South Bay Sales Prices Take A Rest

November 8, 2013 Posted by Andre Hemmersbach

Per the Multiple Listing Service (MLS) data for the greater South Bay area, real estate prices seem to have taken a bit of a rest in the last few months as the median listing price and median sales price have dropped (See Chart Below). While certain high demand zip codes could still be experiencing sales price increases, multiple sources that measure housing values have been reporting that the rate of sale price increases have started to slow nationally. FHFA HPI

The frenzied atmosphere of this summer’s home buying season created conditions in which buyers had to make tough decisions on paying over value, waiving inspections, waiving appraisal contingencies and other contractual milestones that protect them from potentially harmful financial situations. For those who are still looking to purchase a home and were frustrated by the absolute chaos of multiple offer and “bidding war” situations during the summer months, may take hope in the recent slow down in activity.

Supply and demand is a basic driver of price in any free market and the lack of homes for sale has continued to be an issue (See Chart). Just a short 16 months ago a home owner wanting to sell his property had a tough time getting a fair price for his property because of the glut of foreclosures and short sales that were his competition. That is no longer a problem as distressed sales in the South Bay and the nation as a whole,  have dramatically decreased. According to most experts the supply of homes for sale will  probably not increase any time soon (Foreclosure Rates).

Demand from home buyers while still strong, seems to have slowed a fraction. To blame could be seasonal issues along with higher interest rates and sales prices. The latest Homeowners Affordability Index (HAI) report from the California Association of Realtors (CAR) showed that affordability in California has slipped every quarter since it’s high in the first quarter of 2012. Mortgage applications for purchases as reported by the Mortgage Bankers Association, a very reliable forward looking indicator for home sales has also fallen almost every week since the September 22, 2013 release.

Current conditions for buying a home appear as favorable now as they were in the 2nd quarter of 2012. Rates are still a extremely low historical levels and while we are still in a seller’s market buyers are not running over each other at the site of a new house on the market. At least until Spring buying season 2014, buyers should be able to make rational decisions based on real issues and not the “if I don’t get this one, I’ll miss the market” mentality.

Please let me know if i can be a resource you you or your acquaintances on any matters of real estate.

List Price vs Sales Price 11 1 2013

About Andre Hemmersbach

Andre Hemmersbach has been working in the mortgage banking business for over 30 year helping people successfully finance their real estate holdings. He can be reached at (310) 540-1330 #137.

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