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:
1. Home sales activity for the Palos Verdes Peninsula and theSouth Bay actually increased compared to the prior year. On the Palos Verdes Peninsula, 117 condos, townhomes and single family residences were sold, compared to 87 for the first quarter of 2006 ( a 35% increase), however sales volume for the first quarter of 2007 decreased approx. 6% compared to the fourth quarter of 2006.. Although the length of time to sell a home has increased over the last 6 months, it is important to note that the sales inventory of homes, condos and townhomes as of 4/15/07, has actually decreased 8% from this time last year on the Palos Verdes Peninsula. There are strong indications that the market is “bottoming out”.
For the Beach Cities ….Manhattan Beach and Redondo Beach also had similar increases in sales for the 1st Quarter of 2007, compared to the comparable quarter in 2006, with 12% and 21% increases in sales volumes for the quarter, respectively.
2. Home Prices (average price per sq. ft. ) in Palos Verdes, sold during the 1st Quarter of 2007 showed a decrease compared to the prior year, decreasing 2.1% over the comparable period of 2006 (to an average price per sq. ft. of $571). Prices in other cities of the South Bay showed greater decreases over the comparable period last year, with decreases of 24% (Redondo Beach) to 4% (Manhattan/Hermosa Beach). Prices per sq. ft. for smaller properties have been relatively stable, and have actually increased for medium sized homes (1,500 – 2,500 sq.ft.), but have declined for larger properties. 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. Discounting? The discounting 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 approx. 80 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 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.
5. The market does appear to be stabilizing. 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.
Considering making a move? If you are thinking of selling, remember that the low interest rates attract buyers and they are cautiously returning to the market. We have a tremendous internet presence both locally and across the country. Don´t miss this very important sales tool. Most buyers begin there search on the internet today. I can also help you maximize your home´s best attributes for an optimal selling price and fewer days on the market. My website is filled with ideas to get your home ready, or it can be professionally staged. Now may be the best time for the foreseeable future to put your house on the market while rates are low and buyers are re-entering the market. In the future, interest rates may increase, possible tax reform measures are passed, or the market continues to cool. Want To Buy A Home or Investment Property? For buyers, this is an excellent time to be in the market. Sellers are more willing to negotiate price and interest rates have remained low. 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.
Are You Waiting For The Market To Cool? Any advantage obtained by waiting for hopefully for prices to decrease longer than a few months may be offset by increasing interest rates, which are once again near historically low levels