Wednesday, February 11, 2015
THE NUMBERS ARE IN FOR 2014--PRICES WERE UP, VOLUME DOWN--BUT DON'T EXPRECT THAT TREND TO CONTINUE IN 2015
The New Year, that is 2015, has started with a much
bigger bang than 2014 did. In
fact, it started to pick up at the end of 2014. The total number of sales for November, 2014 (condos,
single-family resale and new homes) totaled 15,643 for all of So Cal. (This
includes Ventura, LA, OC, San Bernardino, Riverside, and San Diego.) That number jumped an astonishing
amount to 19,205 for December 2014, a 22.8% jump. So you can imagine how anemic the numbers were all year as the total for Orange County for
2014 was 33,844, down 8.2% from 2013's total. That number was for all homes as stated above. The median price, meanwhile, hit
$585,000 and that was up 9.3% from 2013.
This completed two back to back years of fairly rapid appreciation
gains, and experts rightly predicted a heavy slowdown, which actually started
last winter, with appreciation steadily dropping all last year. There was a total of 20,496 single-family
resale, 9,166 condos sold and 4,182 new homes. This year already is showing strong signs of volume recovery
as interest rates promise to stay down...for now. But many buyers are getting the message loud and clear from
the Fed, that rates will probably rise sometime this summer. This is a strong motivating factor for
"fence sitters", who are waiting for that perfect time to buy. The perfect time to buy is when you are
financially and emotionally motivated, don't worry about the market, but in particular, inventory is
expected to strengthen this spring as more and more sellers are able and
willing to sell, having enjoyed two strong years of equity growth. You can expect to see our strongest
"move up" market in over 7 years as people who want to do something,
as well as those who have to do something, all enter the market.
FOREIGN BUYING POWER FOR HOMES HITS INTERESTING HICCUP
Most of us have read about or if you were selling a
higher end home, may have experienced, the foreign nationals who have been
snapping up properties in the US, particularly in So Cal, especially the
OC. Now listing inventory of the
higher priced homes are starting to pile up as these buyers grapple with the
stronger dollar. It is a
conundrum. On the one hand, their
money doesn't go nearly as far. On
the other hand, compared to many foreign currencies, the dollar is the safest
haven and hedge against inflation.
Even said, listing agents might be compelled to obtain price reductions
to move their high end properties. Be patient and be realistic are the watch words for this
market. Even with this being the
case, these off shore buyers will still bring competition to the high end.
AFFORDABILITY--A GLOBAL CHALLENGE
So read the headline of a recent OC Register
article. But there was a great
chart from Demographia that listed the top 10 cities with the least affordable
homes, in terms of the ration of an area's median home price to local median
household incomes, from a study of 86 cities. The good news is that greater OC isn't on the list, the bad
news LA is, but the good news is that at least it's #10. The cities you ask?: 1) Hong Kong 2) Vancouver, BC 3) Sydney 4) San Francisco
4) tied- San Jose 6)
Melbourne 7) London 8) San Diego 9) Auckland, New Zealand 10) Los Angeles
WHAT WERE THE ACTUAL NUMBERS FOR OC?
The last complete month is December2014 and the
numbers are: Total sales - 2,880, which is down 6.8% for the same month of
2013; The median price for all homes was - $591,000 which rose a mere 3.7% (much
more sustainable and will lead to a healthier market for 2015); The total
number of resale homes was 1,726, both price hikes and volume nearly flat at
less than 1% for both; Condos sold a total of 744 and the price was $390,000
volume down 4.2% and prices up 4.8%.
HOMEOWNERS'RISING EQUITY SHOULD CAUSE MARKET TO STABILIZE
Rising equity will always have a stabilizing
effect, because it allows all segments and price ranges in the market to make
independent decisions regarding their home, which ultimately cause more
interaction between price ranges and people move up or down in size and price
according to their need of growing family, empty nesters, and retirement. Equity is a very liberating quality in
homeowner economics. And although
credit standards tightened immensely after the recession, there are now
emerging more loan programs, the resurgence of some old programs and some
revamps even in government lending such as the lowering of the FHA mortgage
insurance by almost half a point.
On a median priced home, that can be over $200 a month or even
more. That increases a buyers,
"buying power", tremendously.
All who are looking to buy should speak with a lender to find out
exactly how much you qualify for...buyers may be surprised by their purchasing
powers. Sellers are also in a
great position. At last it would
seem we may be trending to a totally equitable market. It has been sometime. Surely the results will be an
encouraging factor in our economy for the year ahead.
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