South Bay and Palos Verdes Peninsula 4th Quarter 2012 Real Estate Market Report
The current real estate market is dominated by the extremely low level of inventory of homes available for sale.This market is a “Perfect Storm” of factors that make now an amazing time to sell a home. These factors include record low interest rates for buyers, the lack of competitive properties for sale making for less competition to sell your home, and an improving economy. Sales prices are expected to be relatively stable over the near term, however there is some downside risk. There is a threat that Congress may limit certain real estate deductions such as mortgage interest or property taxes. In addition, when the economy improves and interest rates increase, this will also lead to pressure on home prices. All in all, I believe that now may be the best time to sell a property in the foreseeable future.
2012 Fourth Quarter Market Report Palos Verdes Peninsula and South Bay Single Family Homes
The real estate market sales activity for the Palos Verdes Peninsula continued to improve during the 4th quarter 2012, with overall sales volume up about 19% and the inventory of homes for sale down 39% compared to the fourth quarter 2011 sales, which is equal to only about 2 months of inventory. Pricing has started to increase, and buyers who can get financing are actively looking and aggressively offering where they see a deal. Sellers who are motivated to move are pricing their homes to sell. Buyers are taking advantage of significant discounts and continuing record low interest rates.
Properties, on average, on the Palos Verdes Peninsula are selling for approx. 94% of list price. The average price per sq. ft. for Palos Verdes homes sold in the fourth quarter 2012 of $491 compared to the fourth quarter 2011, increased approx. 9% overall, but varied city by city. Prices per sq. ft. are down approx. 18% on the Palos Verdes Peninsula from their peak in 2007 of approx. $600 per sq. ft.. Prices in the South Bay, however, have decreased much less than other areas in Southern California due to the relative few number of foreclosures compared to other inland areas. This market is now considered a stabile market by loan underwriters.
The total inventory of single family homes for sale in the cities listed above is down approx. 51% compared to the prior year, the sales activity is up 20%, and there is less than 2 months of inventory. For most of the last two decades, L.A. County has averaged an 8 month inventory. Homes in the lower end of the price range have also been selling faster than the higher priced homes. Average price per sq. ft. for homes sold in the 4th quarter 2012 for the cities listed above is up approx. 10% overall compared to the 4th quarter of 2011.
Interest rates for Conforming Loans ($417,000 and below) are at approx. 3.4%, a small increase over last quarter of 3.25%. Rates for 30 year loans between $417,000 and $625,500 (conforming jumbos) are approx. 3.625% , and 15 year loans are at approx. 3.0%.Conforming loans generally require a 20% down payment (less for FHA or VA loans). Interest rates on Jumbo 30 year fixed rate mortgages (loans in excess of $625,500) have an average rate of approx. 4.25%. All of these rates are still near record lows. The spread in interest rates between conforming loans and jumbo loans has narrowed considerably over the last year or so as more banks are participating in making jumbo loans. Jumbo loans require a higher down payment of 25 to 30%. All rates above are APR rates as of 1/17/2012, and assume a 20% down payment, no points and a FICO score of at least 740.
Fourth Quarter 2012 Market Analysis for Palos Verdes Peninsula Condos and Townhomes
The average price per sq. ft. for townhomes and condos on the Palos Verdes Peninsula has increased approx. 7% compared to the fourth quarter of last year, and averaged $316 per sq. ft. during the 4th quarter 2012. Average monthly price per sq. ft. appears to have stabilized over the last 4 months.
The inventory of condos and townhomes for sale of 30 units at the end of the 4th quarter of 2012 continues to fall dramatically from its peak in March 2011 of 91 units ( a 67% decrease) .Sales volume for the quarter was also 11% higher than last year, which has resulted in a reduction to only a 3 month inventory of condos and townhomes for sale based upon the average monthly sales over the last quarter.
For more detailed market information, go to the following page on my website: Market Reports