Ventura County Market Analysis
Our Ventura County Market is marching in a very new direction for 2013. Last year we saw home prices beginning to edge up and home inventories dry up. Concerns about the world- wide economy, our national economy, the presidential election, the “Fiscal Cliff” and even the end of the world Mayan Calendar have had everyone second guessing our local real estate market.
Apparently our world did not end and people are still buying and selling real estate. Who knew Mayans could be such practical jokers?
Prices are still low but they are moving upwards at what I predict will be an accelerating pace. There has been data analysis of our market by San Diego based “DataQuick” which stated the median county home prices rose by about 7.5% last year and roughly 16.7% in Los Angeles. The median home sale price in Ventura County rose from $335,000 to $360,000. (See Ventura County Star – 11/14/2012)
One of the interesting sidelights of this new market is that more expensive homes appear to be selling again as well. In Ventura County, 55 homes sold for more than $800,000 in the month of October – up 52.6 % from a year ago!
In January of 2012, we had 421 homes for sale in Oxnard and Port Hueneme. By December of 2012 we had 122 homes on the market! In Camarillo, we went from 198 homes to 71 homes on the market for the same time frame. We simply do not have enough homes for sale to meet local demand anymore. With demand high and supply low there can be only one outcome. Higher prices.
Frankly, the market in many ways resembles the market we had in 2002 – 2007. Any single family detached home in reasonable condition for under $400,000 has frequently been the target of multiple offers, bidding wars and sale prices exceeding listing prices. Once again, cash is king, since appraisals frequently come in low for these homes. That is a typical indicator of a market with significant price increases.
Buyers must make up the difference between sale price and appraisal with cash. Often, first time home buyers must stretch to reach the list price, so trying to find an additional $5,000 or $10,000 to close the deal is difficult. Investors typically are not affected since they usually pay cash regardless of any appraisal. They may not even order an appraisal. Investor groups are very popular for this reason. They simply roll over and crush any loan financed competition.
So what’s next? I predict home prices will continue upwards and trigger the renewed building of new home developments. Certainly, more folks will decide to list their homes as prices begin achieving the levels where they are no longer upside down on their loans. Some of these folks will finally be able to refinance out of their arm loans and into today’s market interest rates. A great deal of financial pain will be relieved for these home owners, allowing them to use their earnings for a broader range of consumer products and services.
As more people list their homes, the upward pressure on home prices may moderate from present levels as supply begins to catch up with demand. I think prices will continue upwards in the double digits from this year for at least the next several years before we see prices slow again. There is just too much pent up demand.
Short sales and foreclosures will be with us for at least a few more years but the number of these sales is a much smaller portion of total sales today than just 2 years ago when over 60% of all our sales were distressed sales. I believe they make up less than half of that number today, but I don’t have any hard data on them.
Short sales have one year left as an advantaged viable option for home sellers. Congress did renew the Mortgage Forgiveness Debt Relief Act for one more year. We are hoping that the State of California will do the same. (Additional conditions apply) This allows a homeowner to short sale their home, pay no commission for the sale of their home, ( the mortgage holding bank pays ) and no taxes on their capital gains mortgage debt. Personally, with rising home prices, I don’t expect to see this relief extended past this year.
Finally, interest rates may begin to see more upward movement before the end of 2013. As our economy continues to improve and more homes are built, I believe we will begin to see the beginnings of inflationary pressures on our local, and nationwide economies. That may signal the start of a more definitive increase in interest rates. I’m not an economist, but we have had several years of historically low interest rates and our market has responded. The Fed will soon have no reason to artificially hold rates down.
Competition for nicer homes will remain intense this year so buyers must have patience, be pre-approved and have the ability to make home buying decisions quickly. Putting off a home purchase for an extended time will probably be a costly decision.
For home sellers, the market is headed your way. Most folks should see prices high enough to list again in a much shorter period of time than they may have thought possible. Just remember if you delay in selling your home, the purchase of an equivalent home may cost more as well. Conversely, listing homes at wildly inflated prices may still cause them to sit while replacement homes increase in price. Neighborhood sold trends still are the best indicators of sales success when pricing your home.
We are in a time of transition now. I believe prices and interest rates will continue upwards this year and probably more quickly than most people expect. Home inventory will remain tight for most of this year until prices allow homeowners to refinance or list at a profit again. Home prices fell a long way over the last 5 or 6 years so this may take some time.
Mark Thorngren
Movewest Realty, Inc.
For more information you are welcome to visit http://realtytimes.com/REUv/MarkThorngren , or the blog tab of my website at www.markthorngren.com
