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

The Pasadena real estate market may be getting a pulse. After sales declines of 50% for the last three months, sales continued to decline but unit sales were of by a mere 28%, compared to April ‘07. Compared to last month, unit sales increased from 38 to 51 units or 34%. Looking at some other key indicators such as days on market, it is still talking much longer to sell a house this year, which probably explains why homes are selling at a greater discount compared to their asking prices as evidenced by the percentage of sale price to list price.

According to Altos Research, there are 487 single family properties for sale in Pasadena, indicating a 9.5 months supply, very indicative of a buyers market.

Condo’s & Townhomes

Sales of condos and townhomes also decreased 14% compared to last year, but unit sales continued to decline by almost 50%. Compared to last month units increased from 25 to 31 and sales prices were down about 2% from $470,000 to $460,000. Last year we saw an increase in activity in new units which helped propel the median prices in this category. Now with the slower market, condos and townhomes are returning to median prices seen in 2006.

We are seeing some of the same characteristics as the single family market, mainly condos and townhomes are selling at a bigger discount to their listing prices. Altos Research reports that 289 condos & townhomes are available for sale. With 31 reported sales in April, a 9.3 months supply of inventory exists. If you would like the latest research information on the Pasadena real estate market, email me, indicating single family or condo.

A list of all the homes / townhomes that were sold in Pasadena, Altadena and South Pasadena for the month of April is available at up2daterealestate.

Note: We have modified our “days on market” with two numbers, (1) is days on market for the current listing period, (2) represents cummulative days on market indicating how long a property has been for sale. For instance, a property may have been for sale for 60 days and did not sell and was relisted with a new agent one week later. Numerically it would read 1/61.

Tags: pasadena housing market, Pasadena real estate, Pasadena Real Estate Agent

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

If the real estate market were on a fiscal year instead of a calendar year, the New Year would begin in March. With the onset of spring, the housing market has typically kicked into gear. We have recovered from the holidays, prioritized and set goals convincing ourselves that this year will be different. With the warmer weather approaching and the end of the school year, people are once again ready to shop for houses.

Or at least they used to be.

The Springtime Effect

I recently posted a graph depicting monthly sales in the Pasadena real estate market. It showed the seasonality in the market with sales peaking in the spring and summer months. Go as far back as 2002 and you get the same results. Set your watch. It was going to happen. Like clockwork.

Then came the spring of 2006 and interest slowly began to fade. The bull housing market began to loose its steam. It just wasn’t recognized as such. Maybe the market was just taking a breather. Housing slowed as the spread between adjustable rate loans and fixed rates began to move closer, eliminating affordability for many would be homeowners. No one expected such a swift and sudden stop. At this point, the housing market only had one strike against it. We weren’t prepared for the next two 95mph fastballs, known as the sub-prime crisis and the increasing rate of foreclosures. Both of which came in high and inside. Strike two, strike three.

Inventory Levels to Be Key

As you can see, people will take their property off the market at the end of they year as evidenced by the two dips in January. Listing inventory began to increase late January 2007. It is beginning to rise again and apparently earlier this year than last.
current Pasadena inventory levels (single family) as of 2/25/08

The rate of homes sold to current inventory will be a critical calculation and will determine the course of the market for the remainder of 2008.

If inventories begin to rise and we do not see a proportional rise in the number of homes sold, Sellers will be forced to take a more aggressive approach, putting more pressure on listng prices.

Currently in Pasadena we have approximately a 9 to 10 month supply of houses on the market for sale. If you are a home seller and that number continues to grow, be patient. The prospects for this year are not likely to be any better than 2007.

Tags: pasadena california real estate, pasadena housing market, Pasadena real estate

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

The one good thing about the 2007 Pasadena Housing market… it’s over!

Home sales for the month of December went out with a whimper as there were only 37 Single Family units sold compared to 81 in December of 2006, a decline of 54%. Median prices however stabilized and held firm at $775,000.

Pent up demand surfaced in December of 2006 and it was uncharacteristically a strong month for housing. It seems we had a late year end rally that continued into January and February of 2007. Then the news regarding sub-prime surfaced in March. I would expect January and February to also run behind last years numbers despite some very favorable interest rates, simply due to the strength of last years sales results.

Townhomes & Condominiums

Sales of Townhomes and Condominiums remained fairly flat in terms of units, however we did see the median price fall from $545,000 last year to $459,000 in December ‘07. This is a number that has seesawed back and forth this year.

Current Inventory Levels

Based upon these latest rates of sale, there is a tremendous amount of inventory on the market. Currently there is approximately a 10 month supply of Single Family homes for sale and almost an 8 month supply of Townhomes and Condo’s. These numbers are calculated based upon the absorption rate in our area. Anything over a 5 month supply is considered a Buyers Market.

Tags: pasadena december home sales, pasadena housing market

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

It is becoming apparent that we will soon know what the government’s response will be to the growing real estate mortgage crisis. In this upcoming election year, nobody wants to appear insensitive to homeowners possibly losing their homes, so many knee jerk reactions are being formulated. How will a plan of this magnitude even become close to being fair?

As you can see from the chart below, many adjustable rate mortgages are about to reset and foreclosures are expected to increase as these loans adjust to higher interest rates. Adjustable rate mortgages have been around a long time, and we have never experienced this amount of properties that are in some stage of foreclosure.

Why Are So Many Homeowner’s in Distress?

What haven’t been around a long time were subprime loans. The chart indicates the majority of these loans are the high risk loans which are about to increase. Plus the industry introduced new products such as the option arm allowing borrowers to make the smallest of monthly payments. So when you provide 100% financing to someone who has less than ideal credit, and then allow them to make the minimum of minimum payment’s you have the recipe for disaster. It’s like providing an all you can eat buffet at a weight watcher’s meeting!

Notice how subprime loans diminish as part of the overall lending portfolio. Someone finally said “Oh my God, What Have We Done?”

Tags: Foreclosure, mortgage crisis, Pasadena foreclosure, pasadena housing market, Pasadena real estate, subprime

In the current housing market the only segment that is showing any growth has to do with the foreclosure market. Looking as far back as 1990 in Los Angeles County, foreclosure activity peaked in the third quarter of 1996 and did not begin to level off until approximately one year later. The foreclosure market hit bottom in the third quarter of 2005, but since then has been steadily increasing. When home prices are rising at 15 - 20% per year the amount of foreclosure activity is almost nonexistent as increasing equity can offset rising debt.

What is Happening in Pasadena?

The chart below indicates the amount of monthly foreclosure activity. For the most part, the foreclosure filings have steadily been increasing for about a year now. The activity appears to have peaked in August, however the data could be about to change. The largest number of adjustable rate mortgages are set to reset in late 2007 to early 2008 with many of those being subprime.

Foreclosure Activity by Zip Code

Analyzing the activity in Pasadena, the greatest numbers are found in zip codes 91103 and 91104. Overall there are 259 properties that are in some stage of the foreclosure process. These consist of single family, condo/townhome, multi-family or commercial. The majority are single family homes followed by townhomes or condominiums. This represents approximately 95% of the foreclosure market.

The zip codes of 91103, 91104, 91106 and 91107 represent 90% of the current activity and you can see how the numbers are growing month by month. Also many homes are in the initial “preforeclosure” stage. This means that the homeowner has missed one to several payments and a notice of default has been filed. This period will allow a property owner an opportunity to correct the situation. Sometimes a home is sold or refinanced while it is in the default process. The important thing for someone to understand is that there are options available. Most lenders do not want to foreclose and take the property back. The worst thing someone can do is to ignore a dire situation and hope it goes away.

Tags: foreclosures, Pasadena foreclosures, pasadena housing market, Pasadena real estate