Toscana CC 2013 2nd Quarter Report
Dear Toscana Resident:
*To view my entire Quarterly Report, please select "View PDF Document" located to the right of this page under my photo.
The housing market continues to improve and with it new issues rise to the surface during the buying and escrow process that are either new or ones we haven’t seen for a number of years. For at least the next year, appraisals will, at times, fall behind the current market values causing some homes to not appraise for its actual true market value. As a result, cash buyers will continue to have the advantage over those obtaining a loan. Buyers who recognize increasing home values and are able to put more cash down to cover the difference between the appraisal and the sale price will have a better chance in getting a home where cash buyers are competing for the home. With increasing interest rates, homes values on the rise and limited inventory, the shift from a buyers market to a sellers market is occurring. In this market, with the variance in appraisals on the same property, the seller is less likely to accept a lower price, reduce the price due to the appraisal or willing to agree to heavy buyer demands for repairs.
The median price of a California home in April was up 28.9% compared to a year ago. This is the highest year to year gain since February of 1980. A shortage of inventory is the primary reason the number of sales dropped 3.7% this year. Unsold inventory dropped to 2.8 month supply in April from 4.2% in April of 2012.
The number of homes selling between $400,000 to $500,000 rose 29.1%. Homes selling over $500,000 rose 44.9%. Sales declined in the under $400,000 home market due to less inventory. Home sales over $500,000 are up as buyers become willing to pay more for the homes that most appeal to their wants and needs. The Coachella Valley Total Home Sales Evaluation included in this report supports these facts. Sales over $500,000 are up 20.5% in the second quarter of this year. Sales under $500,000 are off 5.1% from the first quarter of this year and 5.8% from a year ago. The sale of homes over one million represented 5.6% of the market, up from 4.5% from a year ago and up 2% from the first quarter of this year.
In the early stages of the real estate market decline (2007), the media continued to report that home values were holding. At that time million dollar home sales represented 10% of the total sales. These higher priced home sales kept the median prices higher giving the impression that the overall market was still stable while the lower priced home values were dropping. In my quarterly reports and when working with clients, I indicated that the market was adjusting and the reports from the general media could not be accurate. It became important then, for me to inquire as to whether the buyer could afford to make the loan payment if the market crashed and there were no tenants to help pay the monthly cost. If the answer was no, I recommended that buyer wait for the market to cycle out of this downward trend. Today, with home values and interest rates on the rise and the market in recovery, this is a good time to purchase the vacation or investor property.
In spite of unemployment at 14.6 million, 29.9 million Americans on welfare assistance, 11 million illegal immigrants in the country with more coming in, Medicare to run out in 2026, Social Security to go broke in 2033, a $17 trillion dollar debt and the ever rising threat of terrorism, it is interesting how the housing market continues to improve in spite of all this.
As a result of low mortgage rates and a shortage of unsold new and existing inventory, prices jumped nationally 10.9% from March of 2012 to March of 2013. The good news is this is the largest gain in 7 years. The bad news is we need to see an additional 28% increase in appreciation to reach the peak in 2006.
As reported in the June 26th issue of the LA Times, since 2008, Fannie Mae and Freddie Mac have backed about 90% of all new home mortgages. In order to reduce taxpayers risks should the housing market collapse again, a plan is being presented to force private companies – mainly banks- who package mortgages into securities, to hold at least ten cents in capital for every dollar of underlying loans to cover the first wave of potential losses. Had this been in effect back in 2008, there would have been enough money to back Freddie and Fannie in the beginning without the government spending $187 billion tax-payers dollars (to date) to cover the mortgage guarantees.
Bank owned sales have dropped 23% from a year ago. New home sales rose 2.3% from March to April with an unsold inventory of just 4.1 months. Pending sales are up causing a seven percent increase in total annual sales for the year. The Northeast and Midwest saw the greatest increases in home sales while the South and West experienced declines of 1.1% and 7.6% respectively. Inventory had a greater affect on the total number of homes sold in these areas.
Absentee owners and investors represented 30.2% of the total sales in California. Nearly 34% of the buyers are paying cash to purchase a home. Investor ‘flipping‘ has increased 4.3% from a year ago with 6.3% of the recent homes sold being placed back on the market in a short period of time. Days on market dropped from 48 days last April to 28 days in April of this year. Jumbo loans (over $417,000 in the desert) represented 26.1% of the total sales, the largest percentage since September of 2007.
The buyer affordability has dropped by twelve percent since the first quarter affordability of 56%. This 44% is still much higher than the 11% affordability back in the second quarter of 2007. At that time, loan payments were nearly double what they are today.
California residents are represented by 73% U.S. Citizens and 27% foreign born. Home prices for the month of May showed a 31.9% increase showing 15 straight months of annual price increases and 11 straight months of double digit annual gains. Home prices are increasing at levels above those of 2006-2007 with buyers much more conservative in their lending choices and going for move conventional loans with higher down payments.
Distressed sales continue to decline with over 78% of the homes sold now equity sales. In May of 2012, distressed sales represented 55.8% of all home sales. Riverside County has shown a decline in distress sales from 54% in May of 2012 to 29% in May of 2013.
Home sales in the Coachella Valley showed a drop of 2.9% in the first two quarters of 2013 compared to 2012. For the same time period, we experienced a 23.3% increase in the sale of homes over $500,000 and an increase of 3.6% in home sales over $ 1 million. Comparing the number of homes sold in the first two quarters of 2013 compared to the total in 2012, most golf course communities have sold at least 50% or more homes to date in 2013 compared to the total home sales in all of 2012. If this holds true, the 21 country clubs I track will sell at least the same number of homes or more than in 2012. There appears to be no correlation between price and the number of homes sold. In the higher end golf course communities, home sales are brisk with home sales at least at 65% or greater compared to all of 2102. This shows an increasing demand for the higher priced homes.
Clubs experiencing an increase in residential sales are either those who are offering tremendous discounts off the initiation fees or the high end country clubs who have retained their market appeal to the wealthy buyers preferring to reside in a golf course community with a high level of service and quality of amenities.
Currently there are 2692 homes on the market in the Coachella Valley, 431 homes over $1 million, 1637 homes under $500,000 and 628 between $500,000 and $1 million. While many homes are taken off the market during the summer and sellers wait until fall to put their home on the market, with the heavy buyer interest this summer, sellers who want to sell their home quickly will find this a good summer market to get their home sold.
In the second quarter of this year, 10 resale homes sold for a total sales volume of $14,162,500. The same number of homes sold in the first quarter with a total sales volume of $2,175,500. The current price per square foot of the 14 homes on the market is $451 with the average sold price at $420. Windermere Real Estate Professionals represented buyers and/or sellers in 9 out of the 20 sales making it the dominant outside Brokerage firm selling homes in Toscana. Having listed and sold homes in Toscana since the first re-sale in 2005 and doing quarterly reports since then, I continue to have a strong presence in representing Sellers and Buyers in Toscana.
New home construction and land sales have seen a sharp increase this year as Buyers weigh the benefits of building their own custom home. The lots in Toscana continue to draw a higher price with an average sale price of a half acre custom lot at $695,000. In the Hideaway, the average sale price and lot size is $401,088 for .43 acres.
For the properties I have listed in Toscana, the showings this summer have been more brisk than in summers past as the inventory remains low and the buyers wanting to take advantage of the low interest rates and lower prices. Home buyers, who understand the current market condition know that with interest rates increasing, home values are on the rise and more people are competing for the limited inventory, are purchasing now rather than waiting.
I hope you find my quarterly report informative and beneficial. I look forward to closing out 2013 in stellar form and continuing the privilege of doing what I do best – representing my Buyer’s and Seller’s best interests.
Feel free to call me with any questions you have with regards to the market. I am happy to meet with you on a confidential basis to provide a true market analysis of your home.
Diane R. Williams
Associate Broker/Executive Premier Director
Windermere Real Estate
License: CalBRE #01364828