Many of the charts and graphs used in determining the direction of the Pasadena housing market (single family) include the basic measurements such as current inventory, days on market, and the number of homes sold. These indicators usually provide an “at a glance” view and direction of the current trends. I am going to look back on 2009 and include some other areas of analysis and see how the market progressed as it came out of hibernation in the early part of the year to recover and produce much better results that what most of us expected.

Median Price vs Average Price per Square Foot

During the first 5 months of 2009, the only thing more tentative than home sellers were home buyers. Coming off a disastrous 2008, many people who were considering buying or selling were hoping to test the market with either low ball offers or listing prices that did not reflect current market conditions. Real estate activity in late 2008 was soon to hit bottom.

That is why we see the average price per square foot go into a free fall during the January – May time period. It’s similar to an ocean liner trying to make a sharp left turn, which they can’t. They have to start the turn well in advance. The real estate market was no different. The changes taking place were happening faster than home buyers or sellers could fathom and as a result we saw steep declines occurring.

The first 5 month of 2009 saw the recreation of home prices in the $300,000 to low $400,000 price range. Most all of the action in the real estate market occurred at the low end, while the higher end homes sat idle. In the middle of the year, activity began to pick up in the higher end market as prices and the mix of homes tended to resemble more of a bell curve. As fall approached there was more evidence we were beginning to see normal activity return as listing prices peaked and inventory declined.

Homes for Sale and Price Reductions

A “Listing Absorbed” was a home that may have sold, or was taken off of the market. As the year progressed the number of “absorbed listings” increased as home sales picked up. Plus, during this time most of the inventory available for sale was being reduced. As the number of listings absorbed went higher , the reverse was true for the number of homes taking a price reduction. Market momentum picked up, therefore sellers were less aggressive on their pricing. Keep in mind however that these charts only measure properties that are for sale and typically represent the higher end of the market. As we start the new year, notice that these two measurements are in unison.

The “average price per square foot” has been fairly steady for about 8 months. Look for that trend to continue into 2010. The median price as well as the number of listings absorbed will periodically change to reflect monthly demands. Less volatility in 2010 would be a welcome change.

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