Toscana CC 2015 1st 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.
For the past 11 1/2 years as I collected and read real estate statistics, reports and projections, I would get a sense of where the real estate market was heading. This quarter is the first time it has been difficult to identify where the market is heading. As a result, I went back out to the research industry to see if I might have missed some important tell tale information. What I found was support of ‘more of the same’.
In January of 2015 according to the California Association of Realtors (CAR), “sales dropped to the lowest annualized level since the housing collapse despite positive housing fundamentals and bustling economy” in California. Median prices have dropped as well. So are prices really dropping? NO. For the past two years we have seen the affluent buyers coming in and purchasing homes with the number of buyers of primary residences and investors falling back. As a result we have seen double digit price increases over the past two years. Sales this year in the Bay area in San Francisco are down primarily due to limited inventory. Inventory levels in some of these markets are critically impacting sales. This is also driving a drop in value due to the lower number of higher priced homes sales. This is not a true decline in the market.
Know that we are moving slowly in the right direction. One of the key indicators is the number of pending sales. While January showed a drop in the number of sales, we saw a 27% increase in pending sales in California and nationally as well. February showed an increase in pending sales as well. It is important to note that 50% of the homes sold are selling up to 11% off the listing price, so we still have homes priced too high for the current market conditions.
Job creation remains a concern as shown by an unwillingness of corporate America to bring cash back into the United States that would create more jobs. The U.S. Corporate tax being the highest in the world at 35%; the number of entrepreneurs and corporations leaving California for more business friendly states; that for the first time since 1872, the U.S. is no longer the largest economy in the world; and continued interest in the government wanting more of tax payer dollars causes many to question the financial stability we all rely upon to create jobs, grow wealth and grow the economy and as a result increase the opportunities for people to purchase homes.
The National Association of Realtors (NAR) projects we will see a 6.4% increase in existing home sales in 2015 and a possible drop in new home sales. Existing home sales in California were down 3.9% in January from December of 2014 and off 2.7% from a year ago. Medium prices were down 5.9% in January from December but still up 3.4% from a year ago. Inventory was up to a 5 month supply from 4.3 months in January of 2014. Equity sales (sales of non-distressed properties) in January represented 88% of all home sales. Buyer affordability is 31%, down from its all time high of 56% in 2012. NAR also reports the stagnation of the market in some areas is due to rising values which is great for sellers but serves as an obstacle for buyers. Another reason is the lack of equity in seller’s homes which prevents them from affording a large or more expensive home.
The California market did not end the year with a big bang and the number of home sales declined by 7.6% and experienced a 3.2% gain in value in 2014. The Bay Area in San Francisco continued to out perform the rest of the state last year in-spite of what we have referenced above. Central California did not perform as well as it is still a distressed market. Southern California, especially Orange and San Diego counties were sluggish in sales, perhaps due to the 9.6% median price increase in 2014 and 23.3% in 2013.
In the Coachella Valley, according to the California Desert Association of Realtors, 570 homes sold across the valley in February with 354 being single family homes and 566 homes sold in January, with 356 single family homes. Currently we have 4,884 homes on the market in the valley. The average sales price for single family homes saw a drop in value but condo homes realized an increase.
In review of the Coachella Valley Total Home Sales Evaluation, a report included in this mailing, the representation of home sales by price point remains the same. However, the number of home sales continues to drop. The total number of sales for the first quarter in the valley was off nearly 13% between 2013 and 2014 and off 8% from 2014 to 2015.
Analysis of the Country Club Price Changes and Appreciation shows that 10 of the 19 country clubs I track have experienced price appreciation from the 2014 to the first quarter of 2015 with six having a drop in value and three unchanged. Eight of the clubs are on target to sell the same number of homes or more in 2015 than in 2014. Seven clubs sold more homes in the first quarter of 2015 than in the first quarter of 2014. Only six of the club experienced a price per square foot increase in the first quarter of this year over last year’s numbers.
The Million Dollar Luxury home market report shows homes under $3 million on pace to sell the same number of homes or more than in 2014. However there is as least an 18 month supply of homes over $1 million. Sellers in this price range have to be very competitively priced and newly upgraded to attract buyers due to the high volume of homes on the market.
Last year, January and February were slower months and the season really began to kick off mid March. This year appears to be following the same pattern with more showings of serious buyers occurring more now than earlier this season. The desert typically has the highest volume of sales in the second quarter. We are hopeful the early Easter will not alter this trend.
Ten homes sold in Toscana during the first quarter of 2015 according to the Multiple Listing Service. One of these homes was a spec home so in reality there were 9 resale homes sold, one more than in the first quarter of 2014. Sales in 2014 included 7 spec and/or new homes recording in the Multiple Listing Service for a total of 22 resales. So in 2014, 25% of the homes were spec or new home sales. The change in the price per square foot is $23 less than the average in 2014 and the average price is off 15%. Buyers who have seen my listings have chosen to buy a lot and build a new home. The push towards completion of the community offers outside agents a greater incentive to sell new homes over the resales which could have some effect on the somewhat sluggish resale market in Toscana. With eight new home sales plus the sale of two spec homes, newer and updated homes are what the current buyer is looking to buy as referenced earlier in this letter. Many buyers who are looking in Toscana are also waiting to sell their home elsewhere before purchasing as they don’t want to own multiple homes. With the new proposed additions to the club, as the final golf holes are complete and phase three gets closer to completion, there should be a bigger spike in home sales. The buyers coming to Toscana and electing to buy new more than likely will not mind a 10% dues increase for the increased amenities. As evidenced in Indian Ridge as it neared completion and the market continued to improve, the number of home sales increased at a much faster rate and I expect this to take place in Toscana also.
If you have any questions or concerns, or want a complimentary market analysis, call me. It will always remain confidential. I look forward to hearing from you.
Diane R. Williams
Associate Broker/Executive Premier Director
Windermere Real Estate
License: CalBRE #01364828