The National Association of Realtors publishes results of a survey every month called its Realtor Confidence Index. The Index is based on a 0 – 100 scale, with 50 indicating moderate confidence, zero weak, and 100 strong.
- The confidence index for single family homes dropped from 69 in August to 60 in September;
- for townhouses from 47 to 44, and
- for condos, from 41 in August to 38.
We Realtors continue to complain about unreasonable tight credit conditions. Lenders continue to display an unnecessary high level of risk aversion… a pendulum swing from the easy credit that helped crash the world economy six or seven years ago. For example, 70 percent of single family loans went to applicants with credit scores of at least 740. From 2001 to 2004 only 40% of loans were to applicants with that score or higher. Appraisers seem to be behind the times in terms of current values.
Realtor economists have estimated that as many as 500,000 additional sales could be made if credit conditions returned to normal. Further new regulations scheduled to take place may decrease the number of people that will be able to qualify for a loan by another 10%. If you are planning to finance a purchase it may be in your best interests to do it before year-end.
Pasadena Market Report for October
In our September report we noted that Pasadena pending sales were down nation-wide but up in Pasadena. We “caught up” with the nation in October, with pending sales down 11.2% from September to October. That indicates that sales will likely be down over the next month or two. Pending sales are those that are in escrow, ready to, but not yet, closed.
- Closed sales were up 2.1% in October from September, but expect that number to be lower for the next month or two. If we compare last year to this, the numbers are quite different. The number of closed sales this year in October was over 22% more than the same month last year.
- Properties for sale increased 4.2% from September to October, and over 20% more homes were for sale this year compared to October of last year.
- Prices continued to increase from September to October – by 3.3% — measured by price per square foot. Prices are up nearly 18% from last October. If you look at a graph of the last year, you can see a steady price increase trend. Bottom line: prices continue to increase, but it’s hard to think that they will continue to rise at such a blistering pace, especially with inventor increasing and pending sales down.
- Properties for sale are still selling faster than a year ago, but the time on the market is longer for the last three months. A year ago, the time on the market was 64 days, and increased to 75 days by March. That trended down, so by May properties were sold in an average of 42 days. In October that had increased to 58 days. That’s another indicator of a slowing pace and more moderate price increases.
- Finally, the number of months of inventory in October increased ever so slightly from a year ago, from two months of inventory last year, to 2.2 months this October. Over the last year, inventory ranged from a high of 2.7 months, last September, to a low of 1.3 months in April of this year. Since April the inventory of homes for sale has increased, especially in the last three month. This does not indicate a surplus of homes in any sense… two month of inventory is very low, and continues to stymy buyers, who find themselves in bidding wars often.
Next report in early December.
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