In presentations over the past few months you’ve heard me predict that by year-end Temecula would likely meet or exceed their previous high-water mark for housing prices. Well, it didn’t quite take until year-end as Temecula established a new record average housing price in August! Previous peak price occurred in June of 2006 when their average price hit $575,935.
In August the average price of a Temecula home was $591,851 and their median price hiked north of ½ million as well to $510,000. Unless the market totally tanks over the next few months, Temecula will finish the year at a new record pace with an annual average price in excess of the $543,545 also set in 2006. 13 years to get back to what was lost in 18 months!
While our other cities have not yet climbed all the way out of the hole, prices continue to appreciate across the region, up 3% year over year and year to date with little sign of abatement anytime soon. Indeed, while many economists are calling for a recession of one magnitude or another as early as next year or the year after, experts at CoreLogic are forecasting accelerated price appreciation next year as increased demand fueled by near-record low interest rates, millennial demand and constrained inventory drive the market.
So, what was the driving force behind Temecula’s recovery?
Well, in general two things. Demand for lower tier homes remains strong as first-time buyers and investors look to take advantage of interest rates. Including condominiums, there are fewer than 40 homes available in Temecula under $400,000. Only 8% of available listings. Yet this is where demand is strongest with 82% of those homes selling last month.
At the same time there are 101 homes listed in excess of $1 million including two over $5,000,000. 12 $million+ homes sold in Temecula last month – just 12% of the available inventory. But those 12 sales, including 2 over $2 million, really impact average price and boost median as well. And remember, back in the market heyday, we were selling 20+ million dollar homes every month in the Wine Country, Glenoaks and De Luz.
We’ve still got room for the market to grow.
We also experience strong demand again in August besting last year’s sales volume by 9% (984/1,077). That puts us ahead of 2018 year-to-date performance by 1% (7,361 / 7,414). Keep in mind as I’ve been telling you, one of the reasons for lackluster existing home sales has been the increased production of new homes across our region. This year new home sales are estimated to account for nearly 13% of home sales in Riverside County, up from 8% last year. When taken together, overall home sales this year show significant strength with sustained growth in both sales and price appreciation.
Inventory remains constrained with a 17% drop from August of last year (2,828 / 2,353) leaving us with an average 2.2 months inventory considering an 85% adsorption rate. Properties are staying on the market around 25 days on average if I exclude Canyon Lake’s 66-day lead time. Last month they had several sales of homes that had been on the market for 100+ days including 2 in excess of 250 days and 1 at 382 days.
In 3 days, Sacramento will be out of our hair for a couple months while we attempt to deal with the aftermath of their overreaches from this session. And there are plenty.
Looks like we’ll be dealing with statewide rent control, (oops, pardon me, rent cap), a call for more housing construction while implementing prevailing wage, and increased incursions into local control forcing cities to adopt one-size fits none RHNA requirements, among other wonderful gifts.
We’re having some fun now, eh?