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orange county

Market Overview a monthly real estate report | May 2010

Favorable News For The Economy And Housing


Consumers turn positive have enough demand for housing to reignite a The withdrawal of government support is
housing boom. already impacting the housing market, with
The improved job outlook was accompanied by
mortgage interest rates beginning to fluctuate.
improvement in consumer attitudes: The housing market turns positive This may cause some home buyers to jump
• A March 2010 Move.com survey found that While there’s no question that pressure is still in before rates go much higher, or it could
one in five potential home buyers plan to buy intense from the distressed end of the housing temporarily cool the market. However, with an
a home in the near future, and 17% want to market – short sales, foreclosures and home improving economy, it’s unlikely that buyers
buy an investment home — three times the price declines – one benefit is undeniable. will be too deterred by higher interest rates in
investor interest of a year ago. the short term, knowing that housing prices
Homes are more affordable than they’ve been might also go higher.
• A Fannie Mae National Housing Survey in a decade.
conducted between December 2009 and The Mortgage Bankers Association has
January 2010 found that 65% of respondents The average household can afford more than predicted that mortgage rates will rise, possibly
believe it’s a good time to buy a house, and 70% of the homes that have been recently sold near 5.8% to 6.0% by the end of the year; but
nearly 31% say it’s a very good time. 44% say on the market. During the housing peak in the that’s not likely to impact sales. The Associated
they expect their personal financial situation mid-2000s, the typical household could afford Press Economy Survey of 44 leading national
to improve in the next year. only 40% of homes sold, says the NAHB. economists found that while sales prices will
• The National Association of REALTORS® lower in 2010 by a minuscule 0.1%, they’ll
According to the National Association of
Pending Sales Index was up 8.2% in February. rise 2.3% in 2011. It also predicted that home
Realtors’ Affordability Index, in 2009, a
Pending sales are calculated by the number of sales volume will rise in both 2010 and 2011,
median income family had 171.6% of the
signed purchase contracts. perhaps as new households start forming
income necessary to qualify for a mortgage on
again.
• The NAHB/Wells Fargo Housing Market a median-priced home, assuming a 20% down
Index rose four points in April, a significant payment and principal and interest totaling less Employment turns positive
improvement after six months of no than 25% of household income. At that time,
Because employment and housing are lagging
movement. the median existing-home price was $172,100
indicators in a recovery, April may have seemed
and the median income was $61,845.
• Building permits were up 34.1% in March worse than it actually was. For example, the
2010 from a year ago — the biggest annual The reason buyer interest is growing is that Bureau of Labor Statistics announced that
gain since February 1992. prices have fallen to pre-boom levels — and March 2010 showed the first rise in monthly
that has attracted the attention of renters. employment since December 2007, and
• Housing starts are up 1.6% to a seasonally
According to Move.com, nearly seven in ten revised earlier estimates to show that jobs were
adjusted annual rate of 626,000 units, and
renters (67%) plan to buy a home at some more stable than had been previously reported.
February housing starts were revised to
point in the future. But that cheerful news didn’t arrive until mid-
show a 1.1% increase, which was previously
April, while the nation was busy preparing its
reported as a 5.9% decline. This is the biggest It’s no coincidence that the home ownership tax returns. The upshot is that 162,000 non-
improvement in 17 months. rate is also 67%, a sustainable, practical number farm jobs were added in March, reversing an
The impact of consumer sentiment is critical for both sides of the market — home owners average 200,000 monthly loss in Q4 2009.
to metrics such as household formation. As and renters. (Editor’s note: About 48,000 of those jobs
the NAHB points out, “Household formations went to temporary census workers.)
slowed from a 20-year average annual growth Federal Reserve Chairman Ben Bernanke was
rate of 1.3% to less than 1% in 2008 and to cautiously optimistic enough to tell the Joint California Outlook
a post-World War II low of 0.34% in 2009.” Economic Committee of Congress in mid-
April that he believed consumer demand According to a joint report by the California
That means we’re about 1.2 million households Association of REALTORS® and DataQuick,
short of normal. If people return to the normal would be sufficient to replace the government
stimulus efforts of the past two years in keeping 230 out of 357 cities in California showed an
rate of household formation, we could actually increase in median home prices over a year ago.
the economy growing.
The state median price was up 20.8% year- Furthermore, only a few California cities are anticipated to be exhausted in the first
over-year, to $301,790. Unsold inventory is saw large price reductions in April 2010. 30 days of offering.
now strongly in the seller’s court, with only Of the top 50 cities in the U.S., Long
five months of supply on hand. Homes that Beach, California, had 23% of listings with Buyers: Don’t assume that waiting will get
sold were on the market a brief 39.2 days, reductions in April 2010, with an average you a lower price. With inventories at an
compared to 48.2 days a year ago. reduction of 10%. Los Angeles reported average five-month level or less, it’s not
20% of listings with reductions, with an likely the home you have your eye on will
Among other reasons for sellers to celebrate average 11% off the list price. Sacramento linger on the market very long. In some
is the fact that price reductions are halting. had 18% of listings with reductions, with price ranges, sellers are receiving multiple
At the end of April 2010, Trulia.com an average 10% off the list price. offers within days of putting their home on
announced that 20% of its listings have been the market. Make your best offer, and look
reduced in price, compared to 27% a year Others include Oakland (16%, 12% off forward to building your own equity.
ago. This represents a 26% improvement in list), Fresno (15%, 10% off list), San Diego
asking prices. (12%, 9% off list) and San Jose (12%, 7% Sellers: Do not anticipate the market
off list). by setting asking prices above recent
California metros were among the most comparables. Lending guidelines require
improved in holding the line on listing It’s a great time to buy a home. While no that sales comparables go back as far as a
prices. San Diego, for example, showed a one can predict the future, it does appear year, which may not reflect the current
52% improvement, from 25% of homes the market has stabilized. Mortgage interest seller’s market as much as you might like.
with price reductions in April 2009 to 12% rates, despite recent spiking, are still nearly While lenders have discretion, they don’t
in April 2010. San Francisco reported a three points below “normal.” Home prices want to take risks on rising prices without
45% improvement, from 30% of homes have turned the clock back to 2004 in many seeing several months of sustained price
with at least one price reduction to 17% of areas, and as national incentives are expiring, growth.
homes reduced in April 2010. Los Angeles California tax incentives will pick up
improved 40% year-over-year, from 33% through the end of the year. Note: California
of homes reduced in April 2009 to 20% of tax credits take effect immediately following
homes in April 2010. the conclusion of federal tax benefits, and

ORANGE COUNTY

Like other areas of Southern California, Orange County is in a blistering seller’s market in homes priced under
$1 million, but supply starts to build when prices rise above $3 million. However, upscale and unique homes
aren’t expected to sell at the same pace as more affordable homes. When upscale supplies approach two
years on hand or more, then the market is sluggish or stagnant.

*A balanced market is widely accepted as having six months of inventory on hand with market conditions favorable to both buyers and
sellers. A buyer’s market is characterized by conditions such as high inventories, falling prices, concessions by sellers, and incentives among
other indicators. A seller’s market has low inventories of homes for sale, escalating prices, and keen competition between buyers, including
multiple offers.
Detached homes stand alone and share no common walls with any other neighboring home. Attached homes share at least one common wall with
another home. The type of home ownership is determined by whether it is a condominium, townhome, duplex, co-operative or other.

Listings Sold by Calendar Quarter


All residential properties in SoCalMLS-Orange County
9 quarters List Price Range (Less than $1 million) through March 31, 2010
All Properties - Listings Sold by Calendar Quarter
9 Quarters through March 31, 2010
Average Sale Price (Thousands) Homes Sold

$600 10,000
Avg Sale Price Listings Sold Units
Orange County homes under $1 million gained 8.9%
$500
8,000
in price between Q1 2009 and Q1 2010, and are still
6,625 6,598
$400
5,565
6,026
6,865
6,000
12.5% below first quarter prices in 2008. Sales volume
6,377
$300
5,075 5,136
has tapered off for the same period, after skyrocketing
3,201 4,000 60.4% from two years ago.
$200

$410 $393 $429 $434 $428


$489 $476 $445 $412 2,000
$100
1-year avg. price trend: Up 8.9 % 1-year sales trend: Up 1.2 %
2-year avg. price trend: Down 12.5 % 2-year sales trend: Up 60.4 %

$0 0
2008/1 2008/2 2008/3 2008/4 2009/1 2009/2 2009/3 2009/4 2010/1

Based on data supplied by SoCalMLS / Orange County and its member Associations of REALTORS, who are not responsible for its accuracy.
Analysis dates are January 1, 2008 through March 31, 2010. Does not reflect all activity in the market place. Copyright © 2010, Real Data Strategies, Inc. All rights reserved.
Inventory in Months’ Supply – April 5, 2010
Detached properties in SoCalMLS-Orange County

Detached Properties - Inventory in Months


Under $300K 1.9
Detached homes are selling nearly as fast as they can
$300K - $399K 2.3
close in the affordable ranges. Only when prices rise
$400K - $499K 2.4
above $900K do supplies start to build toward a buyer’s
$500K - $599K 2.9
market.
$600K - $699K 3.2
$700K - $799K 3.8
$800K - $899K 4.0
$900K and over 8.6

0.0 2.0 4.0 6.0 8.0 10.0


Inventory in Months’ Supply – April 5, 2010
Attached properties in SoCalMLS-Orange County
Copyright © 2010, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.

Attached Properties - Inventory in Months

Under $300K 2.5


Attached homes are selling nearly as quickly as detached
$300K - $399K 2.6
properties, but supplies start to build once prices leave
$400K - $499K 2.9
the conforming loan ranges.
$500K - $599K 4.2
$600K - $699K 5.4
$700K - $799K 7.7
$800K - $899K 8.1
$900K and over 10.1

Pricing
0.0 Reality
2.0 – April
4.0 5, 2010
6.0 8.0 10.0 12.0
List prices per square foot by MLS status
Detached properties in SoCalMLS-Orange County
Copyright © 2010, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.

Detached Properties - Pricing Reality for Sellers, per square foot


Sellers should carefully consider current buyer
demand when pricing their home for sale.
ACTIVE $499 The gap between active listings prices per square foot
When list prices per square foot of Backup
and Pending status properties are below that
and that of closed sales underscores the heated seller’s
of Active properties, sellers should ask for
pricing counsel from their Agent.

BACKUP OFFERS $320 market in the affordable price ranges. Higher backup
offers suggest that sellers have pricing strength.
CLOSED SALE $332

HOLD DO NOT SHOW $306

PENDING SALE $300

Pricing Reality – April 5, 2010


List$0
prices$100 $200foot $300
per square by MLS $400
status $500 $600
Attached properties in SoCalMLS-Orange County

Copyright © 2010, Real Data Strategies, Inc. All rights reserved. Use is by license agreement only.

Attached Properties - Pricing Reality for Sellers, per square foot


Sellers should carefully consider current buyer
demand when pricing their home for sale.
ACTIVE $333
The gap between active attached home list prices and
When list prices per square foot of Backup
and Pending status properties are below that
of Active properties, sellers should ask for
solds is not as vast as that of detached homes, possibly
pricing counsel from their Agent.

BACKUP OFFERS $255 due to the greater availability of near-same comparables.

CLOSED SALE $264

HOLD DO NOT SHOW $246

PENDING SALE $235

$0 $100 $200 $300 $400 $500


Monthly Listings Taken and Absorbed
Detached properties in SoCalMLS-Orange County
12 months through March, 2010

Detached Properties - Monthly Listings Taken and Absorbed


12 Months through March 2010
3,000 2,500
New Listings Listings Absorbed 2,711
Detached home sales volume and inventory levels
2,500
2,000
2,100 2,095
reached their lows in December 2009. For the next
2,000 three months, new listings expanded 54%, along with
1,658 1,500
1,611 1,647
1,503 1,550 1,542
1,509
absorption rates up 48%.
1,500 1,406
1,237
1,000
1,000

500
500

0 0
2009/04 2009/05 2009/06 2009/07 2009/08 2009/09 2009/10 2009/11 2009/12 2010/01 2010/02 2010/03

New Listings 1503 1550 1611 1647 1542 1509 1658 1406 1237 2100 2095 2711
Listings Absorbed Monthly
1567 1527 Listings
1627 1553Taken
1618 and
1559 Absorbed
1423 1342 1158 1298 1569 2223

Attached properties in SoCalMLS-Orange County


12 months through March, 2010

Attached Properties - Monthly Listings Taken and Absorbed


12 Months through March 2010
1,800 1,800
New Listings Listings Absorbed 1,560
New listings of attached homes also hit bottom in
1,500 1,500
1,348
1,291 December 2009. Since then, sellers have released
1,200
1,071
1,200 46% more inventory to the market. Fortunately for
976 1,031
1,005
960 943 954 945 them, absorption rates are up 50% for the same
900 851 900
period.
600 600

300 300

0 0
2009/04 2009/05 2009/06 2009/07 2009/08 2009/09 2009/10 2009/11 2009/12 2010/01 2010/02 2010/03

New Listings 960 943 976 1031 954 1005 1071 945 851 1348 1291 1560
Listings Absorbed 966 916 1078 1052 1000 999 987 825 802 1046 1118 1586

Listings Sold by Calendar Quarter


Detached properties in SoCalMLS-Orange County
9 quarters through March 31, 2010
Detached Properties - Listings Sold by Calendar Quarter
9 Quarters through March 31, 2010
Average Sale Price (Thousands) Homes Sold

$900 6,000
Avg Sale Price Listings Sold Units
Detached home prices are up 18.9% in the year between
4,621

4,079
4,392
Q1 2009 and Q2 2010, flattening sales volume along
4,574
4,000
the way.
$600

4,061 4,272

3,301
3,308
2,279

$300
$682 2,000
$825 $758 $679 $632 $586 $629 $688 $697

1-year avg. price trend: Up 18.9 % 1-year sales trend: Up 0.2 %


2-year avg. price trend: Down 15.5 % 2-year sales trend: Up 45.2 %

$0 0
2008/1 2008/2 2008/3 2008/4 2009/1 2009/2 2009/3 2009/4 2010/1

Listings Sold by Calendar Quarter


Based on data supplied by SoCalMLS / Orange County and its member Associations of REALTORS, who are not responsible for its accuracy.
Analysis dates are January 1, 2008 through March 31, 2010. Does not reflect all activity in the market place. Copyright © 2010, Real Data Strategies, Inc. All rights reserved.
Attached properties in SoCalMLS-Orange County
9 quarters through March 31, 2010
Attached Properties - Listings Sold by Calendar Quarter
9 Quarters through March 31, 2010
Average Sale Price (Thousands) Homes Sold

$450 3,500
Avg Sale Price Listings Sold Units
$400
2,905 3,000
With prices up 11.1% between Q1 2009 and Q1 2010,
2,692 2,681
$350
2,410
2,500
attached home sales volume held its own – up 10.6%
2,190 2,635
for the same period.
$300

2,291
$250 2,000
2,072

$200
1,500
1,381
$150

$404 $396 $312 $293 1,000


$354 $309 $327 $329 $326
$100

1-year avg. price trend: Up 11.1 % 1-year sales trend: Up 10.6 % 500
$50
2-year avg. price trend: Down 19.4 % 2-year sales trend: Up 65.9 %

$0 0
2008/1 2008/2 2008/3 2008/4 2009/1 2009/2 2009/3 2009/4 2010/1

Based on data supplied by SoCalMLS / Orange County and its member Associations of REALTORS, who are not responsible for its accuracy.
©2009 PrudentialAnalysis
California Realty
dates are January 1, 2008Independently owned
through March 31, 2010. Does not reflectand operated.
all activity Objective
in the market place. data
Copyright © 2010, used
Real Data in this
Strategies, Inc. Allreport provided by Real Data Strategies. Inc. Our company’s mailing materials are printed on paper certified by the
rights reserved.

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