Last month we saw downturns in most areas we track in Pasadena, and speculated that it may represent the beginning of the holiday slowdown, but this month’s report shows that the market is not only seasonally slower but slow in comparison to last year at this same period. Inventory in October was up to its highest level in some time. That means more homes for buyers to choose from and if the trend continues it probably is a good thing – we need homes for sale to satisfy demand. Remember that multiple offers means that one in five or six buyers is successful while the remaining buyers wait for the next home to come to market. If inventory increased, more buyers will be satisfied, and the market will gain strength. Let’s pray for six months’ supply of homes! The inventory was actually at 3.2 months (2.6 months last month, and 2.3 months a year ago) at the end of October, and early November shows a continued increase in the number. We have an advance look at the first part of November, and while the median price continues down (good), the average price of a sold property moved up by 17%. Confusing? We think that this shows that millennium buyers are starting to move out of mom and dad’s spare room, credit is easing, and that entry level buyer is making more of an impact on our market The median is the price where half the sales are higher and half lower, and a decline indicates lower priced homes are selling. There is a bit of good news in regard to first time buyers too — Fannie Mae and Freddie Mac have recently reached a deal to ease lending restrictions, a major victory for those impacted by the ongoing affordability crisis and a step towards a healthier market in 2015. Recently, mortgage giants Fannie Mae and Freddie Mac came to an agreement with the FHFA (FHA) aimed pn looseninh the lending standards that have pushed many would-be home buyers off the market. Soon, those who have a less than perfect credit should find it easier to qualify for a loan, and mortgages should become more affordable for the masses. Furthermore, the change in policy will reduce the minimum down payment required to qualify to sell a loan to the Fannie or Freddie, dropping from 5% to 3%. What’s more, this news all comes just days after mortgage rates hit a yearly low. The average rate on a 30-year fixed mortgage hit 3.92%in the second to last week of October, 0.21% below the same time one year ago and the lowest point since June 2013. We are going full tilt into the holiday season, so expect slowing from around Thanksgiving to mid-January. Next report in mid-December.
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