By Gene Wunderlich
\We’re still waiting for the onslaught of buyers that traditionally emerge this time of year. We appear to be building momentum gradually but certainly slower than in some past years. Single family sales have been on the increase generally since our January trough. Through the first half we’re running about 10% behind last year’s pace, which was not a barn burner itself. In fact this first half posted the lowest sales in the past 5 years – down about 17% from 2012. SFR sales in June were up 5% over May but still 4% under last June.
On a positive note, median prices continue to appreciate. As anticipated, the rate of appreciation has slowed considerably from last year’s 22+%, but we’re still up 5% over last June and up 15% 1st half to 1st half. Regionally our prices did dip from the previous month with declines in Temecula, Wildomar, Lake Elsinore and a significant drop in Canyon Lake. Again, keep in mind that with the volume of home sales in Canyon Lake, a single sale of $1 million+ can have a major impact on median pricing. Declines in the other cities were in the 2% – 3% range.
Inventory continues to climb with the 6 city inventory of available homes climbing over 2,000 for the first time since February of 2011, up another 8% from May. We’re holding at about a 3 month inventory of homes for the region which is still well off the 6-7 months considered a balanced market. Menifee and Wildomar sold more homes last month than they listed and both cities show inventory levels at just 2.3 months. In general, homes are staying on the market less time too. After hitting a peak of 71 days in March, homes stayed on the market just 57 days in June.
Standard sale homes make up 90% of our active listings and rose to 88% of sold homes in June, up from about 80% the first of the year. While some parts of the country are seeing increases in bank owned homes coming to market again, our region is not. Having added 33% to our median price since 2009 ($229,505/$342,122), we have far fewer homeowners underwater today than we did during the crash and those that have held on are in much less danger of losing their home.
The states that are seeing the biggest bump in REO’s are the judicial foreclosure states that were seriously overwhelmed for years and are finally starting to process the backlog. We still have anecdotal stories in the local market of homeowners living rent-free for 2 or 3 years or more, but they are increasingly rare. This isn’t to suggest that we’re completely out of the woods yet as our local market is still some 30% under the median price in 2006 ($489,311/$342,122). Foreclosure filings are up slightly in California after years of steady decline, but the increase is statistically insignificant at this point.
There are a lot of reasons why the market is stalled out, some of which I’ve gone into before, a few I’ll touch on in The Last Word. Suffice it to say if things continue this way, this will not be a stellar year for home sales in Southwest County, in California or across the nation. We may not, as some have predicted, slide into another housing recession but we are continuing in this transition phase which has been going on for the past 3-4 years.
If you talk to 5 different experts on the housing market today, you’ll wind up with at least 7 different opinions on where the market is headed all backed up with statistics and a PowerPoint presentation. It’s even more confusing trying to suss out the national market. There’s a reason we say all real estate is local – because each market is different and each locality is progressing out of this crash differently and at their own speed. Some markets haven’t started the climb yet and others, including California, are making decent progress. Trying to define the national housing market is a lot like trying to forecast tomorrow’s weather in Murrieta based on national trends, yet there’s no shortage of folks trying to do just that – and they get paid big bucks. I’m definitely doing something wrong.
Gene Wunderlich is the Government Affairs Director for Southwest Riverside County Association of Realtors. If you have questions on the market please contact me at GAD@srcar.org or to keep up with the latest legislative and real estate trends go to http://gadblog.srcar.org/