1. Sales activity in the real estate market for the Palos Verdes Peninsula and the South Bay continued to slow during the 4th quarter of 2006 compared to the prior year. For the Palos Verdes Peninsula, 125 condos, townhomes and single family residences were sold during the fourth quarter of 2006, compared to 141 for the fourth quarter of 2005 ( an 11% drop). Although the length of time to sell a home has increased over the last 6 months, the number of homes, condos and townhomes on the market on the Palos Verdes Peninsula has actually decreased 7% over the amount for sale this time last year. Manhattan Beach and Redondo Beach also had similar decreases in sales for 2006, compared to 2005, with 14% and 16% decreases in sales volumes, respectively.
2. Pricing of homes (average price per sq. ft. ) in Palos Verdes sold during the 4th quarter of 2006 continues to show increases compared to the prior year, increasing 2.7% over the comparable period of 2005 (to an average price per sq. ft. of $591). Prices in other cities of the South Bay showed greater increases over the comparable period last year, with increases of 5% (Redondo Beach) to 21% (Manhattan/Hermosa Beach) 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 increased slightly, averaging 2.5% to 3% below list prices, with lower priced homes having less discounting. Property is taking longer to sell, with the average days on the market for properties to sell, averaging 55 to 65 days, compared to 20 to 30 days during 2005.
4. Interest rates have risen slightly recently, but remain at very attractive levels. 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 stopped their increases to short term interest rates, therefore mortgage rates have been relatively stabile. 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. Current interest rate news can be viewed at my web blog..
5. The market does appear to be stabilizing. A Daily Breeze Business Section Article on 12/29/06 included the following headline: “EXISTING HOUSE SALES TURN AROUND: Signs of the home market’s comeback may tie in with the increased consumer confidence.” The article stated that “The better-than-expected showing for both new and existing home sales could be signaling that this year’s severe slide in housing is starting to bottom out analysts said.” Prices are expected to continue to move downward over the next few months, however “A lot of people who had been sitting on the sidelines are beginning to move back into a buying mode. . “.
Basically, the market has returned to a more “normal” real estate housing market, with general equilibrium between buyers and sellers. Certainly, compared to the super-heated market of 2005, things have cooled down considerably, however this market is not a bubble bursting or a market of plunging prices which some media reports would lead you to believe. As noted above, the market data simply does not support such reports, and most housing studies conducted by reputable sources, have reached the same conclusion.
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. 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 have remained low. It is a great time to be a buyer, as reasonable offers are receiving serious consideration by sellers, and the competition to buy the home of your dreams is back to a more normal market. 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 once again near historically low levels