Buyers: There's No Time Like Right Now

Real estate supply and demand goes in cycles, it always has. Sales are down, inventory is up past the 6 month level, but what else is happening? Interest rates are creeping up, and there are no predictions for any decreases by the Federal Reserve on the horizon. Don't be one of those people who, two years after the fact, comes back and wants something from today's market that's not around any more, i.e., more inventory to choose from, lower rates, or even a lower price. Did you know that so far this year, the median home price in Los Angeles County is higher than last year? In fact, it is in the top 10 areas of median price increases in the state. If you want more information about loans or real estate, contact me by phone or e-mail. See my site at www.juliahuntsman.com for more information or a property search that is updated throughout the day.

Long Beach

Inventory Decline This Month

The inventory in November for the greater Los Angeles/Long Beach area climbed to over 40,000 units, houses and condos combined--that was up from 27,000 in April 2006. This month has settled back down to about 30,000 units on the market. Buyers have more time to decide, which is good, because buying a new home is pressure enough--but with so much on the market at one time in some areas, buyers have mistaken it for a recession, instead of a more normal market time for most properties. 2007 is predicted to be the 4th best year for real estate, according to NAR, not the 19th, which is what some have been fearing. Try finding your home through my local MLS website search, which is updated throughout the day: www.juliahuntsman.com.

The Housing Market Slump

Long and short term mortgage rates went down last week on average of .5 point. When buyers understand they're getting more breaks on their rates, they'll decide now is a good time to act. More housing inventory has taken pressure off, but at some point, in the not-too-distant future, buyers will suddenly come alive and if they do it all at once, they may be wondering what happened to a certain property. The answer will be, somebody already bought it. Don't get fooled by the slow times, they won't last forever in a strong economy.

The Number of Pending Home Sales

... rose in August compared to July, 2006. This index is used by the National Association of Realtors to rate activity in sales. If there is an anticipated reduction in listings on the market, as this index might show, that may mean price stabilization in the near future. Demand gets closer to supply. Pending home sales usually close 30-60 days. September and October data will tell more of the story. See this website for more real estate information.

What Is The Current Time On Market

What’s the time on the market. A quick check in our local MLS for houses in 90803 (Long Beach near the coastline and adjacent neighborhoods) shows 117 single family residences at an average active list price of $1,444,122, with 25 in escrow: That means about 4.68 months inventory on the market for houses. Some people don’t think this shows an extraordinary supply vs. demand, although it certainly provides a much better opportunity for buyers to see what’s on the market and having some time to think it over before making an offer. With 76 condos (not including lofts or own-your-owns), on the other hand, at an average price of over $581,000, there is almost a 7 month supply in the same area. Still a great buy for buyers to be near the ocean in an area where a house would be unaffordable for them. Search properties at http://www.juliahuntsman.com.

Some Housing Update: Not All Pessimism

With the housing inventory on the market, it's not a time when buyers have to turn to FSBO's to find just the right house, contrary to the photo in the New York Times article. Buyers and sellers continue in a standoff while sellers are having to adjust to not being in total control as they have for the past few years. Though prices are basically holding, sales volume has decreased in most local zip codes, down by over 26% in 90803 compared to this time last year. Mortgage rates are still lower, while it may take the rest of the year to move the rest of this current inventory. This is definitely a good time for buyers, as they can now take adequate time to select their next home. See www.juliahuntsman.com for search for Long Beach and Orange County properties.

Housing Demand Keeps Prices Up

California has the second-highest increase in the number of housing units of any state last year, adding over 181,000 new dwellings. Yet house building sources and others say that California should be building 250,000 new units per year, and that we are not keeping up with the demand in this state. This demand will maintain the real estate for many years into this future in the west, due both to immigration from other states and other countries, and natural population growth.

Why the Housing Boom Will Stay

Harvard University's Joint Center for Housing Studies points out the main pillars of the housing market in its 2006 report, where downturns in the market will not outweigh the long term factors:

Several factors are at work.

Booming household growth. The nation will add 1.37 million new households this year. Part of this is natural population increase but this has also been bolstered by foreign migrants.

Graying boomers. As boomers have aged and prospered, they have begun to buy vacation or second homes in increasing numbers. This trend will widen as they near retirement.

Changing household composition. Social and cultural changes add to the number of households. There are more single-person households than in the past. Fewer adult children live with their parents; they establish their own homes. Increases in divorce rates result in the division of multi-person households into smaller ones. Family sizes have shrunk; a community may have about the same population but more households.

Minority gains. Ownership among formerly under-represented minorities has increased. Black and Latin home ownership has always trailed that of whites but the past 10 years has seen minorities making great progress.

What's a Seller To Do?

In a market where inventory is building up and sellers are waiting a little longer for an offer, it's time for sellers to think once again about the best improvements to make--and not to make--to get their homes sold. Pools, for the post-baby boomer generation, may not be the right improvement--geographic demand, location, lot size, and maintenance should all be considered. According to the National Association of Realtors, house siding, and kitchen and bathroom upgrades are among the top four best improvements for bringing the best return. Surprisingly, a home office did not bring as high a return on the investment. Regular maintenance is very important, as buyers will move more quickly on a home that does not have deferred issues. In a somewhat slower moving market, a return to standard preparation for home selling will obtain a better offer and a more satisfied buyer.