LA South Bay Real Estate Unsold Index (San Pedro to Inglewood)

A Sellers' market means that Buyers will have a tough time in getting concessions from sellers, Sellers will become more demanding and independent. A sellers market is a quite common and normal in the LA south Bay, and as such the conditions for a seller's market are require less inventory as than in other areas of the state or the nation. While an inventory of 6 months or less might be considered as a strong market elsewhere instead of two months we using here. That makes it easier to relate conditions here to other areas of the country. Based on the history of the South Bay Real Estate market a 6 month Inventory is quite rare here .The Bull Real Estate market 1996 -2005 was characterized by an Inventory of less than 2 months. We are now headed into that area as the number of listed homes is in decline, an unusual condition for the peak sales months. Based on less homes being added to the inventory and normal seasonal buying it is most likely to occur. Prices have not as yet broken through their normal monthly fluctuation trends but that very likely to change if current trends continue.
The Unsold Index is simply calculated by dividing the available homes by the number of homes sold. A two month Inventory as sold by the Unsold Index indicates that at the current rate of sales it will be 2 months if no new properties are listed it would take 2 months to completely deplete the inventory, of course that is unlikely to occur because there inevitably are going to be new properties put on the market
The current Unsold Index is at 2.52 months.
When the inventory gets this low we end up with a double problem low Inventory and low quality  inventory choices as inferior homes are making up the higher percentage of the inventory as more desirable ones are quickly bought up. We are going to be seeing more multiple offer situations and a pent up demand for housing which will result in home buyers being priced out of the market. This is where negotiating skills.
For Unsold Indexes for individual LA South Bay Cities please consult the next newsletter.

                             Best viewed with Microsoft Internet Explorer 

View the Graphs and Indicators

Summary of March's Data

March sold prices both Median Average prices were up over February's prices. The increase in home prices are part of the monthly price fluctuations experienced since  January 2009. 

Average prices came in $630,450 while Median Home prices came in at $407,500 The Unsold Index came in under 3.0 at 2.78 months an indication of a very hot market. This is now placing considerable pressure on prices to the upside and is expected to continue in the coming months due to the high sales volume months ahead and the total inventory on a downward trend. The Lower Unsold index is also being experienced statewide which will increase the likelihood that this trend will continue at least through the summer. The Unsold Index is one of the primary and time tested real estate indicators.

It is clear now that that prices have completed the bottoming prices and are now poised for the upside. The national economy will be main damper on increasing prices but that will also keep interest rates low. Chances of prices  going down from here is remote and ignoring the record low interest rates remains a mistake.

Affordability, our primary timing tool continues to show record high affordability numbers though it was down from the previous month.

Buyer sentiment reported last month looked very suspicious, on review an error in the program was found and was corrected (it was the computers fault not mine, ha, ha). Buyer sentiment or confidence is turning to the upside.

Price Momentum Rate of Change (price momentum strength) is showing a breakout to the upside.

The DOM (days on the market) improved in March's  to  89.19 days  compared to February's  94.04 days. That is still an negative indication, we are looking for a DOM less than 60 days for a strong market. At the market peak DOM was 44 days in comparison. January and February usually have seasonal drops in sales volume, that was the case in January and February of this year also however there is a trend over the last six years that is showing seasonality (time of the year) is becoming less of a factor. Sales volume is increasing as expected due to seasonality factors.

City price trends for Torrance, Redondo Beach, Manhattan Beach and San Pedro are shown at the bottom of this report with their deviations from the long term price trends. The data for Torrance and Manhattan Beach includes corresponding median home sizes which must be evaluated against the median price. In some months the median house prices went down but so did the corresponding home size, in other words home prices were down because people were buying smaller houses. 

The following conditions are supporting a market bottom and are reasons to buy now.

1 – The LA County Foreclosures charts are indicating a peak in foreclosures a very reliable indicator, if sustained it will provide additional confirmation of the bottom of the market. The number of new foreclosure properties currently listed for sale in the entire South Bay as of today is relatively low and more prevalent in the lower price ranges. The number of annual foreclosures have peaked.
2 -The Affordability chart shows that the affordability in January 2012 was at the highest (best) since before November 2002. From August 2007 to Jan. 2012 affordability has increased Approximately 63 %. This indicator is the most important indicator if you are looking to get in to the market because it is a measure of how much you can buy for your money. Interest rates are now at historical lows.
3 – Properties are being absorbed in the outside areas at discounted prices as conditions are continuing to improve, see the chart below (see Murietta)
4 – Interest rates are at all time lows, Government buying of Treasury securities is forcing interest rates artificially down again, when the Federal Reserve's action ends rates or the economy starts to improve rates will be going up. Interest rates are now on the way up.
5 – High Inflation is very likely to occur within the next 2 years (See the 10 year Treasury Yield curve below), All asset classes such as real estate will increase when that occurs. The Federal reserve has made the decision to print more money which may result in possibly runaway inflation and to force interest rates down.
6- Most economists agree that the national recession is over buying confidence should eventually increase fueling the buying crowd. Home Buyer confidence is currently trending down.

Here are the reasons to wait: for a better buying time

1 – Low confidence in the national economy and increased unemployment, higher income taxation and or negative personal income trends locally may drive down prices and/or Mortgage rates. A double dip recession remains a possibility.
2 – Low number of sales may be an issue again, if that happens the U.I. (Unsold Index) will increase resulting in a large supply of homes on the market causing prices to go down provided inventory does not decrease.
3 – Interest rates may go down or additional buying incentive programs may be offered further improving affordability for more buyers to buy. Interest rates are currently on an up trend. This can happen if the national economy worsens.
4 – Interest rates may go up higher as economy improves forcing prices down to a better buying price opportunity if sales volume also drops. Watch the sold data in April 2012 and beyond.
5 – Fear of a double dip recession may hold down buying activity resulting in lower home prices in the future. Consumer confidence is decreasing.
6 – Deterioration of the Mortgage Interest rate deduction may deter potential home buying. 7 – 2012 is an Election Year, uncertainty may have a negative impact as more buyers wait it out.

Remember to read the comments to the right of each chart below. Click on the graphs to enlarge.

Forecast

Home prices remain in a bottoming process in the LA South Bay, however due to monthly price fluctuations the consolidation pattern or channel it can be penetrated by an improvement in the national economy to the upside or a lack in buyer confidence to the down side. The impact of the weak current national economy, lack of personal earning growth and related credit issues will continue to put a negative drag on prices and the recovery in the local real estate market, however we remain in one of the strongest markets in the nation and local supply and demand of available homes will have a larger impact.

Application

In the summer of 2005 prices peaked for one month and the price trend started to level off. That was the start of a high risk time period a market down turn was fore-casted. The Market Sentiment peaked at that time and started going down confirming the price peak. The sales volume also peaked and started going down. The Unsold Index was moving into the Buyers market zone. All this was forecasting a change in the market and an end to upward price momentum. Prices were relatively flat from the price peak in the summer of 2005 to the January 2007.Another price peak occurred which was an unconfirmed price peak, at a time which did not justify the continued higher prices. Most of the South Bay Home price decline occurred after the summer of 2008. The purpose of this newsletter is determine risk levels when deciding to buy or sell real estate. At present a moderate risk buy signal from March 2009 remains in effect. 

Current Recommended Action – Low Risk, Buyers' in control market exists in most South Bay Cities but with a seller bias. The Risk score For March 2012 = 4/10, (based on 10 of the indicators)10 is the highest risk, 1 is the lowest risk.

View all the Indicators

March 24, 2012 (Based on Feb. 2012 sold data)

Volume 9, Issue 3

  Written and Created by Barry Brickel J.D.  

             Keller Williams Realty              

LAsouthbayRealEstate.com

                             Best viewed with Microsoft Internet Explorer 

View the Graphs and Indicators

Summary of February's Data

February 2012 Median home prices moved back toward the flat trend area experienced since January 2009. Average prices continued to remain stable and are above their fluctuation flat range, also since January 2009. January and February are traditionally the weakest months of the year in terms of the number of units sold which (see the sales volume chart below) and is  usually significantly lower than the other months. Stronger prices should be reflected in the March sales results The improving national economy  has put additional pressure on Interest rates to rise, waiting for prices to go down from here while ignoring the record low interest rates remains a mistake.

Mortgage rates continue to be the main driving force in this South Bay real estate market which is benefiting from the weak real estate market nationwide. Our primary timing tool continues to show record high affordability numbers. Prices have been very stable for the past three years. 

Buyer sentiment shot up in February, at this point we will consider that as an abnomaly.

The Unsold Index has decreased in February to 3.68 months., this was the result of

the lower Total Inventory. When the Unsold Index number gets to 3.0 prices will start moving up. The frantic real estate from 1996 to 2005 occurred when the Unsold Index fell below  2.0 months, that was a very unusual occurrence. An Unsold Index in the 3.0 month range indicates a very strong real estate market. The Unsold Index is one of the primary and time tested real estate indicators. There was not a surge in new Inventory in January which normally occurs, in fact the total inventory continued to go down in February. Even with the average number of monthly sales the Unsold Index will be going down. The expected result in a lower Unsold Index will be very positive.

The DOM (days on the market) increased in February's  to  94.04 days  compared to January's  89.30 days. That is a negative indication, we are looking for a DOM less than 60 days for a strong market. At the market peak DOM was 44 days in comparison.

January and February usually have seasonal drops in sales volume, that was the case in January and february of this year also however there is a trend over the last six years that is showing seasonality (time of the year) is becoming less of a factor.

City price trends for Torrance, Redondo Beach, Manhattan Beach and San Pedro are shown at the bottom of this report with their deviations from the long term price trends. The data for Torrance and Manhattan Beach includes corresponding median home sizes which must be evaluated against the median price. In some months the median house prices went down but so did the corresponding home size, in other words home prices were down because people were buying smaller houses. 

The following conditions are supporting a market bottom and are reasons to buy now.

1 – The LA County Foreclosures charts are indicating a peak in foreclosures a very reliable indicator, if sustained it will provide additional confirmation of the bottom of the market. The number of new foreclosure properties currently listed for sale in the entire South Bay as of today is relatively low and more prevalent in the lower price ranges. The number of annual foreclosures have peaked. 
2 -The Affordability chart shows that the affordability in January 2012 was at the highest (best) since before November 2002. From August 2007 to Jan. 2012 affordability has increased Approximately 63 %. This indicator is the most important indicator if you are looking to get in to the market because it is a measure of how much you can buy for your money. Interest rates are now at historical lows.
3 – Properties are being absorbed in the outside areas at discounted prices as conditions are continuing to improve, see the chart below (see Murietta)
4 – Interest rates are at all time lows, Government buying of Treasury securities is forcing interest rates artificially down again, when the Federal Reserve's action ends rates or the economy starts to improve rates will be going up. Interest rates are now on the way up.
5 – High Inflation is very likely to occur within the next 2 years (See the 10 year Treasury Yield curve below), All asset classes such as real estate will increase when that occurs. The Federal reserve has made the decision to print more money which may result in possibly runaway inflation and to force interest rates down.
6- Most economists agree that the national recession is over buying confidence should eventually increase fueling the buying crowd. Home Buyer confidence is currently trending down.

Here are the reasons to wait: for a better buying time

1 – Low confidence in the national economy and increased unemployment, higher income taxation and or negative personal income trends locally may drive down prices and/or Mortgage rates. A double dip recession remains a possibility.
2 – Low number of sales may be an issue again, if that happens the U.I. (Unsold Index) will increase resulting in a large supply of homes on the market causing prices to go down provided inventory does not decrease.
3 – Interest rates may go down or additional buying incentive programs may be offered further improving affordability for more buyers to buy. Interest rates are currently on an up trend.
4 – Interest rates may go up higher as economy improves forcing prices down to a better buying price opportunity if sales volume also drops. Watch the sold data in March 2011 and beyond.
5 – Fear of a double dip recession may hold down buying activity resulting in lower home prices in the future. Consumer confidence is decreasing.
6 – Deterioration of the Mortgage Interest rate deduction may deter potential home buyers                                                             7- 2012 is an Election Year, which will impact the climate of the economy

Remember to read the comments to the right of each chart below. Click on the graphs to enlarge.

Forecast

Home prices remain in a bottoming process in the LA South Bay, however due to monthly price fluctuations the consolidation pattern or channel it can be penetrated by an improvement in the national economy to the upside or a lack in buyer confidence to the down side. The impact of the weak current national economy, lack of personal earning growth and related credit issues will continue to put a negative drag on prices and the recovery in the local real estate market, however we remain in one of the strongest markets in the nation and local supply and demand of available homes will have a larger impact.

Application

In the summer of 2005 prices peaked for one month and the price trend started to level off. That was the start of a high risk time period a market down turn was fore-casted. The Market Sentiment peaked at that time and started going down confirming the price peak. The sales volume also peaked and started going down. The Unsold Index was moving into the Buyers market zone. All this was forecasting a change in the market and an end to upward price momentum. Prices were relatively flat from the price peak in the summer of 2005 to the January 2007.Another price peak occurred which was an unconfirmed price peak, at a time which did not justify the continued higher prices. Most of the South Bay Home price decline occurred after the summer of 2008. The purpose of this newsletter is determine risk levels when deciding to buy or sell real estate. At present a moderate risk buy signal from March 2009 remains in effect. 

Current Recommended Action – Low Risk, Buyers' in control market exists in most South Bay Cities but with a seller bias. The Risk score For February 2012 = 1/10, (based on 10 of the indicators)10 is the highest risk, 1 is the lowest risk. 

View all the Graphs and Indicators

Volume 9, Issue 2

  Written and Created by Barry Brickel J.D.  

             Keller Williams Realty                 

LAsouthbayRealEstate.com

                             Best viewed with Microsoft Internet Explorer     

                      View the Graphs and Indicators

Summary of January's Data

In January 2012 Median home prices dropped more than expected. Average prices continued to remain stable. January and February are traditionally the weakest months of the year in terms of the number of units sold which is  usually significantly lower than the other months. The drop in median prices  may be explained  as a  result of less homes selling in the month providing more volatility (fluctuation in prices). Stronger prices should be reflected in the March sales results, with the economy arguably improving additional pressure will be put on Interest rates to rise, waiting for prices to go down from here while ignoring the record low interest rates remains a mistake.

Mortgage rates continue to be the main driving force in this South Bay real estate market which is benefiting from the weak real estate market nationwide. Our Primary timing tool continues to show record high affordability numbers. Prices have been very stable for the past three years. 

The Unsold Index has increased in January to 4.18 months., this was the result of the lower number of seasonal sales as discussed above when this number gets to 3.0 prices will start moving up. The frantic real estate from 1996 to 2005 occurred when the Unsold Index went below  2.0 months. An Unsold Index in the 3 month range indicates a very strong real estate market. The Unsold Index is one of the primary and time tested real estate indicators. There was not a surge in new Inventory in January which normally occurs in fact the total inventory went down. Even the average number of monthly sales is going to result in a lower Unsold Index which will be very positive.

The DOM (days on the market) decreased in January  to  89.30 days  compared to December's 96.42 days. That is a negative indication we are looking for a DOM less than 60 days for a strong market. At the market peak DOM was 44 days in comparison.

January and February usually have seasonal drops in sales volume, that was the case in January. There is a trend over the last five years that is showing seasonality (time of the year) in  is becoming less of a factor, we still need to look at January's and February's data to determine if it is true this time.

City price trends for Torrance, Redondo Beach, Manhattan Beach and San Pedro are shown at the bottom of this report with their deviations from the long term price trends. The data for Torrance and Manhattan Beach includes corresponding median home sizes which must be evaluated against the median price. In some months the median house prices went down but so did the corresponding home size, in other words home prices were down because people were buying smaller houses. 

The following conditions are supporting a market bottom and are reasons to buy now.

1 – The LA County Foreclosures charts are indicating a peak in foreclosures a very reliable indicator, if sustained it will provide additional confirmation of the bottom of the market. The number of new foreclosure properties currently listed for sale in the entire South Bay as of today is relatively low and more prevalent in the lower price ranges. The number of annual foreclosures have peaked.
2 -The Affordability chart shows that the affordability in January 2012 was at the highest (best) since before November 2002. From August 2007 to Jan. 2012 affordability has increased Approximately 63 %. This indicator is the most important indicator if you are looking to get in to the market because it is a measure of how much you can buy for your money. Interest rates are now at historical lows.
3 – Properties are being absorbed in the outside areas at discounted prices as conditions are continuing to improve, see the chart below (see Murietta)
4 – Interest rates are at all time lows, Government buying of Treasury securities is forcing interest rates artificially down again, when the Federal Reserve's action ends rates or the economy starts to improve rates will be going up. Interest rates are now on the way up.
5 – High Inflation is very likely to occur within the next 2 years (See the 10 year Treasury Yield curve below), All asset classes such as real estate will increase when that occurs. The Federal reserve has made the decision to print more money which may result in possibly runaway inflation and to force interest rates down.
6- Most economists agree that the national recession is over buying confidence should eventually increase fueling the buying crowd. Home Buyer confidence is currently trending down.

Here are the reasons to wait: for a better buying time

1 – Low confidence in the national economy and increased unemployment, higher income taxation and or negative personal income trends locally may drive down prices and/or Mortgage rates. A double dip recession remains a possibility.
2 – Low number of sales may be an issue again, if that happens the U.I. (Unsold Index) will increase resulting in a large supply of homes on the market causing prices to go down provided inventory does not decrease.
3 – Interest rates may go down or additional buying incentive programs may be offered further improving affordability for more buyers to buy. Interest rates are currently on an up trend.
4 – Interest rates may go up higher as economy improves forcing prices down to a better buying price opportunity if sales volume also drops. Watch the sold data in March 2011 and beyond.
5 – Fear of a double dip recession may hold down buying activity resulting in lower home prices in the future. Consumer confidence is decreasing.
6 – Deterioration of the Mortgage Interest rate deduction may deter potential home buyers                                                             7- 2012 is an Election Year, which will impact the climate of the economy

Remember to read the comments to the right of each chart below. Click on the graphs to enlarge.

Forecast

Home prices remain in a bottoming process in the LA South Bay, however due to monthly price fluctuations the consolidation pattern or channel it can be penetrated by an improvement in the national economy to the upside or a lack in buyer confidence to the down side. The impact of the weak current national economy, lack of personal earning growth and related credit issues will continue to put a negative drag on prices and the recovery in the local real estate market, however we remain in one of the strongest markets in the nation and local supply and demand of available homes will have a larger impact.

Application

In the summer of 2005 prices peaked for one month and the price trend started to level off. That was the start of a high risk time period a market down turn was fore-casted. The Market Sentiment peaked at that time and started going down confirming the price peak. The sales volume also peaked and started going down. The Unsold Index was moving into the Buyers market zone. All this was forecasting a change in the market and an end to upward price momentum. Prices were relatively flat from the price peak in the summer of 2005 to the January 2007.Another price peak occurred which was an unconfirmed price peak, at a time which did not justify the continued higher prices. Most of the South Bay Home price decline occurred after the summer of 2008. The purpose of this newsletter is determine risk levels when deciding to buy or sell real estate. At present a moderate risk buy signal from March 2009 remains in effect. 

Current Recommended Action – Low Risk, Buyers' in control market exists in most South Bay Cities but with a seller bias. The Risk level of lower prices now at 5/10, (based on 10 of the indicators)10 is the highest risk, 1 is the lowest risk.

To view all the graphs please click the link below:

 View the Graphs and Indicators

Summary of December's Data

Mortgage rates continue to be the main driving force in this South Bay real estate market which is benefiting from the weak real estate market nationwide. Our Primary timing tool continues to show high affordability numbers. Prices have been very stable for the past three years. Waiting for prices to go down from here while ignoring the record low interest rates is a mistake.

The Unsold Index has drop in December to 3.3 months. when this number gets to 3.0 prices will start moving up. The frantic real estate from 1996 to 2005 occurred when the Unsold Index went below  2.0 months. An Unsold Index in the 3 month range indicates a very strong real estate market. The Unsold index is one of the primary and time tested real estate indicators. This could change in the other direction if there is a surge of new inventory in January 2012.

The DOM (days on the market) increased in December  to 96.42 days  compared to Novembers' 87.10 days. That is a negative indication. perhaps this can be explained by the long approval times for short sales and foreclosures.

December and January usually have seasonal drops in sales volume, that was not the case in December. There is a trend over the last five years that is showing seasonality (time of the year) in December is becoming less of a factor, we still need to look at January's and February's data to determine if it is true this time.

City price trends for Torrance, Redondo Beach, Manhattan Beach and San Pedro are shown at the bottom of this report with their deviations from the long term price trends. The data for Torrance and Manhattan Beach includes corresponding median home sizes which must be evaluated against the median price. In some months the median house prices went down but so did the corresponding home size, in other words home prices were down because people were buying smaller houses. 

The following conditions are supporting a market bottom and are reasons to buy now.

1 – The LA County Foreclosures charts are indicating a peak in foreclosures a very reliable indicator, if sustained it will provide additional confirmation of the bottom of the market. The number of new foreclosure properties currently listed for sale in the entire South Bay as of today is relatively low and more prevalent in the lower price ranges. The number of annual foreclosures have peaked. 
2 -The Affordability chart shows that the affordability in October 2011 was at the highest (best) since before November 2002. From August 2007 to Nov. 2011 affordability has increased Approximately 60 %. This indicator is the most important indicator if you are looking to get in to the market because it is a measure of how much you can buy for your money. Interest rates are now iat historical lows.
3 – Properties are being absorbed in the outside areas at discounted prices as conditions are continuing to improve, see the chart below (see Murietta)
4 – Interest rates are at all time lows, Government buying of Treasury securities is forcing interest rates artificially down again, when the Federal Reserve's action ends rates or the economy starts to improve rates will be going up. Interest rates are now on the way up.
5 – High Inflation is very likely to occur within the next 2 years (See the 10 year Treasury Yield curve below), All asset classes such as real estate will increase when that occurs. The Federal reserve has made the decision to print more money which may result in possibly runaway inflation and to force interest rates down.
6- Most economists agree that the national recession is over buying confidence should eventually increase fueling the buying crowd. Home Buyer confidence is currently trending down.

Here are the reasons to wait: for a better buying time

1 – Low confidence in the national economy and increased unemployment, higher income taxation and or negative personal income trends locally may drive down prices and/or Mortgage rates. A double dip recession remains a possibility.
2 – Low number of sales may be an issue again, if that happens the U.I. (Unsold Index) will increase resulting in a large supply of homes on the market causing prices to go down provided inventory does not decrease.
3 – Interest rates may go down or additional buying incentive programs may be offered further improving affordability for more buyers to buy. Interest rates are currently on an uptrend.
4 – Interest rates may go up higher as economy improves forcing prices down to a better buying price opportunity if sales volume also drops. Watch the sold data in March 2011 and beyond.
5 – Fear of a double dip recession may hold down buying activity resulting in lower home prices in the future. Consumer confidence is decreasing.
6 – Deterioration of the Mortgage Interest rate deduction may deter potential home buyers                                                                       7- 2012 is an Election Year, which will impact the climate of the economy

Remember to read the comments to the right of each chart below. Click on the graphs to enlarge.

Forecast

Home prices remain in a bottoming process in the LA South Bay, however due to monthly price fluctuations the consolidation pattern or channel it can be penetrated by an improvement in the national economy to the upside or a lack in buyer confidence to the down side. The impact of the weak current national economy, lack of personal earning growth and related credit issues will continue to put a negative drag on prices and the recovery in the local real estate market, however we remain in one of the strongest markets in the nation and local supply and demand of available homes will have a larger impact.

Application

In the summer of 2005 prices peaked for one month and the price trend started to level off. That was the start of a high risk time period a market down turn was fore-casted. The Market Sentiment peaked at that time and started going down confirming the price peak. The sales volume also peaked and started going down. The Unsold Index was moving into the Buyers market zone. All this was forecasting a change in the market and an end to upward price momentum. Prices were relatively flat from the price peak in the summer of 2005 to the January 2007.Another price peak occurred which was an unconfirmed price peak, at a time which did not justify the continued higher prices. Most of the South Bay Home price decline occurred after the summer of 2008. The purpose of this newsletter is determine risk levels when deciding to buy or sell real estate. At present a moderate risk buy signal from March 2009 remains in effect. 

Current Recommended Action – Low Risk, Buyers' in control market exists in most South Bay Cities but with a seller bias. The Risk level of lower prices now at 4/10, (based on 10 of the indicators)10 is the highest risk, 1 is the lowest risk.

Summary of Novembers' Data

Mortgage rates fell to below 4.00% yesterday to 3.90% for a 30 year fixed rate conforming loan. Our Primary Timing tool is  showed a small drop in affordability due to a large median price increase for November a rare condition. You can still build equity fast by paying off your principle faster at these low interest rates. Having a home fully paid off at retirement is not a bad thing to desire. Price appreciation is still highly desirable but there are other ways of building equity.

The main driving factor in the current market is the lower interest rates, which was the driving factor in the run up in home prices from 1996 to 2007. The major stumbling block remains uncertainty in the national economy.  We have benefited locally due to the weak real estate market in most of the country which has resulted in manipulated lower mortgage rates for us.

The number of notices being sent out is in a manipulated fashion as the banks have been regulating the actual flow due to their in efficiencies in handling the data on a consistent basis. Still this indicator trend is important to watch as an indicator of overall inventory. Bank owned properties are on the decline.  There are a large number of homes in escrow which is evidence of a demand but many of these require bank approvals, therefore the indicator to watch is the Unsold Index rather than the PSR, percentage of homes of escrow .

The Unsold Index remains in the balanced market zone where neither buyers nor sellers are in control. The 4.40 months of Unsold inventory is an indication of a very healthy market. A strong market will exist if the Unsold index moves down to 3.0 months. When that occurs prices will  have a lot of pressure on prices to the upside. The Unsold index for the South Bay has been consistently better than the state average which came in at 5.0 months.  The increase in the Unsold Index was a result of additional homes on the market and a lower number of home sales than in November.  The DOM (days on the market) improved in November decreased to 87.12 days  compared to Octobers' 91.92 days. December and January usually have seasonal drops in sales volume.

City price trends for Torrance, Redondo Beach, Manhattan Beach and San Pedro are shown at the bottom of this report with their deviations from the long term price trends. The data for Torrance and Manhattan Beach includes corresponding median home sizes which must be evaluated against the median price. In some months the median house prices went down but so did the corresponding home size, in other words home prices were down because people were buying smaller houses. 

The following conditions are supporting a market bottom and are reasons to buy now.

1 – The LA County Foreclosures charts are indicating a peak in foreclosures a very reliable indicator, if sustained it will provide additional confirmation of the bottom of the market. The number of new foreclosure properties currently listed for sale in the entire South Bay as of today is relatively low and more prevalent in the lower price ranges. The number of annual foreclosures have peaked.
2 -The Affordability chart shows that the affordability in October 2011 was at the highest (best) since before November 2002. From August 2007 to Nov. 2011 affordability has increased Approximately 60 %. This indicator is the most important indicator if you are looking to get in to the market because it is a measure of how much you can buy for your money. Interest rates are now iat historical lows.
3 – Properties are being absorbed in the outside areas at discounted prices as conditions are continuing to improve, see the chart below (see Murietta)
4 – Interest rates are at all time lows, Government buying of Treasury securities is forcing interest rates artificially down again, when the Federal Reserve's action ends rates or the economy starts to improve rates will be going up. Interest rates are now on the way up.
5 – High Inflation is very likely to occur within the next 2 years (See the 10 year Treasury Yield curve below), All asset classes such as real estate will increase when that occurs. The Federal reserve has made the decision to print more money which may result in possibly runaway inflation and to force interest rates down.
6- Most economists agree that the national recession is over buying confidence should eventually increase fueling the buying crowd. Home Buyer confidence is currently trending down.

Here are the reasons to wait: for a better buying time

1 – Low confidence in the national economy and increased unemployment, higher income taxation and or negative personal income trends locally may drive down prices and/or Mortgage rates. A double dip recession remains a possibility.
2 – Low number of sales may be an issue again, if that happens the U.I. (Unsold Index) will increase resulting in a large supply of homes on the market causing prices to go down provided inventory does not decrease.
3 – Interest rates may go down or additional buying incentive programs may be offered further improving affordability for more buyers to buy. Interest rates are currently on an uptrend.
4 – Interest rates may go up higher as economy improves forcing prices down to a better buying price opportunity if sales volume also drops. Watch the sold data in March 2011 and beyond.
5 – Fear of a double dip recession may hold down buying activity resulting in lower home prices in the future. Consumer confidence is decreasing.
6 – Deterioration of the Mortgage Interest rate deduction may deter potential home buyers                                                                       7- 2012 is an Election Year, which will impact the climate of the economy

Remember to read the comments to the right of each chart below. Click on the graphs to enlarge.

Forecast

Home prices remain in a bottoming process in the LA South Bay, however due to monthly price fluctuations the consolidation pattern or channel it can be penetrated by an improvement in the national economy to the upside or a lack in buyer confidence to the down side. The impact of the weak current national economy, lack of personal earning growth and related credit issues will continue to put a negative drag on prices and the recovery in the local real estate market, however we remain in one of the strongest markets in the nation and local supply and demand of available homes will have a larger impact.

Application

In the summer of 2005 prices peaked for one month and the price trend started to level off. That was the start of a high risk time period a market down turn was forecasted. The Market Sentiment peaked at that time and started going down confirming the price peak. The sales volume also peaked and started going down. The Unsold Index was moving into the Buyers market zone. All this was forecasting a change in the market and an end to upward price momentum. Prices were relatively flat from the price peak in the summer of 2005 to the January 2007.Another price peak occurred which was an unconfirmed price peak, at a time which did not justify the continued higher prices. Most of the South Bay Home price decline occurred after the summer of 2008. The purpose of this newsletter is determine risk levels when deciding to buy or sell real estate. At present a moderate risk buy signal from March 2009 remains in effect. 

Current Recommended Action – Medium Risk, Buyers' in control market exists in most South Bay Cities. The Risk level of lower prices now at 6/10, (based on 10 of the indicators)10 is the highest risk,1 is the lowest risk. This was increase because of seasonal factors expected.

Our Primary Timing tool is indicating the highest Affordability in over the past 10 years. This is due to the a combination of lower interest rates and lower home prices, a ver rare condition.. In the next 3 months I expect prices to drop slightly because of seasonal conditions. This will raise affordability even higher, good news to buyers but bad news to sellers. The sales volume chart below is starting to show the seasonal drop in sales volume which will result in favorable conditions for the homebuyer.

The main driving factor is the lower interest rates, which was the driving factor in the run up in home prices from 1996 to 2007. The major stumbling block remains uncertainty in the national economy.

The number of notices being sent out is in a manipulated fashion as the banks have been regulating the actual flow due to their iin efficiencies in handling the data on a consistent basis. Still this indicator trend is important to watch as an indicator of overall inventory. Bank owned properties on the decline.

The Unsold Index remains in the balanced market zone where neither buyers nor sellers are in control. The 4.32 months of Unsold inventory is an indication of a very healthy market. A strong market will exist if the Unsold index moves down to 3.0 months. When that occurs prices will  have a lot of pressure on prices to the upside. The Unsold index for the South Bay has been consistently better than the state average which came in at 5.3 months.  The decrease in the Unsold Index was result of additional homes on the market and a lower number of home sales than in August.  The DOM (days on the market) improved in September increase to 88.49 days  compared to August's value of 92.i2 days. The DOM should be less than 60 days for a strong market.

City price trends for Torrance, Redondo Beach, Manhattan Beach and San Pedro are shown at the bottom of this report with their deviations from the long term price trends. The data for Torrance and Manhattan Beach includes corresponding median home sizes which must be evaluated against the median price. In some months the median house prices went down but so did the corresponding home size, in other words home prices were down because people were buying smaller houses. 

The following conditions are supporting a market bottom and are reasons to buy now.

1 – The LA County Foreclosures charts are indicating a peak in foreclosures a very reliable indicator, if sustained it will provide additional confirmation of the bottom of the market. The number of new foreclosure properties currently listed for sale in the entire South Bay as of today is relatively low and more prevalent in the lower price ranges. The number af annual foreclosures have peaked. 
2 -The Affordability chart shows that the affordability in October 2011 was at the highest (best) since before November 2002. From August 2007 to Oct 2011 affordability has increased Approximately 60 %. This indicator is the most important indicator if you are looking to get in to the market because it is a measure of how much you can buy for your money. Interest rates are now iat historical lows.
3 – Properties are being absorbed in the outside areas at discounted prices as conditions are continuing to improve, see the chart below (see Murrietta)
4 – Interest rates are at all time lows, Government buying of Treasury securities is forcing interest rates artificially down again, when the Federal Reserve's action ends rates or the economy starts to improve rates will be going up. Interest rates are now on the way up.
5 – High Inflation is very likely to occur within the next 2 years (See the 10 year Treasury Yield curve below), All asset classes such as real estate will increase when that occurs. The Federal reserve has made the decision to print more money which may result in possibly runaway inflation and to force interest rates down.
6- Most economists agree that the national recession is over buying confidence should eventually increase fueling the buying crowd. Home Buyer confidence is currently trending down.

Here are the reasons to wait: for a better buying time

1 – Low confidence in the national economy and increased unemployment, higher income taxation and or negative personal income trends locally may drive down prices and/or Mortgage rates. A double dip recession remains a possibility.
2 – Low number of sales may be an issue again, if that happens the U.I. (Unsold Index) will increase resulting in a large supply of homes on the market causing prices to go down provided inventory does not decrease.
3 – Interest rates may go down or additional buying incentive programs may be offered further improving affordability for more buyers to buy. Interest rates are currently on an uptrend.
4 – Interest rates may go up higher as economy improves forcing prices down to a better buying price opportunity if sales volume also drops. Watch the sold data in March 2011 and beyond.
5 – Fear of a double dip recession may hold down buying activity resulting in lower home prices in the future. Consumer confidence is decrreasing.
6 – Deterioration of the Mortgage Interest rate deduction may deter potential home buyers 

Remember to read the comments to the right of each chart below. Click on the graphs to enlarge.

Forecast

Home prices remain in a bottoming process in the LA South Bay, however due to monthly price fluctuations the consolidation pattern or channel it can be penetrated by an improvement in the national economy to the upside or a lack in buyer confidence to the down side. The impact of the weak current national economy, lack of personal earning growth and related credit issues will continue to put a negative drag on prices and the recovery in the local real estate market, however we remain in one of the strongest markets in the nation and local supply and demand of available homes will have a larger impact.

Application

In the summer of 2005 prices peaked for one month and the price trend started to level off. That was the start of a high risk time period a market down turn was forecasted. The Market Sentiment peaked at that time and started going down confirming the price peak. The sales volume also peaked and started going down. The Unsold Index was moving into the Buyers market zone. All this was forecasting a change in the market and an end to upward price momentum. Prices were relatively flat from the price peak in the summer of 2005 to the January 2007.Another price peak occurred which was an unconfirmed price peak, at a time which did not justify the continued higher prices. Most of the South Bay Home price decline occurred after the summer of 2008. The purpose of this newsletter is determine risk levels when deciding to buy or sell real estate. At present a moderate risk buy signal from March 2009 remains in effect. 

Current Recommended Action – Medium Risk, Buyers' in control market exists in most South Bay Cities. The Risk level of lower prices now at 6/10, (based on 10 of the indicators)10 is the highest risk,1 is the lowest risk. This was increase because of seasonal factors expected.

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Summary of Septembers' Data

The most signicant change in market conditions was the large increase in new foreclosure notices reported by Dataquick in the second quarter of 2011 compared to the previous quarter.(See chart below). Although there was an increase the number of quarterly notices of foreclosures. The annual number of notices is expexted to be less this than last year. It was also reported thougt not show here by Dataquick that the number of homes being returned to the banks are trending lower.

The number of notices being sent out is in a manipulated fashion as the banks have been regulating the actual flow due to their iinefficiencies in handling the data on a consistant basis. Still this indicator trend is important to watch as an indicator of overall inventory.

The Home Affordability curve was moved up to the first position in our list of charts because of it's importance as a timing tool. Too often buyers and investors are overly concerned with price. The Home affordability curve as used here combines both median prices and Interest rates. What this indicator is telling us is that you can buy more the than the median priced at  the market peak for less than half of the monthly payment of the median priced home at its peak. Home prices remain in the in a consolidating mode absorbing the large run up in prices prior to 2007. Prices have remained essentially flat since 2009. Eye's should be primarily  focused on interest rates, we are benefiting in that regard from the weak real estate markets experienced by most of the country (75%).

The Unsold Index remains in the balanced market zone where neither buyers nor sellers are in control. The 4.15 months of Unsold inventory is an indication of a very healthy market. A strong market will exist if the Unsold index moves down to 3.0 months. When that occurs prices will have a lot of pressure on prices to the upside. The Unsold index for the South Bay has been consistently better than the state average which came in at 5.1 months.  The decrease in the Unsold Index was result of additional homes on the market and a lower number of home sales sales than in August.  The DOM (days on the market) improved in September increase to 88.49 days  compared to August's value of 76.21 days. The DOM should be less than 60 days for a strong market.

City price trends for Torrance, Redondo Beach, Manhattan Beach and San Pedro are shown at the bottom of this report with their deviations from the long term price trends. The data for Torrance and Manhattan Beach includes corresponding median home sizes which must be evaluated against the median price. In some months the median house prices went down but so did the corresponding home size, in other words home prices were down because people were buying smaller houses.

The following conditions are supporting a market bottom and are reasons to buy now.

1 – The LA County Foreclosures charts are indicating a peak in foreclosures a very reliable indicator, if sustained it will provide additional confirmation of the bottom of the market. The number of new foreclosure properties currently listed for sale in the entire South Bay as of today is relatively low and more prevalent in the lower price ranges. The number af annual foreclosures have peaked. 
2 -The Affordability chart shows that the affordability in September 2011 was at the highest (best) since November 2002. From August 2007 to March 2011 affordability has increased more than 50 %. This indicator is the most important indicator if you are looking to get in to the market because it is a measure of how much you can buy for your money. Interest rates are now in an uptrend.
3 – Properties are being absorbed in the outside areas at discounted prices as conditions are continuing to improve, see the chart below (see Murrietta)
4 – Interest rates are at all time lows, Government buying of Treasury securities is forcing interest rates artificially down again, when the Federal Reserve's action ends rates or the economy starts to improve rates will be going up. Interest rates are now on the way up.
5 - High Inflation is very likely to occur within the next 2 years (See the 10 year Treasury Yield curve below), All asset classes such as real estate will increase when that occurs. The Federal reserve has made the decision to print more money which may result in possibly runaway inflation and to force interest rates down.
6- Most economists agree that the national recession is over  buying confidence should increase fueling the buying crowd. Home Buyer confidence is currently trending down.

Here are the reasons to wait: for a better buying time

1 – Low confidence in the national economy and increased unemployment, higher income taxation and or negative personal income trends locally may drive down prices and/or Mortgage rates. A double dip recession remains a possibility.
2 – Low number of sales may be an issue again, if that happens the U.I. (Unsold Index) will increase resulting in a large supply of homes on the market causing prices to go down provided inventory does not decrease.
3 – Interest rates may go down or additional buying incentive programs may be offered further improving affordability for more buyers to buy. Interest rates are currently on an uptrend.
4 – Interest rates may go up higher as economy improves forcing prices down to a better buying price opportunity if sales volume also drops. Watch the sold data in March 2011 and beyond.
5 – Fear of a double dip recession may hold down buying activity resulting in lower home prices in the future. Consumer confidence is decrreasing.
6 – Deterioration of the Mortgage Interest rate deduction may deter potential home buyers 

Remember to read the comments to the right of each chart below. Click on the graphs to enlarge.

Forecast

Home prices remain in a bottoming process in the LA South Bay, however due to monthly price fluctuations the consolidation pattern or channel it can be penetrated by an improvement in the national economy to the upside or a lack in buyer confidence to the down side. The impact of the weak current national economy, lack of personal earning growth and related credit issues will continue to put a negative drag on prices and the recovery in the local real estate market, however we remain in one of the strongest markets in the nation and local supply and demand of available homes will have a larger impact.

Application

In the summer of 2005 prices peaked for one month and the price trend started to level off. That was the start of a high risk time period a market down turn was forecasted. The Market Sentiment peaked at that time and started going down confirming the price peak. The sales volume also peaked and started going down. The Unsold Index was moving into the Buyers market zone. All this was forecasting a change in the market and an end to upward price momentum. Prices were relatively flat from the price peak in the summer of 2005 to the January 2007.Another price peak occurred which was an unconfirmed price peak, at a time which did not justify the continued higher prices. Most of the South Bay Home price decline occurred after the summer of 2008. The purpose of this newsletter is determine risk levels when deciding to buy or sell real estate. At present a moderate risk buy signal from March 2009 remains in effect. 

Current Recommended Action - Medium Risk, Buyers' in control market exists in most South Bay Cities. The Risk level is now at 4/10, (based on 10 of the indicators)10 is the highest risk,1 is the lowest risk.

 To view all the graphs go to LA South Bay Real Estate Forecast Website edition click Here

                             Best viewed with Microsoft Internet Explorer     

                      View the Graphs and Indicators

Summary of August's Data

The Home Affordability curve was moved up to the first position in our list of charts because of it's importance as a timing tool. Too often buyers and investors are overly concerned with price. The Home affordability curve as used here combines both median prices and Interest rates. What this indicator is telling us is that you can buy more the than the median priced at  the market peak for less than half of the monthly payment of the median priced home at its peak. Home prices remain in the in a consolidating mode absorbing the large run up in prices prior to 2007. Prices have remained essentially flat since 2009. Eye's should be primarily  focused on interest rates, we are benefiting in that regard from the weak real estate markets experienced by most of the country (75%).

The Unsold Index remains in the balanced market zone where neither buyers nor sellers are in control. The 3.65 months of Unsold inventory is an indication of a very healthy market. A strong market will exist if the Unsold index moves down to 3.0 months. When that occurs prices will have a lot of pressure on prices to the upside. The Unsold index for the South Bay has been consistently better than the state average which came in at 5.0 months.  The improvement in the Unsold Index was result of stronger than average sales volume and a decrease in the number of homes offered for sale. The DOM (days on the market) improved in August at 76.2 days compared to July's value of 81.7 days. The DOM should be less than 60 days for a strong market.

City price trends for Torrance, Redondo Beach, Manhattan Beach and San Pedro are shown at the bottom of this report with their deviations from the long term price trends. The data for Torrance and Manhattan Beach includes corresponding median home sizes which must be evaluated against the median price. In some months the median house prices went down but so did the corresponding home size, in other words home prices were down because people were buying smaller houses.

The following conditions are supporting a market bottom and are reasons to buy now.

1 – The LA County Foreclosures charts are indicating a peak in foreclosures a very reliable indicator, if sustained it will provide additional confirmation of the bottom of the market. The number of new foreclosure properties currently listed for sale in the entire South Bay as of today is relatively low and more prevalent in the lower price ranges. The number af annual foreclosures have peaked. 
2 -The Affordability chart shows that the affordability in March 2011 was at the highest (best) since June 2003. From August 2007 to March 2011 affordability has increased more than 50 %. This indicator is the most important indicator if you are looking to get in to the market because it is a measure of how much you can buy for your money. Interest rates are now in an uptrend.
3 – Properties are being absorbed in the outside areas at discounted prices as conditions are continuing to improve, see the chart below (see Murrietta)
4 – Interest rates are at all time lows, Government buying of Treasury securities is forcing interest rates artificially down again, when the Federal Reserve's action ends rates or the economy starts to improve rates will be going up. Interest rates are now on the way up.
5 – High Inflation is very likely to occur within the next 2 years (See the 10 year Treasury Yield curve below), All asset classes such as real estate will increase when that occurs. The Federal reserve has made the decision to print more money which may result in possibly runaway inflation and to force interest rates down.
6- Most economists agree that the national recession is over  buying confidence should increase fueling the buying crowd. Home Buyer confidence is currently trending down.

Here are the reasons to wait: for a better buying time

1 – Low confidence in the national economy and increased unemployment, higher income taxation and or negative personal income trends locally may drive down prices and/or Mortgage rates. A double dip recession remains a possibility.
2 – Low number of sales may be an issue again, if that happens the U.I. (Unsold Index) will increase resulting in a large supply of homes on the market causing prices to go down provided inventory does not decrease.
3 – Interest rates may go down or additional buying incentive programs may be offered further improving affordability for more buyers to buy. Interest rates are currently on an uptrend.
4 – Interest rates may go up higher as economy improves forcing prices down to a better buying price opportunity if sales volume also drops. Watch the sold data in March 2011 and beyond.
5 – Fear of a double dip recession may hold down buying activity resulting in lower home prices in the future. Consumer confidence is decrreasing.
6 – Deterioration of the Mortgage Interest rate deduction may deter potential home buyers 

Remember to read the comments to the right of each chart below. Click on the graphs to enlarge.

Forecast

Home prices remain in a bottoming process in the LA South Bay, however due to monthly price fluctuations the consolidation pattern or channel it can be penetrated by an improvement in the national economy to the upside or a lack in buyer confidence to the down side. The impact of the weak current national economy, lack of personal earning growth and related credit issues will continue to put a negative drag on prices and the recovery in the local real estate market, however we remain in one of the strongest markets in the nation and local supply and demand of available homes will have a larger impact.

Application

In the summer of 2005 prices peaked for one month and the price trend started to level off. That was the start of a high risk time period a market down turn was forecasted. The Market Sentiment peaked at that time and started going down confirming the price peak. The sales volume also peaked and started going down. The Unsold Index was moving into the Buyers market zone. All this was forecasting a change in the market and an end to upward price momentum. Prices were relatively flat from the price peak in the summer of 2005 to the January 2007.Another price peak occurred which was an unconfirmed price peak, at a time which did not justify the continued higher prices. Most of the South Bay Home price decline occurred after the summer of 2008. The purpose of this newsletter is determine risk levels when deciding to buy or sell real estate. At present a moderate risk buy signal from March 2009 remains in effect but a change could occur in the next two months.

Current Recommended Action – Medium Risk, Buyers' in control market exists in most South Bay Cities. The Risk level is now at 3/10, (based on 10 of the indicators)10 is the highest risk,1 is the lowest risk.

To see the rest of the newsletter click here