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Pasadena’s Housing Recovery
Now that 2009 is in the history books, I was curious to find out how our local real estate market performed compared to previous years. If I was ask to sum up this past year’s real estate market, the phrase that comes to mind would be “cautiously optimistic”.
Pasadena's Annual Number of Home Sales
The reason’s for the cautious optimism are numerous:
- Pasadena home sales have shown increasing monthly demand beginning in January of 2009, compared to the previous 12 months and for the most part on a month to month basis.
- Interest rates remain low, albeit with the help of government intervention, and
- Based upon our higher home values I don’t anticipate a slowdown in activity when the home buyer tax incentives expire in April.
The graph of Annual Pasadena Home Sales shows that the number of home sales were highest in 2005. Rates were low, mortgages were easy. As we went into 2006 the spread on adjustable rate mortgages began to widen decreasing affordability, plus prices were at their all time high. The middle of 2006 marked the beginning of the downfall as bank failures begin to appear and lending was changed forever.
The 2009 Housing Recovery
2009 was a year of marked improvement as the market for lower priced homes developed. Looking at the chart below, we see that homes priced below $200,000 comprised about 2-3% of overall home sales. This category was absent in the years from 2005 to 2008. Also homes priced up to $599,000 made up approximately 63% of the homes sold in Pasadena, a much higher percentage than in years past.
The area of weakness this past year was in homes priced over $1 million. This could be attributed primarily due to the less than favorable lending conditions in the first part of they year with regards to jumbo loans. Lower priced homes precipitated the action and recovery this year while step up and luxury homes were more active in the second half of ‘09.
The Future of Pasadena Home Prices
One thing I occasionally hear is a home seller may wait a couple of years before putting their house on the market in hopes of obtaining a higher price. I feel pretty confident in stating that we will never see the appreciation in home prices that we saw in the early to mid 2000’s. The free and easy monetary policy with regards to mortgage lending is gone forever and if not forever at least a long, long time. Secondly, home prices will remain steady due to supply $600,000, home ownership is still out of reach for many residents, insuring a balance in the real estate market.
I think in nature they call this the circle of life, or at least they did in The Lion King.
Percentage of Pasadena Home Sales by Price Category
