News you can use, from Randy’s desk to yours.
August 23, 2010
The final Numbers are in for the first half of 2010, and they are positive. Here are the numbers for the first six months of this year, and for the same period in 2009 for comparison:
NEW LISTINGS 2,568 2,164 +404 +19%
NEW ESCROWS 2,635 2,211 +424 +19%
TTL PENDINGS 1,703 1,823 -120 – 7%
TTL INVENTORY 549 359 +190 +52%
MARS* 103 102
The MARS* numbers show a remarkable consistency in the ratio of new listings to new escrows opened during the same period between 2009 and 1010. This is really interesting in that the balance between the number of sellers and the number of buyers has remained virtually the same in the first half of both 2009 and 2010.
Another really interesting phenomenon is the 19% increase for both new listings and new escrows opened in 2010 over 2009. Even with this increase, our total inventory is lower this year than it was last year. This is due to the remarkable increase in the total number of homes currently pending (in escrow) at the end of June 2010. There were 52% more homes in escrow than at the same time in 2009. This absolutely reflects a higher demand for real estate.
The large increase in the number of homes in escrow, in my opinion, is in large part due to government tax incentives. Other contributing factors would be historic low interest rates and low real estate prices. We may expect to see a decrease in sales in the second half of the year as a result of the government incentives being eliminated.
The total inventory of homes for sale in the county has dropped 7% this year, so far, over last year. This is the fourth year in a row we’ve seen a decrease in inventory for this time of year, however the differential is smaller this year. This suggests we may see a leveling off of our county inventory over the next few years.
Another exciting change is the number of days homes stay on the market prior to selling. Last year at the end of the second half of the year homes were staying on the market for nearly 5 months (151 days). At the same time this year we are seeing homes stay on the market for a little over 3.5 months (111 days). This reflects aggressive pricing by sellers, as well as the pricing structure for both foreclosures and short sales.
In my opinion we still have reason for optimism that our local real estate market will continue to show good recovery. We’re not seeing real dramatic changes in value as we have over previous years. While there is no indication that prices are beginning to go up, they don’t seem to be continuing to fall as they have been in recent years. All things considered, we’re in a pretty “healthy” market.
For more details on market activity please visit www.RandySteiger.com
*The MARS index (Market Activity Ratio Statistic) is obtained by dividing the number of new escrows opened in a given period of time by the number of new listings in that same period of time. It can also be viewed as the percentage of new listings that are being offset by new escrows. The higher the MARS, the hotter the market. Please call me if you have any questions on this.
July 1, 2010
May 17, 2010
WHAT’S HAPPENING WITH THE LOCAL REAL ESTATE MARKET?
Half way into the second quarter of 2010 our real estate market continues to show signs of strength. Here are the MARS* numbers for the last week of April:
San Luis Obispo: 200
South County: 129
North County: 162
North Coast: 113
County Average: 147
Notice that in the San Luis Obispo market area there were twice as many new escrows opened in this week as there were new listings that came on the market. All of the market areas in this study showed stronger activity in the number of new escrows opened compared with new listings coming on the market. The county average of 147 is the highest recorded MARS* index since I began recording this data in January of 2006; and indicates strong consumer demand for real estate in our county.
We have averaged a MARS* of over 100 in ten of the past twelve months in San Luis Obispo County! The two months with exceptions were last July when we saw a MARS* of 90, and in March of this year it was 94. Note that even the lowest months of the past year still gave us a MARS* index of 90 or higher. This is significant. I am now in the fifth year of tracking these numbers and the past year has by far been the strongest when we compare demand versus supply.
Because of the high MARS* numbers we continue to see our inventory of homes for sale stay comparatively low. We currently have 1,587 homes for sale in the county. This is the lowest of any other April in the past five years. Normally this is the time of year when our inventory increases dramatically. However we have only seen an increase of approximately 18% since the beginning of the year. In previous years we have seen growth in inventory of 30% in the first half of the year.
Another interesting fact about our market today is the high number of homes currently in escrow: 643. To give you a perspective, there were 384 homes in escrow at the end of April 2009. And before many of you write back to tell me, I do know that all of these escrows do not close. But keep in mind that some of those 384 in escrow last year probably didn’t close either. Also, I do not mention the number of closed escrows here because there are many other people doing that. Suffice to say that sales are up nearly 70 percent over last year.
The majority of sales continue to be in the lower price ranges, with many first time home buyers entering the market. With strong government tax incentives and low interest rates, combined with affordable prices, buying a home is now more sensible than renting one for many people. Prices are continuing to stabilized in these lower price ranges in many communities throughout the county, and the higher price properties are still experiencing a “softening” of value. It’s still a great time to invest!
For more details on market activity please visit www.RandySteiger.com
*The MARS index (Market Activity Ratio Statistic) is obtained by dividing the number of new escrows opened in a given period of time by the number of new listings in that same period of time, then multiplied by 100. The number is basically the percentage of new listings that are being offset by new escrows. The higher the MARS, the hotter the market. Please call me if you have any questions on this.
April 19, 2010
WHAT’S HAPPENING WITH THE LOCAL REAL ESTATE MARKET?
April 5, 2010
HOME BUYING INCENTIVES WITH A SHELF LIFE
For a limited time California first time home buyers can take advantage of up to $18,000 in combined state and federal tax credits if they enter into contract to buy a home after May 1, 2010 and close escrow before June 30, 1010. Other home purchasers may qualify for up to $16,500 if they meet certain requirements, such as having lived in the home they’re replacing for at least 5 of the last eight years and the replacement home has never been previously occupied. Like any other government program, these incentives are not always simple and easy for some people to navigate.
Let’s first take a look at the existing federal tax incentive program. This program is designed to give first time home buyers up to $8000 in tax credit or rebate if they enter into an escrow to purchase before May 1, 2010 and close that purchase prior to June 30, 2010. The actual credit/rebate will be calculated at 10% of the sale price of the home for homes valued under $800,000. There are extensions of the time frames for certain military personnel who are out of the country on active duty.
Home buyers taking advantage of the federal tax program must also keep their homes for at least 36 months after closing or they might be required to give a pro-rated portion of their credit/rebate back to the government. Furthermore, there are income restrictions: Single taxpayers must have a modified adjusted gross income (MAGI) of $125,000 or less, and married taxpayers must have a MAGI up to $225,000. Single taxpayers with income between $125,000 and $145,000 and married taxpayers with income between $225,000 and $245,000 are eligible for a reduced credit.
Now take a look at the California State Franchise Tax Board credit/rebate: Governor Schwarzenegger signed into law in March a tax incentive program for home buyers giving them up to a total of $10,000 in rebates/credits. IF they meet certain criteria, of course. The incentive is available to first-time home buyers OR purchasers of homes that have never before been occupied. A total of $200 million has allocated for this program with half dedicated to first-time home buyers and half dedicated to buyers of new homes.
The California tax incentive is given over the course of three years in equal amounts of $3,333. Buyers must be at least 18 years of age and be unrelated to the seller of the property. Buyers must also live in the home they’re purchasing to be eligible. As with the federal program, first time home buyers are defined as those who have not owned a home for three years prior to closing escrow. This law is different from previous California legislation in that it allows buyers of new homes currently under construction to reserve a tax credit in advance as long as the property is completed before the end of the year.
So as good as all this sounds please be aware that there is a great deal of “fine print” to decipher before rushing into an assumption that you’re eligible for any tax credit or rebate. Do your homework and consult tax, legal, and real estate professionals. Not only are there great mortgage programs available, but the low home prices also offer two more reasons to get into the market sooner rather than later!
March 1, 2010
WHAT’S HAPPENING WITH THE LOCAL REAL ESTATE MARKET?
The first quarter of 2010 is continuing to indicate positive expectations for our local real estate market. The MARS* numbers for month of February are as follows:
San Luis Obispo: 59
South County: 123
North County: 139
North Coast: 106
County Average: 111
Seeing the average MARS* remain above 100 is indeed encouraging as a sign that demand continues to be strong in this market. The San Luis Obispo market area continues to be the weakest of the four market areas in our study. There are many reasons for this, but the primary ones are the relatively stable level of inventory in this area and the historically high cost of housing compared to the other market areas. We have seen values decline substantially in San Luis Obispo, however consumers can still find better values in other parts of the county.
The South County market area has consistently shown strong market activity over the past six months. This is due primarily to the large number of foreclosure and short sale properties that have come on the market. Furthermore, there is an abundance of affordable, newer construction homes available in the South County. The inventory in the South County market area has begun to increase again after more than two years of steady decline. This will most likely continue to have downward pressure on values in this market area.
The North County market area has typically been the strongest segment of our county in terms of market activity over the past few years. We have seen the inventory of homes for sale in the North County go from a high of nearly 900 homes in 2008 to a current low of 470 (nearly 50% less). This reduction in inventory has been critical to the North County communities in terms of beginning to stabilize property values there. We are finally starting to see homes in the entry-level price ranges holding steady for the first time in four years.
The North Coast market area (from Los Osos to San Simeon) has been one of the most interesting market areas in the county to watch recently. The current inventory of homes for sale in the North Coast market area is down to 280 homes, from a high of 387 homes at this same time two years ago. While this is only an approximate 30% drop, it has had a profound impact on the market. The coast remains a very desirable place to live and the cost of homes in these communities has become much more affordable.
Overall inventory in the county is currently at 1,373 homes. This is significantly lower than at the same time in any of the previous 4 years. Furthermore, the inventory is not fluctuating as dramatically, month to month, as it has in past years. This indicates that only serious sellers are coming on the market.
As indicated by the strong MARS* numbers, we are experiencing a greater demand for housing than the number of homes coming on the market. Low interest rates, attractive home bargains, and government tax incentives are all playing a role in supporting this high demand. We are still seeing prices decrease, overall, and while there is no end in sight for this, all indications are very positive that we will continue to see positive signs of recovery in our market throughout 2010.
For more details on market activity please visit www.RandySteiger.com; and please feel free to contact me if you have questions or suggestions for topics you’d like to see covered in this column. I am grateful for this opportunity to be a resource for real estate information in our community!
*The MARS index (Market Activity Ratio Statistic) is obtained by dividing the number of new escrows opened in a given period of time by the number of new listings in that same period of time, then multiplied by 100. The number is basically the percentage of new listings that are being offset by new escrows. The higher the MARS, the hotter the market. Please call me if you have any questions on this.
February 01, 2010
HOW’S THE REAL ESTATE MARKET LOOKING SO FAR THIS YEAR?
The MARS* numbers for the month of January indicate that we’re off to a good year!
San Luis Obispo: 68
South County: 111
North County: 104
North Coast: 150
County Average: 108
In looking back over the last 4 years at January’s MARS* numbers I found that this is the first time they’ve come in over 100. Clearly we are entering the new year with the same strength of market statistics that we consistently saw during the last 9 months of 2009. Here is a look at January’s numbers over past years:
| Year New Listings New Sales Mars |
| 2006 282 151 54 |
| 2007 445 368 83 |
| 2008 411 240 58 |
| 2009 397 343 86 |
| 2010 417 449 108 |
What is significant about these numbers is that January is typically considered to be a slow month for real estate sales. Additionally, January is when we begin to see the inventory increasing as people who took their listings off the market for the holidays start to put them back on the market afterward. What these most recent numbers indicate is that the number of new listings coming on the market is relatively stable over the past 4 years, while sales are dramatically higher. So much for the “slow January” theory.
As I’ve mentioned recently in this column: we are seeing a stabilization of prices in the lower end of the market. These sales numbers reflect mostly homes priced in the “entry level” price category in the various market areas of the county. This is obviously a good sign, and the expectation is that we will see this stabilization begin to expand into the “middle level” price categories as well. This would be a natural indicator that our market is continuing to recover nicely.
The average number of days homes are staying on the market prior to selling was 97 for this past January. This number has been decreasing steadily since 2007, when we saw a high of 166 days on the market (on the average). I believe this is a result of more realistic expectations on behalf of sellers and aggressive pricing of short sales and foreclosures. There seems to be a “healthy” population of qualified buyers out there who are ready to buy and eager to snap up a deal.
*The MARS index (Market Activity Ratio Statistic) is obtained by dividing the number of new escrows opened in a given period of time by the number of new listings in that same period of time, then multiplied by 100. The number is basically the percentage of new listings that are being offset by new escrows. The higher the MARS, the hotter the market. Please call me if you have any questions on this.
Randy Steiger is the Broker/Owner of Re/Max Del Oro; serving all of San Luis Obispo County. He can be reached at 748-1624.