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LA
South Bay Real Estate Volume 8, Issue 7 Written and Created by Barry Brickel J.D. Keller Williams Realty |
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Best viewed with Microsoft Internet Explorer View the Graphs and Indicators
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Summary of June's Data Junes's Average Home price declined a bit from the surge in May, from $708,830 compared to $653 776, . The Median home price for June was up from $405,000 in May to $445,000 i The Average price is more reflective of home price trends while the median price is more reflective of where the public is buying. One reason for this coulld be that buyers are being more conservative and buying smaller homes in light of the weak national economy. Readers of this newsletter are well aware of the large monthly price fluctuations and are careful when making year to year comparisons because of that factor.The Unsold Index remains in the balanced market zone where neither buyers nor sellers are in control. The 3.9 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, also on a downward trend. 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. On the negative side, the DOM (days on the market) was down from 90 days to 85, but is still at a high leveli The DOM should be less than 60 days for a strong market. The upper priced portion of the market has been the strongest part of the market with a high percentage of all cash sales indicating the big players are moving in to scrape up the bargains. A common concern of buyers is trying to guess the direction of market prices. That is the wrong qyestion to ask; the better question to be concerned with is what is the direction of interest rates. It is the lower interest that have drastically reduced monthly home prices for the median price home. Home prices because of the smaller drop on our area compared to national levels have not affected monthly payment very much. 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 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
Application
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.
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| Graphs and Indicators | |
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Average SB Home Price- June. 2011=$653,776Median SB Home Price- June. 2011= $445,000 Average
SB Home Price - May. 2011 = $708,715
**Average (Sum of the Sold prices divided by These are relative values, both average
and median proces are not direct measurements of home value. Condition - Average and Median home prices are on a flat consolidation pattern.
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South Bay Sold Properties Price Distribution (click Chart to enlarge) |
Sold Price Distribution
Median SB Home Price - May 2011 = $445,,000 June 2011 Minimum Home Price = $85,000 June 2011 Maximum Home Price = 7.250 Million
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Unsold Index LA South Bay
(click chart to enlarge)
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Unsold Index June 2011 = 3.906 months May 2011 = 4.1 months June 2011 CA state Unsold Index = 5.0 months May 2011 CA state Unsold Index = 5.4 months
Current Condition - Balanced market |
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Total Inventory LA South Bay (click chart to enlarge)
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Total Inventory - The number home on the
market at the beginning of each month.
June 2011 = 2305 units May 2011 = 2305 units
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South Bay Housing Income Affordability Comparison (click chart to enlarge)
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Housing
Income Affordability
Annual Household Income Required To Purchase A Median Priced LA South Bay Home. (Based on 80% financing) Higher
values on the chart to the left corresponds to lower requred income to
purrchase the median priced home. This graph is important for extremes and trends and not the actual data values you may use because your financing is most likely different, however the affordability comparisons are the same. |
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Price Momentum Charts (click chart to enlarge)
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Price Momentum
The Median Price Graph (June 2003 thru June 2011.) is shown with the same date range as the momentum charts below it. Note the price peaks in the summers of 2005 and 2007. Price Momentum (12 month simple moving average) is a measure of the rate of change of prices. Zero indicates no price momentum in either direction. Above the zero line indicates positive price momentum, below the line, negative price momentum. In June 2011 we see price momentum below the zero line indicating negative price momentum, price momentum is accelerating slightly but in the negative direction Rate Of Change In Price Momentum Strength Indicator (12 month simple moving average. ) This is the 12 month simple moving average of the price rate of change chart above. Value near the zero line indicates that there is very little energy in price momentum or prices are are stalled, Farther away from the zero line indicates relative the strength of momentum. Price energy is now fluctuateing widely indicade an unsure market condition. |
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PSR Ratios (click chart to enlarge)
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Ratio Percentage Of Homes in Escrow
The Citys f Gardena was the strongest segment in the South Bay for June
2011 with a PSR's of 75.7%.
25-45% = Balanced Market
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Number Of Foreclosures LA County (click chart to enlarge)
LA County Foreclosures - Last 17 Quarters (click chart to enlarge) South Bay Foreclosure Vs. All Sales (click chart to enlarge) |
LA County Foreclosures In July of 2008, A new law went into effect; 30 days notice had to be given to a homeowner warning the homeowner that his mortgage was in trouble before the NOD could be filed.
The number of foreclosures is defined as the number of Notice Of Defaults (NOD's) filed for loans, not the number of individual homes in foreclosure, for example, one home can have several notices of default filed if there are multiple loans on that home that are in
default. The bottom chart shows the relationships between represents distressed property sales consisting of properties in the foreclosure process and bank owned properties and standard sales. The top curve represents standard sales. Distressed sales have been stable at approximately 20% of total sales. June ratio of foreclosuures to standard sales was at 21.6%. |
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Buyer Sentiment - LA South Bay (click chart to enlarge)
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Buyer Sentiment June 2011 = 37.00 May. 2011 = 31.72
Market peak value = 94.14 July 2005
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Sales Volume History LA South Bay (click chart to enlarge) |
Residential Sales Volume June 2011= 590 units May 2011 = 561 units Seasonal Factors could be the reason for the increase in sales
Mean value of monthly sales - 502 Units
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Days On The Market For A New Listing Distribution (click chart to enlarge)
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Average Days On The Market For A New Listing June 2011 - 85.15 days May 2011 - 91.62 days
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** 3 month average Location Segments (click chart to enlarge)
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The Location Segments are used to determine the Relative strength of the Real Estate market
For June 2011 the strongest markets was found in the city of
Hermosa Beach and Manhattan Beach The weakest area was found in Palos Verdes
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Price Segments (click chart to enlarge) |
Price Segments are used to determine the relative strength of several price ranges. For May 2011 the strongest price segments were the 1.5 - 2.5 Million segment, The weakest price segment was in the 2.50 million to 5.0 million range
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Interest Rates Trends Comparison (click chart to enlarge) |
10 Year Treasury Note Yield vs. Mortgage rate. Thie bottom line in the chart show Treasury note yields in the open market. The top line shows corresponding mortgage rates for the past 6 months.
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Selected South Bay City Median Price -Townhomes And Houses
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Manhattan Beach - zipcode 90266 SFR and Townhomes (click chart to enlarge) |
Torrance - zipcodes 90503, 90505 SFR and Townhomes (click chart to enlarge) |
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Redondo Beach - zipcodes 90277, 90278 SFR and Townhomes (click chart to enlarge) |
San Pedro - zipcode 90732 all property types (click chart to enlarge) |
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Barry Brickel J.D. Click
Here Resources The data used for LA South Bay Real Estate is obtained from the Greator South Bay MLS areas 101-193, (North Inglewood to San Pedro), Clarus Market Metrics, LA Business Journal, LA County Assessors Records, Dataquick Information Services, US Census Bureau, and the National Association of Realtors. Copyrighted
Material 2002-2011
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| To go to the LA South Bay Real Estate Forecast Website edition click Here | |
