Local Market Conditions


February 2010

Our office meeting this week was jam packed with good real estate information presented by seasoned Realtor® and speaker Carole Rodoni. This dynamic woman shared information with zeal for almost two hours and we went away feeling energized about the market for 2010. Not to say that this year’s market will be anything like it was in 2006, but there are opportunities none-the-less.

INTEREST RATES

We are still experiencing record low interest rates for home purchases. Rumor out of Washington D. C. is Ben Bernanke, Chairman of the Federal Reserve System, is signaling fewer purchases by the Federal government of mortgage backed securities, which will put upward pressure on interest rates.

Carole thought we might see high 5% rates by the end of 2010. These rates will still be well below average. Price of T-Bills are expected to rise resulting in upward pressure on interest rates too. Sellers need to be aware of this as well, as fewer buyers will be able to qualify for home loans.

LENDING IN GENERAL

Lenders are constantly tightening their standards and Carol sees FHA changing as well, from 3.5% down to requiring 5% down, longer time frames to close - 45 to 60 days. Appraisals continue to be a concern, with fewer appraisers willing to call our current market one that has hit bottom and may be on the way back up. Appraisers can only look to the past, not what might be happening in the near future. Communication from your Realtor® is key.

LOCAL MARKET

We will continue to see a high percentage of “bank owned" and “short sale" homes selling over the next two to three years. The short sales will continue to be long and drawn out, but some asset management companies are becoming better organized. Still, buyers should be prepared for a response time of between 2 and 8 months, and in order to compete, need to be very strong financially.

We hear that a good percentage of banks may be withholding some of their inventory from the market in an attempt to keep prices stable.

The idea of Bank Owned and Short Sales being “Red Tag" Sales is a misconception. Bank owned properties are getting snapped up by investors. Buyers need to be prepared to compete, but even if they do have the cash to close quickly they may not win the bid.

We are still in a buyer’s market, but buyers need to be well informed to compete.
There are still “regular" transactions going on where there is not a distressed property issue. We are seeing some increased activity in the mid price ranges of 450 to 550.

High end homes have fallen significantly and are expected to fall a bit more. Buyers in this price range are going to dig in and wait until the price is where they feel comfortable for the current and future economic conditions.

ECONOMY IN GENERAL

The recession seems to be stable, as the GDP showed signs of improvement, even with high unemployment. Part of the unemployment loss is cut back on hours worked, so businesses will have to ramp up to above the current average 30-35 hours per week to over 40 before unemployment turns around.

The $8,000 tax credit will end April 30th with no expectation of that being renewed.

WE STAND READY TO ASSIST

With these uncertainties in the local market, it is increasingly important to use a Realtor® with knowledge and experience to guide you through the buying or selling process. We can send listings of your choosing to you as they hit the market, or answer questions you may have about the buying and selling process.

We have that experience and would be happy to sit down with you or anyone you know that has questions, and provide our best advise.

Contact us at info@TheSteinbeckTeam.com or by phone at either 800.591.5246 or 800.591.5250.

We look forward to hearing from you.

December 2009

The data we refer to comes from our local multiple listing service, and covers the area code of 93446. 

The residential market in the 93446 area saw more sales this year than last, and last year was more than 2007.  There were a total of 389 residential sales in 2007, 455 in 2008 and 472 in 2009. (Up to December 15, 2009).

Of these 11% were distressed properties (either bank owned or short sales), in 2007, 45% in 2008 and over 55% in 2009!

The sweet spot of the market is between $200k and $400k, where our median a few years ago was above $500k.  Quite a turnaround.

“Active” listings, those on the market waiting for an offer, show another story.  There are amazingly few REO (bank owned) and Short Sale listings when compared with the Sold stats.  Currently there are 172 homes on the market in 93446, with 9% REO and 13% attempting a short sale.  This shows that the velocity on these listings is strong, meaning that they do not stay on the market long without selling.  This is usually due to a good price point for the square footage of the homes offered.

We are carefully monitoring market conditions and are preparing for 2010 where we will likely see more distressed properties coming on the market. 

As a buyer, you can take advantage of this market by requesting that we set up a “client portal” which provides live free feeds from our system in whatever price range and detail you request.  There is no obligation for this service and you may opt out at any time.

If you know anyone who is experiencing difficulty in today’s market and would like to talk confidentially, we have the training and expertice to help.  Please give them our email or phone numbers.  It is almost always better to avoid foreclosure.  We can help with how.

 

June 2009 Market Condition Update

 Hi Everyone,

Here‘s another Market Condition Update for the residential real estate market in Northern San Luis Obispo County. We all know that real estate is a micro-market business. With these updates I’m trying to provide a snapshot of what is going on in our little piece of paradise. There are three parts to the real estate market; supply (the available homes), demand or velocity (the number of deals), and pricing or value. The relationship between supply and demand determines pricing. We also know from studying the last down turn in the early 90’s that velocity always leads the market.

Our annual spring time surge was not as robust as I would like to have seen but I am encouraged by the continued improvement in demand as we approach mid-year. We will have a better 2009 vs 2008 in sales as we slowly climb up from the fourth quarter 2007 velocity bottom. The big question is will the demand be enough to turn pricing in 2009. As the “In Escrow” ratio approaches 33% of the available homes we have witnessed a slight movement upward in the median price of the homes in escrow. This may be an indication that we have passed the absolute bottom of the pricing side of the market – where the demand is first generated - pending sales.  Like I said earlier, give me another 30 to 60 days of data before I call it! I’m inclined to think that pricing has bottomed. I have a specific day in mind. But I’m not quite ready to declare! If the supply side remains limited and demand remains strong, particularly with the fast competitive absorption of the foreclosed product, I believe we will continue in the current direction.  Those are big ifs – how much pent-up re-sale supply is waiting on the sideline for price improvement before entering the market?  How many more distressed sale/foreclosed properties are in the pipeline that will make it to market? Time will tell – stay tuned!

Thanks Again,  Fred Bruen

 
 
Today, 4/22/2009, the number of homes in escrow reached 260. This is significant in two ways: 1) it surpasses the previous two years maximum number of homes in escrow on any one given day and, 2) we've reached this number pretty early in the normal annual selling cycle. The previous years reached their maximum in mid to late May. So, if previous trends hold true, we should see even more homes going into escrow through at least the next 30 days and if demand remains as consistent as it did in the fall and winter of 2008, we should have a much improved sales year.
 
Although it's way to early to predict, pricing has nudged up a bit. This could be part of the normal annual pricing cycle; creeping up in the prime selling season, then falling back in the fall. If the demand holds up through this year, pricing may start pushing up more noticeably next spring.

-Fred Bruen, REALTOR
 
4/9/09  Market Condition Update

Hi Everyone,

 

Here‘s our second Market Condition Update for 2009. We all know that real estate is a micro-market business. With these updates I’m trying to provide a snapshot of what is going on with residential real estate in our little world here in Northern San Luis Obispo County. There are three parts to the real estate market; supply (the available homes), velocity or demand (the number of deals), and pricing or value. We also know from studying the last down turn in the early 90’s that velocity always leads the market.

 

The first quarter 2009 numbers are posted on my website at http:/MarketData.FredBruen.com  and I’ve included a re-cap of those numbers in this Market Condition Update. Please feel free to call or email me with any questions or for more information. And please forward this information on to anyone whom you think may be interested.

 

Thanks, Fred Bruen

 

1st Quarter 2009 Review

                                    # of Homes Sold                   Median Sale Price

 

1st Qtr 2008                147                                         $418,000

 

1st Qtr 2009                200                                         $341,600

 

Rate of Change         +36%                                      -18%

                                               

Average days on market from list to sold was 163 days in the first quarter of 2008 and has improved to 146 days for the first quarter of 2009.

 

1st Qtr 2009:   200 sales, median sale price $341,600, 88 of these (44%) were foreclosed properties with a median sale price of $275,000.

 

1st Qtr 2009: 419 new listings were posted with a median list price of $425,000, 115 of these new listings (27%) were foreclosed properties with a median list price of $294,000.

 

There’s now doubt that foreclosed properties are driving the market. Certainly this is not good news to those loosing their homes but it is creating activity and activity will bring more activity. The combination of low home prices and low interest rates is making homes available to folks who were previously priced out of the market and bringing investors back into the market.
Let me share some numbers with you all. I keep likin' what I'm seein'! 
 
 
On 3/17/2008 there were 1069 active residential listings, 177 or 16.6% were in escrow.
On 3/17/2009 there were 907 active residential listings, 225 or 24.8% are in escrow.
 
Less Supply, More Demand
 
The Low Points Looking at the In Escrow Ratio:
On 01/15/2008 there were 972 active residential listings, 98 or 9.2% were in escrow.
On 1/5/2009 there were 830 active residential listings, 181 or 21.8% are in escrow.
 
So the annual slow season for real estate, 4th into 1st quarters, for 08 into 09 has been
significantly strong compared to the '06-'07 and '07-'08 slow markets.
 
This strong market
has not been strong enough to increase prices.
 
The big question is "What does the In Escrow Ratio have to be to start putting upward
on pricing? We've been as high as 25.11% without any real change in pricing.
My guess - over 33% In Escrow Ratio just might turn the tide.......
 
I'm watching ... will let you know!
 
-Fred Bruen REALTOR
 

 

 

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