Are you trying to figure out the direction of the real estate market? In the Palos Verdes and South Bay real estate market we are in a transition. But to what? Here´s what's happening:
First, I would like to share some good news with you. I recently earned "Top Producer" for the month of February 2006 for the Malaga Cove office of Remax Palos Verdes Realty. Thanks to you, my friends and clients, for supporting me and making this possible!
1. Sales activity in the real estate market for the Palos Verdes Peninsula and the South Bay continued to slow during the 1st quarter of 2006 compared to the prior year.
For the Palos Verdes Peninsula, only 82 single family residences were sold during the first quarter of 2006, compared to 128 for the first quarter of 2005 ( a 36% drop) and 141 for last quarter. For the entire South Bay, sales activity dropped 24% compared to a year ago, with Manhattan Beach dropping only 15%.
For the entire South Bay, currently listed properties have an average number of days on the market of 40.4 days compared to a little over 54 days in December of last year. The number of homes on the market on the Palos Verdes Peninsula has increased only slightly during the 1st quarter of 2006.
2. Pricing of homes in Palos Verdes have moderated, increasing only 5.2% over the comparable period of 2005 (to an average price per sq. ft. of $586), and actually decreased in Redondo Beach, while still maintaining healthy increases over the first quarter of 2005 in the other cities of the South Bay. Detailed market reports for the Palos Verdes Peninsula and each city in the South Bay can be viewed at my website http://www.maureenmegowan.com
3. The discount from asking prices that homes are actually selling at has decreased slightly, averaging 2.5% below list prices, with lower priced homes having less discounting.
4. Interest rates have risen and fixed rates now look good to people at 6.1 to 6.5% depending on the loan. Homeowners are beginning to refinance again due to the huge number of variable rate loans out there coming to expiration. The Federal Reserve Bank has given indications that they may stop their increases to short term interest rates, therefore mortgage rates may stabilize at or near their current levels. Variable rate mortgages are not as attractive as they were 6 to 12 months ago. Lenders are also tightening their lending requirements, making it more difficult for buyers to secure such aggressive loans as 100% financing. Flexibility on loan terms, such as interest only payments, or fixed low payments with negative amortization are still available, however.
In summary, if you are thinking of selling, now may be the best time for the foreseeable future to put your house on the market before additional interest rate increases are implemented, possible tax reform measures are passed, or the market continues to cool. May and June are also excellent times to market your home while people look to relocate during the summer. Let me help you!
For buyers, this is also a good time to be in the market while sellers are willing to negotiate price and while interest rates are still low on a historical basis. For those waiting for the market to continue to cool, any advantage obtained by waiting hopefully for prices to decrease may be offset by increasing interest rates, which are still at historically low levels.