August, 2010

Flying on our Own!

With federal subsidies ended,
here's how we're doing

July 10 vs July 09:

Prices UP in 12 of 15 surveyed communities
# of closed sales UP in 12 of 15
Days on market DOWN in 13 of 15
Inventory UP in 12 of 15

Some economists predicted sales would fall off significantly in June and July when the federal tax credit ended. The federal tax credit required closing escrow by the end of May although there were some hardship extensions allowed. Locally, we're finding that the numbers of closed sales were up in July, prices were up and days on the market down.

Pending sales DOWN in 6 out of 8 areas July vs June

Our local numbers below show that June and July pending sale numbers declined in some local communities but remained strong in others. Pending were sales up in Alamo, Danville, Orinda, and stayed the same in Moraga comparing June, 2010, with July, 2010. Numbers were down in San Ramon, Lafayette, Pleasant Hill, and Walnut Creek. Traditionally, sales usually slow down in the summer and there is a bump up in the fall.

Pending Sales 2010

According to C.A.R. President Steve Goddard. “Although we expect sales to be lower in the second half of the year because of the absence of the government stimulus, they should remain above the long-run average and be significantly higher than the trough in 2007, when sales bottomed out. Although the tax credits are no longer available, it’s important to keep in mind that home prices are substantially below their peaks and interest rates remain at historic lows, making this a very affordable time for many first-time buyers to purchase a home of their own.”

*All numbers represent single-family detached homes as reported to CCAR MLS. There may be some inaccuracies.

One concern is that the inventory is also starting up in most communities (12 ot of 15). That continues to be good news for buyers, but prices will start to soften if inventory gets too high. Of course, interest rates have dropped to all-time lows, and many buyers can't resist the opportunity.

An interesting statistic is that the price mix has been changing locally. June's pending sales were focused below $1 Million. July's pendings showed fewer of those sales and more in the $1 Million and $2 Million range than previously. Lending in the upper price ranges has become somewhat easier to obtain and this may be a reflection of that.

Closed Sales Prices	Under $1M	$1 M+	$2M+
June Pending Sales	205	63	4
July Pending Sales	186	75	7

The bottom line though is what will be happening in the economy. As we go through August and then into the fall buying season, jobs are crucial to continued improvement in our local and national housing markets.

Helpful link:
BEYOND THE HEADLINES provided by the California Assn. of Realtors®, Aug. 5, 2010