Ventura county Market Overview
a monthly real estate report | July 09
Housing Sales Are Climbing With affordability reaching unprecedented levels nationwide, including Southern California, housing sales are climbing. The National Association of REALTORS® (NAR) reported the largest jump in pending sales in nearly eight years, largely due to the $8,000 tax credit stimulus for first-time home buyers ( w w w. p r u d e n t i a l c a l . c o m > B u y e r s > $8000 Tax Credit) Existing home sales increased 2.9%, reversing a downward trend in March. The median home price dropped 15.4% from a year ago to $170,200 – the secondlargest yearly price decline on record. The cause for the dramatic plunge is the rise of foreclosures and short sales, which impacted as many as 45% of homes sold. Distressed homes swelled inventories, driving them to 10.2 months on hand, up from 9.6 months on hand in March. Mortgage interest rates have hovered near or below 5% for benchmark fixedrate loans for as long as five months, as home buyers took advantage of a trifecta of opportunities: low interest rates, high inventories, and low prices. First-time home buyers now make up nearly 50% of the market, up from an average of 30%. Southern California Housing Outlook Improves Southern California first-time home buyers were joined by investors buying bargain-priced properties, and the sales pace increased for the tenth consecutive month, according to MDA DataQuick. The percentage of absentee owners in the market, which has stood at 15% since 2000, suddenly jumped to 18.6% in April 2009.
For the seventh month in a row, Southern California foreclosures accounted for more than 50% of sales, bringing the median sales price down from the first quarter of 2009. Foreclosure sales were notably higher inland than along the coast, and builders added little inventory due to heavy competition from distressed homes. Another weight putting downward pressure on the median sales price is low sales volume in the luxury ranges. Inventories of homes priced above $900,000 — out of conforming loan range — are at an 18-month high, while many communities have less than two months’ inventory of homes priced under $300,000. “Jumbo” mortgages – those above $417,000 — are harder to get. Although conforming loans can be obtained up to $730,000, the relatively high cost of living in Southern California meant that only 10.9% of homes sold in April were purchased with jumbo loans. Before August 2007, when the credit malaise began, nearly 40% of Southland sales were in the jumbo range. Nonetheless, overall home prices across California increased 1.4%. The median price rose to $256,700. Home buyers should be delighted that despite rising prices, homes are still priced 36% below 2008 levels, according to the California Association of REALTORS®. Prices are rising on volume of sales, which is up almost 50% for the same period. The takeaway: buyers may find declining prices in some price ranges and accelerating prices in others. Tax credit update With five months left on the federal tax credit for first-time home buyers, the credit is expected to continue fueling entry-level home sales.
Mortgage interest rates still a bargain Ideal home buying conditions don’t last for long. Currently, home buyers enjoy tax benefits, low prices, generous selections and low mortgage interest rates — but it’s inevitable that one or more of these conditions will change. Mortgage interest rates are already beginning to climb, reaching 5.6% for the week ending June 11, 2009. That’s still well below a year ago, when they averaged 6.32% — so current rates should be more than attractive to home buyers, particularly in view of lower home prices and greater selection. Home buyers who are concerned about rate increases would do well to look at Freddie Mac’s historical table on benchmark mortgage interest rates. Between 1972 and 2008, mortgage interest rates have seen an annual high of 16.63% with 2.2 points and an annual low of 5.83% with 0.6 points. (Discount points are the percentage of the loan the lender charges to provide a given rate.) From a historical perspective, there has not been a single year since 1972 when interest rates have been lower than they are right now. And a rise in interest rates can be negated by lower home prices. Here’s why: if interest rates rise 1/8th of a point, that translates to about $25 or less a month in monthly payments on a conforming loan, and $9,000 over the full term of a 30-year loan. But if a home buyer pays $9,000 less for a home, these higher interest costs are negated. For example, if home prices have sunk by 15% over the past year, home buyers are paying $15,000 less, or $85,000, for a $100,000 home. They’re paying $60,000 less, or $340,000, for a $400,000 home. That 1/8th point rise in interest rates is negligible compared to the opportunity to buy a home at a 15% discount. (continued)
This explains why mortgage interest rates and home prices don’t always rise or fall in tandem — and if they do, it’s not for long. As home buyers rush to take advantage of mortgage interest rates and other stimuli, lenders reach their capacity to provide loans, and interest rates inevitably rise.
Advice to home buyers: be ready to make your move by prequalifying with your lender. If interest rates move up before you’ve locked in your rate, make sure you still qualify. To lock in your rate, you must be preapproved, which means you’ve shared your financial information with your lender.
Advice to home sellers: price it right the first time. With first-time home buyers dominating the market, a home in move-in condition will always sell faster than one that needs updating. If you have a higher-priced home, your home has to be in better condition and better priced than your competition.
VENTURA COUNTY The Ventura County housing market is still a tale of two markets. Homes in the conforming loan price ranges (up to $417,000) and jumbo conforming price ranges (up to $730,000) are in a fast-paced seller’s market with as little as 1.2 months of inventory on hand for homes priced under $300,000. Luxury homes priced above $900,000 are in a buyer’s market, at 13.6 months of inventory on hand as of June 3, 2009.
The following data refer to two types of homes. Detached homes have no shared walls. Attached homes have at least one shared wall, such as condos, duplexes, and high-rise apartments.
Detached Properties - Inventory in Months’ Supply
Single-family detached homes in the affordable ranges are selling at an astonishing rate, largely due to federal and state incentives. Ventura County is enjoying a brisk seller’s market. Only homes priced over $900K are at 13.5 months of inventory on hand, far less than many other Southern California communities in the same price range. Attached Properties - Inventory in Months’ Supply
Attached homes are also selling quickly in affordable price ranges, while lingering longer above the conforming loan price range of $730,000 and above.
Detached Listings Taken and Absorbed - 12 Months through May 2009 New Listings
2008/06
2008/07
2008/08
2008/09
Listings Absorbed
2008/10
2008/11
2008/12
2009/01
New detached home listings are on the rise in May 2009, outpacing listings absorbed.
2009/02 2009/03
2009/04
2009/05
Attached Listings Taken and Absorbed - 12 Months through May 2009 New Listings
2008/06
2008/07
2008/08
2008/09
Listings Absorbed
2008/10
2008/11
2008/12
2009/01
New listings in attached homes have outpaced absorbed listings since October 2008.
2009/02
2009/03
2009/04 2009/05
Detached Listings Sold by Quarter - 12 Months through March 31, 2009
Average Sale Price
2007/1
2007/2
Listings Sold Units
2007/3
2007/4
2008/1
2008/2
As of March 31, 2009, detached home sales volume in Ventura County is up 61% due to renewed affordability.
2008/3
2008/4
2009/1
Attached Listings Sold by Quarter - 12 Months through March 31, 2009 Average Sale Price Listings Sold Units
2008/06
2007/1
2008/07
2007/2
2008/08
2008/09
2007/3
2008/10
2007/4
2008/11
2008/12
2008/1
With greater inventories and lower prices in attached homes, sales volumes are up 28.1% as of March 31, 2009.
2009/01
2008/2
2009/02
2009/03
2008/3
2009/04
2009/05
2008/4
2009/1
List Prices per Square foot by MLS Status - Detached Properties
Sellers should carefully consider buyer demand when pricing their home. When list prices per square foot of backup and pending properties is below that of active properties, sellers should review pricing with their agent.
List Prices per Square foot by MLS Status - Attached Properties
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Š2009 Prudential California Realty Independently owned and operated. Objective data used in this report provided by Real Data Strategies. Inc. An independently owned and operated member of the Prudential Real Estate Affiliates, Inc. This is not intended as a solicitation if your property is currently listed with another broker.