I have prepared my elevator speech for the Pasadena housing market….”consistent”. There you have it, nothing fancy, and nothing dramatic, just a quick conveyance of an idea that succinctly sums up Pasadena home sales for the month of September. Consistent was derived by looking at the median price decline for the month, which just happens to be the same decline as we had in August.

Again, rather than insert a matrix of numbers and try to explain each segment of our real estate market you will recognize the graphic at the end of the paragraphs. All of the market data is now put into a PowerPoint presentation and delivered via a slideshow. To me, the synopsis is much easier to read and therefore easier to understand.

Allow me to elaborate on a couple of the highlights in September. Inventory (meaning homes and condos available for sale) is beginning to decline. The main emphasis for this has to do with seasonal occurrences rather than increasing home sales. We are not however seeing the monthly volume swings that we used to experience when the market was much more active. In last month’s report I had suggested that we would see a big increase in the number of homes (units) that were sold. We did, by almost a 3:2 ratio. That could easily continue for the next several months. The reason is that in the 4th quarter of 2007, home sales fell off the radar screen, so today’s increase is against last years poor performance. Units will increase, however the same will not be applicable to prices. October and November’s median price last year was $655,000 and $654,000 respectively. That elevator has a way’s to go before we see those kinds of prices again.

However the long journey begins with a short step!

Hit the “full screen” icon in the the above frame for easier viewing

Pasadena Homes - Sales Report by Month

Pasadena CA Real Estate August Sales Report

Pasadena Real Estate July Sales Report

Tags: Pasadena home sales, pasadena homes, pasadena houses, pasadena property, Pasadena real estate

Pasadena home sales for the month of July are still about 3-4 weeks away from being released on a national level. Expect a reversal in the continuing bad news that has plagued the housing market for the last year. Why the change? Is it from the expected passage of the
Housing Bill making its way through Congress? Have the number of foreclosed homes finally reached their peak and now are beginning to level off? Have home buyer’s come to recognize that the bottom is soon approaching and pent up demand will drive the market higher? Or have consumers just been inundated to death by articles and advertising campaigns stating that “now is a great time to buy a house” and it is finally beginning to pay off?

The answer is ….probably not

It would be great news and also provide a much needed boost to the housing sector if we could pinpoint the expected July turnaround to the proactive position taken by consumers and to a lesser extent, government intervention. But the underlying reason of the better news can only be attributed to one thing, and that is…. time.

It was July 2007, when we noticed a substantial drop in home sales activity. Although projected home sales for the month of July 2008 will be predictably in line with what we have seen so far this year, when compared against last year it will appear that the housing market has began to steady itself and that the worst news is now behind us. The outlook for the remainder of 2008 also appears to be favorable based upon the recorded home sales in the back half of ‘07. While the next few months may begin to appear more positive, its not much to get excited about. But then again it will be portrayed as a sign that the market is on track and that in itself will allay consumer skepticism. The perception will be perceived as a return to normalcy and as we all know, perception is reality, when in fact you know it as a false positive.

Tags: pasadena ca real estate, Pasadena home sales, pasadena housing market, pasadena market reports, Pasadena market update

When you hear the word “sensitive” the Pasadena real estate market is probably not the first thing that springs to mind. That being said, we are probably in the midst of the most sensitive housing market in years. Volatility will continue to reign, until time has a chance to cure the current ills.

If you are looking to buy a property, there is no more important factor than your interest rate.
It can make or break your deal. A slight change can end up costing you hundreds if not thousands of dollars over the life of your loan. The most closely watched barometer of the housing market, followed intently by home buyers and all but ignored by home sellers.

Why?

Because homes are priced based on comparative sales in the neighborhood with very little thought to economic conditions, with one exception as we will discuss in a following paragraph. On the other hand homes are purchased based upon affordability and qualification. Two factors that have maligned the mortgage industry of late, since borrowers are now being asked to document the file and prove their income.

The following graphs reflect the current status of the Pasadena California real estate market for single family homes as of last Friday, June 20.

Interest Rate Increase, Home Sales Decrease

Even though loan qualification is a much more stringent process these days, interest rates remain historically low. However when interest rates begin to rise what impact does this produce on home sales?

As you can see from the graph provided by Bankrate, over the last two and a half months interest have been steadily on the increase. Home buyers begin to recognize this and see the monthly mortgage payment consume more of the monthly budget. Instead of rushing out to lock in a loan, they choose to take a “wait and see” approach, in hopes of this just being a slight adjustment and thinking rates will soon fall to previous levels.

The Trickle Up Effect

When interest rates begin to move up, we see other leading indicators in the housing market begin to move in unison. Typically, inventory or unsold homes will increase as new homes become listed “for sale” and houses that have been “for sale” continue to increase their “days on market” or selling time due to the reduced activity of home buyers.

Now is when home sellers begin to pay attention to the economic indicators which is typified by how many days the house has been on the market for sale. The net result is the longer number of days it takes to sell a house produces a decline in property values.

One way to avoid being at the mercy of the housing market is to accept the fact that pricing your Pasadena home properly is critical to getting out of this market as quickly as possible. The longer you’re in it, the less likely your chances of winning.

Tags: interest rates, Pasadena home sales, pasadena housing market

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

Used to be if you studied the real estate market at all, you could predict when the best time would be to sell your property. During the boom years of 2000 to 2005 the selling season would typically get started in April and run through September. This defined the true Seller’s Market. Put your property up for sale and it was usually sold in 2-3 weeks, maybe for even more than the asking price. Buyer’s understood that they could not make unreasonable demands on the seller, the house was being sold “as is”. Someone was usually standing in line to replace them if they decided to exit or were forced to leave. There was a definite answer to the question “When is the best time to sell my home?” The last couple of years however have been different. Now it’s anybody’s guess as to whether or not the spring selling season will return.

Residential Sales Defined

The above chart recaps sales of residential units by month. Let me say that there were a couple of assumptions made. Sometime last year the i-Tech MLS (Pasadena) was combined with the MRMLS (Arcadia/Monrovia) which resulted in some duplication. Spot checks indicated about 10% of the results were reported twice, so adjustments were made. Secondly as I reported in the article about Pasadena real estate our primary source of information is the i-Tech MLS which covers the majority of sale transactions in the Pasadena area.

Now with that said and the formalities out of the way you can see that our real estate market peaked in August 2005. In 2005, there were approximately 1817 sales of residential units including single family homes, townhomes and condominiums. That number dropped to 1602 in 2006, a decline of almost 12%. Then last year it dropped to 1262 units, a 21% decline from 2006 levels. Now if there are 555 fewer homes being sold these last two years at a median home price of $575,000 that equals $319,125,000 in lost sales for 2007. That is serious money where I come from. From a tax perspective, the LA County transfer tax resulted in a loss of $3,510,000 and that is just for Pasadena. Now you begin to understand why Sacramento is in such a budget crisis. Well maybe we will never understand how Sacramento works, but we can provide some obvious explanations.

This Down Cycle Will Run Out of Steam

Periods of growth or decline define most business cycles. If the housing bull market ran for 5 years, the housing recession is not likely to work itself out in the next few months. The housing market needs some good news to help it back on its feet. Maybe gasoline at $2.00 a gallon would do it. It would sure help. If the hangover is preceded by the success and length of the party, then our head may hurt for a while. It was a great party.

Tags: pasadena california real estate, Pasadena home sales, pasadena housing market, pasaedna real estate

Sales of single family homes in Pasadena, California continue to fall behind last year, but for the first time the median sales price declined to $725,000 in November down 4% from last years median price of $754,950. As stated before, we do see median price fluctuations in real estate from month to month, but we haven’t seen median price declines in a year on year basis. Apparently this is the first in quite some time.

Sales of Townhomes and Condominiums also fell behind last November in terms of the units that were sold. There were 29 units sold compared to 45 last year, a decrease of 35%. Despite the greater decrease in unit sales (compared to single family), the median price of a townhome or condo actually increased to $550,000 up from $494,000

The market for townhomes and condominiums appears to be more resilient as properties are showing fewer days on market and selling slightly closer to their asking prices. Home Sales for the month of November are now posted.

Tags: Pasadena home sales, Pasadena home values, pasadena housing market, Pasadena real estate

Whatever is good for General Motors Starbucks, is good for the US economy.

I cannot think of any US companies that have been able to build a brand that has become so ubiquitous. And in the manner in which they have done it. Think about it. When was the last time you saw a Starbucks ad or flier in the newspaper offering a discounted price on a cup of coffee to get you into the store? What if Target or Best Buy could generate increased store traffic week after week without those fancy colorful 12 page Sunday circulars? It just can’t be done. The American economy is built on advertising and promotion. However, their strategy is to blanket an area with retail stores and forgo the advertising. Or at least it was.

Has Starbucks become the new American icon?

Here in Pasadena I count 9 freestanding Starbucks stores to only 3 McDonald’s. Some of the stores are so close you can walk from one to the other. However there may be storm clouds brewing. Starbucks introduced this week a national TV campaign and indicated that sales growth may be slipping. Other fast food competitors see the margin to be made in a $2.00 cup of coffee and who better to go after than the company that created it. Is the sale of a single cup of coffee impacted by competition or by the economy?

Has the Housing Market affected Starbucks?

A slowing housing market impacts many industries. It may not be felt immediately but over time its bound to catch up. Consumers have a choice to make in the morning. Spend $3.50 on a jumbo half caf, double down latte or buy a gallon of gas. Spend $4 for an extra espresso shot or buy a gallon of milk. There comes a point when external forces place too much financial pressure on the American consumer, then they step back and say UNCLE. No mas. Enough already.

Could this be the scenario in the housing market? Are consumer’s saying prices are too high, and homes are unaffordable? The price of money is fairly inexpensive and thereby the housing market should be much more bullish if past history would be any indication. Consumers may just be feeling uneasy about the economy and thereby avoiding a 30 year commitment in the form of a mortgage.

As we drift into unchartered water, consumer buying habits may become harder to predict. Gas prices previously flirted with $3.50 to $4.00 a gallon, but last time we had a housing market. Oh well, enough analysis for the evening. It’s getting late and if I am going to finish my other projects tonight, I need a cup of coffee.

Tags: Pasadena home sales, pasadena housing market