning to rise again. And why not, fear is a great motivator. Real estate agents are convincing clients they must pay more in a declining market in order to increase the likelihood of a sale. Sales commissions have usually been split 50/50 between the listing and selling agents. In a seller’s market commissions declined due to more competition among real estate brokers. Many new business models flourished and the real estate industry offers few barriers to entry. These same companies that did well in a seller’s market are finding the going much tougher when overall sales decline by 50%. As a result, the well established companies that have been around a while and are considered the more traditional models remain despite the market dips.

I last looked at commission rates in our area last June. Based upon the search results below, there has been a trend for consumers to pay more to sell their homes.

While the majority of homes sold continue to offer a 2.5% commission, the number has declined to 56% of the homes sold compared to 70% almost a year ago. Property owners offering a 3% commission increased to 40% from 24%.

Do Homes Sell Faster Offering a Higher Commission?

This is the $64,000 question. I compiled Pasadena home sales from October ‘07 to March ‘08. While it appears that properties offering a 2.5% commission outnumbered those offering 3% by a margin of 4:3, it took those homes 7 days longer to sell, comparing the median days on market. However, analyzing the average days on market the situation was reversed, selling 8 days sooner. Based upon this analysis, I would have to say increasing the commission offered, begets no real advantage. While extremes do exist, a competitive commission reflective of the area will present your home in a positive manner.

Selling Your Home

The number one key to selling your home is getting it priced correctly. End of story. Now there are supplemental factors consisting of condition, timing, amenities, location and competition. Noticeably absent is THE COMMISSION. With 75% of home buyers beginning a search on the internet, the commission offered to the selling agent is no where in sight. I don’t know of any agent that has ever called our office saying they were working with a buyer who only wanted to buy a house offering a 3% commission. And if 3% was sacrosanct, wouldn’t you think licensed real estate agents would offer 3% on their own properties? We will have to keep an eye on this.

In a market where values are declining and the median price of a Pasadena home is $675,000, a savings of 1% or $6750 is an advantage. As with any category, price is determined by market forces. No agent or brokerage company is going to change that. After all it is your equity.

And now for the usual disclosure “The amount or rate of real estate commissions is not fixed by law. They are set by each Broker individually and may be negotiable between Seller and Broker”.

Tags: pasadena california homes, Pasadena Real Estate Agent, pasadena reale state

We’ve all heard the real estate success stories when people purchased an investment home at a low price and then were flabbergasted at the 5 or 6 digit appreciation they realized when they sold it a few years later.  Everyday in the news, we hear or read about our country’s current economic slowdown, triggering a possible recession and responsible for the subsequent down turn of the Pasadena real estate market.  Is this the real estate trifecta we’ve been waiting for?

Let’s take a closer look at the city of Pasadena.  There is a large inventory of homes available on the market today.  In Pasadena, experts estimate about 10 months worth.  The average selling cycle to sell a home often exceeds 100 days with selling prices  well below asking price sometimes up to or greater than 10%.  In addition, the number of home foreclosures & short sales is greater than in past years.  In all, it seems as though, today’s real estate market is prime to purchase a solid investment residential property in a desirable neighborhood at a reasonable price.

OK, let’s go on this hypothetical journey, you purchase an investment home.  Am I going to get a decent rental income?  Who am I going to rent it to?  Is there a demand for homes to rent?   All of these questions have different variables (i.e. size, location, available amenities in the home) that prohibit an absolute answer to them.  However, according to the MLS, the median monthly rental price in Pasadena for the past year (3/07-3/08), is $ 2200.  With the availability of numerous websites for potential renters, advertising a home to rent is easy, inexpensive and accessible to more people.  With the increase in foreclosures, there is and will be a rise in the number of people/families needing to rent.  Plus, these people will be renting long-term in order to save for a down payment towards a future home. 

So, did we hit the real estate trifecta?  No one knows for sure.  Take a closer look.  Do some research on the internet, meet with your local real estate agent and financial counselor to examine the numbers.  Who knows…in five years, you may be the one boasting of the great real estate investment.

Tags: , Pasadena Investment Properties, Pasadena real estate, Pasadena Real Estate Agent

South Pasadena’s once hyperactive real estate market is experiencing the same anemic sales results as Pasadena and Altadena. The western edge of the San Gabriel Valley supports the latest trends in residential real estate with unit sales down 50%, and a median price decline of about 6%.

South Pasadena real estate sales results do indicate that homes are selling closer to their asking prices and are selling in less time, a couple of key indicators to the overall strength of the market.

South Pasadena Homes for Sale

chart from Altos Research LLC, Copyright 2007

In terms of houses for sale, South Pasadena currently has 64 homes that are either for sale or in the escrow process, close to 8 months of supply. Eight homes sold in the month of March ‘08.

South Pasadena Foreclosures

chart from Foreclosureradar.com, copyright 2008

Currently 20 properties are in the foreclosure process, indicating that no matter how desirable the area or school system may be, loan defaults are widespread given these economic times. If you would like a list of South Pasadena properties in foreclosure, email me.

Tags: South Pasadena California homes for sale, South Pasadena homes for sale, South Pasadena real estate

Sales of homes in Altadena from January through March are exhibiting about the same results we are seeing in Pasadena. In other words, Altadena is selling fewer homes, at lower prices and its taking them longer to sell.

_{photo courtesy of Frank Keeney of unwiredadventures.com}

Altadena currently has about 210 residential properties that are listed for sale and in the escrow process. About 99% of those are in the form of single family houses. There are very few condo’s or townhome properties in Altadena. Altadena also has close to 200 properties listed in foreclosure, with the majority of those located west of Lake Avenue.

As you can see from the above chart inventory or homes listed for sale more than doubled from January ‘07 to January ‘08. For the month of March, there were 15 recorded sales in the i-tech MLS, indicating a little over a year’s supply of homes for sale currently on the market.

Short Term Outlook

With the number of homes for sale and the number of homes in foreclosure, there will still be downward pressure on prices. This scenario is likely to continue through the end of the year until the inventory of homes for sale moves back into the 6 month range.

If you would like to have a copy of the Altadena Market report, send me an email.

Tags: altadena california real estate, Altadena real estate, altadena real estate agents

With Pasadena home sales now taking in excess of 100 days to sell and selling at 95% of their asking price, price reductions have become commonplace. Houses are no longer stigmatized by being on the market and “For Sale” up to 4-6 months. Home sellers have now added the word “patience” to their vocabulary. Appointments to view a property are fewer and further apart. If an offer is presented be prepared to see a difference of 7 - 10% from the listing price, translating into several thousand dollars. In other words, serious money.

The perception among home buyers is that prices may fall further, and therefore there is no emphasis placed upon acting now, no sense of urgency. Recent media reports and monthly sales data seem to support this presumption. Real Estate trends indicate declining monthly home sales on a rolling twelve months, increased foreclosures and home financing harder to obtain. Human nature prohibits most of us from taking a perceived risk on something as major as a home purchase, when all of these external forces area saying now is not the time to buy.

The Upswing Will Identify the Market Bottom

The $64,000 question becomes “When will the bottom occur in the housing market”? And the answer is, no one knows. There are plenty of opinions, but the only way we will identify the bottom of the market is that it will become very visible in the rear view mirror. Once the pendulum swings, and the market begins to pick up, then and only then will we identify the bottom. Then its too late. Did anyone actually say in August 2005 that this will be the peak of the market, now is the time to sell?

Price is Just One Consideration

Many people think that they have the gift, the sixth sense. When the market finally reaches that proverbial bottom, they will know and swoop in. If on the other hand your crystal ball is a bit cloudy and unpredictable, maybe you should consider the other factors that are very favorable today, such as:

1. Plenty of Inventory - with close to a 10 month supply of homes for sale, home buyers have many choices available. You can afford to be selective and quite possibly set favorable terms.
2. Interest Rates - money is cheap right now. It is about the only thing that is inexpensive. If you are looking to buy, consider how long you plan to stay in your house. Most people move within 7 years. A very low interest rate may help to offset some of the increase in price, making your monthly payment more affordable. While refinancing may be an option, we don’t know what rates will do in the future.
3. Remodeling - the downturn in the housing market has impacted contractors as well. You may find them more negotiable and eager to find work today versus next year.
4. Tax Implications - you should have your CPA review your finances and see if its better to continue renting or is there a chance you can increase your current standard of living and save more of the money you now pay to the government.

The bottom line (no pun intended as to the title of the story) is there are many factors to consider when purchasing real estate. Evaluate the current market conditions with your current needs and long term goals or benefits.

Earlier this week we reported on the Pasadena real estate market and the sales numbers for March.

Two things are quite obvious; unit sales are off by about 50% across the board. This seems to be true in LA County as well as California. And secondly, inventory levels of homes listed for sale are at the highest point we have probably seen in the last 10 years.

Since the Pasadena area covers such a wide geography and demographic area and because all real estate is local, I decided to break down the analysis by zip code and further dissect what is happening with home values in our city.

Zip Code 91101 - This area is dominated by condos and townhomes. Last year saw quite a bit of activity on newer projects on E. Green St., S. Hudson and Union Street. A market shift has occurred with more mid priced units selling as opposed to higher end units. There are close to 29 homes in foreclosure with about a 10 month supply of inventory.

Zip Code 91103 - Homes within this zip code could be referred to as “A Tale of Two Cities”. This area includes million dollar homes in Linda Vista and also homes east of the Rose Bowl to Marengo. The million dollar market remains fairly strong, however if you exclude homes that sold over $1 million, the median price has fallen from $540,000 last year to $450,000 this year. There are close to 130 homes in this eastern part of the zip code in some stage of foreclosure and approximately a 1 1/2 year supply of homes for sale.

Zip Code 91104 - Including, Orange Heights, Bungalow Heaven, Historic Highlands, Garfield Heights and Brigden Ranch. There is a good cross section of homes in this area and the median price is down about 12%. Also this area is increasing in the number of foreclosures with about 100 properties currently listed. Close to a 10 month supply of homes on the market for sale.

Zip Code 91105 - This area includes San Rafael and features homes in the above average to high price range. It has also been the best performing neighborhood in Pasadena as far as maintaining value and will also be home to the new Pasadena Eco House. Home values have remained strong partly due to the low number (24) of properties in foreclosure. Current inventory indicates about a 12 month supply. This high number of homes for sale could very well produce some softening of values in the future.

Zip Code 91106 - This area features single family homes in Madison Heights in the million dollar plus range, but is also comprised of many condos and townhomes which make up about 75% of the units sold. Most of the price weakness in this area is from the 20+ year old townhomes and condos. Last year we did see the more expensive homes selling over their asking prices, however that has not been the case this year. This are 55 properties in foreclosure with the emphasis on condo/townhomes and several multi-family properties.

Zip Code 91107 - Local neighborhoods include Upper Hastings, Lower Hastings and Chapman Woods. Very similar to the characteristics in zip code 91104. Last year 12 recorded sales (townhomes & condo’s) occurred below $500,000, this year not one recorded sale. Again more evidence that the low end market is suffering the brunt of the housing slowdown. This zip code has suffered the largest decrease in unit sales and with the anemic sales in March, the current inventory is close to a 1 1/2 year supply. Foreclosure property count is 90 units and has been on the rise.

Tags: pasadena california homes for sale, pasadena california real estate, Pasadena home sales, Pasadena real estate, pasadena realtor

If you have a property for sale and have been hopeful the market would begin to turnaround and show some signs of life, the March sales results will likely disappoint you. We have yet to see any sign that home buyers are returning to the market, choosing instead to wait and see if prices fall further.

Also in an earlier post this Pasadena Realtor emphasized that we would soon be able to chart the course of the Pasadena Real Estate market by focusing in on one key factor….inventory. That number, indicating the quantity of Pasadena Homes for sale has been rising for the last few days, just as I predicted it would based upon this time of year. However we are not seeing any evidence of a corresponding rise in home sales.

Single Family Unit Sales Decline 50%, Median Price Falls 12%

March becomes the third successive month in which unit sales have declined at least 50%, dashing any hopes that in 2008 we would begin to see a reversal of falling sales and prices. We are also beginning to see a greater disparity between median sales prices than we noticed previously.

And to add insult to injury, it is taking about 1 1/2 times as long to sell those 50% fewer units with the days on market increasing form 83 to 125 days.

Pasadena Condominiums & Townhomes Mirror Single Family

The data indicates that no particular segment is performing any better or is immune to the overall health of the economy or the market. Sales prices were recorded from the high $200’s to the high $800’s. Rare in the sense that prices have dipped below $300.0 and also failed to reach $900.0, or higher.

Last year we were seeing quite a bit of interest in some of the new projects going up around town. As a consequence, the median price increased for several months which was the antithesis of the overall market. Now we are beginning to see some of these buildings offer new incentives to buyers as the developers invent creative solutions to deal with inventory that is not moving.

Tags: pasadena california real estate sales, pasadena housing market, pasadena real estate market, pasadena realtor

Rarely does home building generate much interest. It has become so commonplace, so routine. But then again, when has home building had anything exciting to really talk about?

The Pasadena Eco House has so many innovative new features and construction methods. The only thing noticeably absent is “traditional”. Many other industries are beginning to break the “traditional” cycle and search for new procedures and technologies which are more efficient and sustainable while being cost effective. However the housing industry has been slow to adapt.

Destined to become a catalyst for change, the Pasadena Eco House will surely alter the manner in which residential real estate is constructed.

Tags: green building, Pasadena a green city, Pasadena Eco House, Pasadena real estate