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Summary of February 2010 Data February is typically one the slowest months in terms of sales volume and came in at 378 units sold up from January's sold volume of 348 units sold in the LA South Bay.That was below the 502 unit mean value. This was mostly due to seasonal effects in January and February as shown in the sales volume history graph below. January and February are traditionally the slower months in terms of sales volume. March marks the start the of the buying season, we will be looking for higher volume in the coming months to validate the current market upswing. Results for Median and Average Home prices were disappointing but most of our other indicators were very strong. Median home values dropped to $420,000 from $465,000 last month. Average prices dropped to $553,941 from $638,590. The short term price uptrend was penetrated to the downside, both these values are impacted by the price most buyers are buying at and is not a reflection necessarily of whether prices are going up or down. This fact is confirmed in the price segment table below which shows a very strong market below $500,000. The Unsold Index improved 4.39 months from 4.66 months, this value improved even though sales volume was below average. Total inventory was up slightly as discussed above The Unsold Index moved closer to a buyers controlled market but is basically in the middle of the balanced control market where neither buyers or sellers are in control, that is the preferred zone for both buyers and sellers. Next month's data will be very critical and we willing be watching it very closely. March's data will give us an indication of whether the price uptrend is likely to continue. Affordability increased in February due to the combination of lower interest rates and the lower median values. The rate of change momentum chart (lower momentum chart) shows a drop from the peak in price momentum, but one leg down is not enough to draw any conclusion at this point. The price change momentum(second chart) showed a small drop and is only negative by a small amount.
Sentiment increased again and remains on an uptrend since November of 2007 this is a new high for this cycle.
Torrance was strongest city in February based on its Unsold Index of 3.79 months
Most South Bay cities experienced a PSR of greater than 45% indicating next month should be a strong month. Gardena had the highest Percentage Of Homes in Escrow in the South Bay (PSR) over 100% at 138% indicating the number of homes in escrow exceeded the available inventory (homes from the previous month are still in escrow). The PSR for the entire LA South Bay was above the 45% level at
81.5% very strong. Six of eight South Bay cities had PSR's over the 45% threshold indicating a sellers' in control market in those
cities are expected. The $350,000 and below price range was the strongest market segment,
while the 2.5 to 5.0 Million price range was the weakest price segment which is expected. Again the Media relies very heavily on Median Home Prices. Median Prices and Average prices are indicators we use to evaluate market strength they do not by themselves indicate whether properties are going up or down in value and by how much. They only show where the prices of where the public is buying. There is quite a bit of controversy as to whether Average or Median home prices are more significant. Comparative market analysis must still be used to determine value and price changes. 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 tend peaks. The following conditions are supporting a market bottom and are reasons to buy now. 1 - Low confidence in the national economy and increased unemployment locally may drive down prices and/or Mortgage rates. A double dip recession may be a strong probability. 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 more improving affordability for more buyers. 4 - Interest rates may go up higher as the economy improves forcing prices down to new lows. The Fed is going to stop buying mortgage securities from Fannie Mae and Freddie Mac at the end of March that will put pressure on mortgage rates to go up and prices down. Home affordability may then go down. 5 - The Foreclosures charts are indicating the number of foreclosures in LA County has peaked in 2009. 6- The Buyers Rebate program is a motivation to buy now and remains in effect.
Here are the reasons to wait: for a better buying time 1 - Low confidence in the national economy and increased unemployment locally may drive down prices and/or Mortgage rates. A double dip recession may be is a strong probability. 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 more improving affordability for more buyers. 4 - Interest rates may go up higher as econcomy improves forcing prices down. As above The government has announced it is going to stop buying mortgage securities, that will cause all rates to rise and prices may be forced down as a result of lower affordability. 6- Removal of government Buyer incentives such as the Home Buyer Tax Rebate may result in a lower number of home buyers. Remember to read the comments to the right of each chart below. Click on the graphs to enlarge. Forecast Home prices are destined to increase if the present trends continue in the LA South Bay. End of year seasonal slowing usually occurs at this time. March will be the month to watch for a confirmation of the current uptrend and will be very critical. The impact of he current national economy
situation and related credit issues will continue to put a negative drag
on prices and the recovery in the local real estate market. Application
Current Recommended Action - Low risk - Buy signal, Neither Buyers or Sellers in control
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| Graphs and Indicators | |
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Median and Average Home Prices - LA South Bay - January 2000 thru February 2010
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Average SB Home
Price - February 2010 = $553,941 Median SB Home Price - February 2010 = $420,000 Average
SB Home Price - January 2010 = $638,590
These are relative values, both average
and median proces are not direct measurements of home value. Condition - Short Term Average and Median Prices uptrend trend has been penetrated to the downside. |
South Bay Sold Properties Price Distribution |
Sold Price Distribution
Median Price February 2010 = $420,000
February 2010 Minimum Home Price = $65,000 February 2010 Maximum Home Price = $3.8 Million |
Unsold Index LA South Bay
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Unsold Index February 2010 = 4.39 months January 2010 = 4.66 months
Legend:
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Total Inventory LA South Bay
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Total Inventory - The number home on the
market at the beginning of each month.
February 2010 = 1658 units January 2010 = 1623 units
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LA South Bay Home Affordability Comparison
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Local Home
Affordability
Annual
Household Income Required To
Purchase A Median Priced LA South Bay Home. (Based
on 80% financing) 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. |
Price Momentum Charts
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Price Momentum
The Median Price Graph (June 2003 thru Feb. 2010) 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. Above the zero line indicates positive price momentum, below the line, negative price momentum. The farther away from the zero line the stronger the price momentum. A zero value indicates no price momentum(acceleration or deceleration in prices). We can see a consolidating of price momentum in the period from October 2008 to April 2009 (negative momentum stalled). Rate Of Change In Price Momentum (12 month simple moving Average) This is the 12 month simple moving average of the price rate of change chart above. This chart is showing price rate of change is increasing in the positive direction and has peaked above the 2003 peak. Previous peaks indicated market turns. This is a measure of accelerating or deceleratig momentum The rate of momentum change(strength) has surpassed the levels of the previous strong sellers' market 1996 -2005. A new market peak may be developing here, reversing price direction, but that is premature at this point. |
PSR Ratios
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Ratio Percentage Of Homes in Escrow
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Number of Foreclosures - LA County
LA County Foreclosures - Quarterly
LA South Bay MLS Distressed Property Comparison |
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. LA South Bay MLS Distressed Property Comparison The bottom curve in the chart represents distressed property sales consisting of Short Sales, properties in foreclosure and bank owned property. The top curve represents standard sales.
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Buyer Sentiment - LA South Bay
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Buyer Sentiment February 2010 = 67.76 January 2010 = 60.60 New
cycle high
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Residential Sales Volume
February 2010 = 378 units January 2010 = 348 units
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Days On The
Market For A New Listing Distribution
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Average Days On The Market For A New Listing February 2010 - 74.8 days January 2010 - 73.5 days
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** 3 month average
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The Location Segments are used to determine the Relative strength of the Real Estate market |
Price Segments
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Price Segments are used to determine the relative strength of several price ranges. For January 2010 the strongest price segment was the range of $350,000 and below.. The weakest Price segment was in the $2.5 million to $5 million range. This is the first time on a long time that the lowest price segment was the strongest and the highest price segment was the weakest. |
Interest rates Trends Comparison
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10 Year Treasury Note Yield vs. Mortgage rate. Thie top line in the chart show Treasury note yields in the open market. The bottom line shows corresponding mortgage rates for the past 6 months. Comparing the two lines, mortgage rates should actually be higher, this could be a result of government effort to artificially hold down rates.
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Selected South Bay City Median Price Trends -Townhomes And Houses
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Manhattan Beach - zipcode 90266 |
Torrance - zipcodes 90503, 90505 |
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Redondo Beach - zipcodes 90277, 90278 |
San Pedro - zipcode 90732 |
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Barry Brickel CA Real Estate Broker #
00947259 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 2002-2009 All data representations and conclusions are the sole opinions of Barry Brickel J.D. and are not to be construed as a recommendation to buy, sell. invest or transfer real Estate or relied upon for such purposes.
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