interest rates

Simi Valley October 2011 Home Sales

October Single Family Detached Home Sales for Simi Valley did not react much different that September. Volume is up over 2010 and 2009. Homes under $400k are pulling the lion’s share of the activity and as interest rates drop into low 4′s and high 3′s buyers still remain cautious.

I mentioned last month the sluggish upper end of the market. If you have a home in the $900k to $999,999 price range, did you know that only 4, yes that is right FOUR homes have sold since January 1, 2011 in this price range for Simi Valley real estate? Currently there are 6 homes on the market in this price range and the last sale for the price range was in May. So, if you are listed in this range and wonder what is happening, wonder no more, even with attractive interest rates buyers for this range are not abundant at this time. At the same time, 10 Simi Valley homes have sold over 1 million with one of those being a custom spec house.

The ditressed market still is a major influencer on the overall market. RealtyTrac recently reported:

California default notices increased 17 percent from the previous month to a 13-month high, helping the state post the nation’s second highest foreclosure rate: one in every 243 housing units with a foreclosure filing in October. A total of 29,240 default notices were reported in California in October, a 1 percent increase from October 2010 — the first year-over-year increase in defaults in California since November 2009.

Even though other parts of the country are seeing some relief. However; Nevada, California, Florida and Arizona continue to battle through many struggling home owner’s loans with modification attempts, short sales and foreclosure.

Below is the 30 year interest rate chart for 30 year conforming loans. 2011 has continues to average with the lowest rates. It is no wonder that investors are out snapping up deals with money this cheap. The Blue line below should be a wake up call to those sitting on the sidelines. The distressed market is continuing to to keep prices in check.

False Recovery? How Fragile is the Simi Valley Real Estate Market

This is a chart I whipped up last year trying to illustrate what a mortgage interest rate does to the real estate market when it goes over 6%. I might have posted it before, but it really needs another look at with our current market conditions. Why this chart becomes even more important now is that the current market conditions are a false positive on recovery for the following unsustainable reasons:

Low interest rates (under 6%). Rates can’t stay here below 6% forever
Historically Low Inventory. Not enought supply to meet demand. As inventory levels increase buyers have more choices.
Federal Tax Credits. $8,000 tax credt for 1st time buyers expires December 1st
Unemployment. Double didgit unemployement still has a long way to go before recovering
Average monthly payments can no longer be disguised lower with exotic financing to help drive up sales prices
Renter Revolt – As soon as the prices move up enough to price renters out of the entry level markets sales will slow again.

If you are in the market to buy a home in Simi Valley, the frustration factor is getting to everyone, you are not alone. Only a good increase in inventory can help cool this market down. I pray for inventory for my buyers.

If you are a seller and cannot wait a few years before selling, this is the time to make a move as the low inventory creates less competition and the likelihood that you can move you home quickly if priced aggressively and made ready to show with a home stager or staged yourself.

If you would like to talk real estate in an open relaxed environment; follow me on Twitter @RealtorTed and watch for my updates as I usually go to Panera Bakery in Simi Valley one night a week and hang out for a few hours having coffee with local people talking about Real Estate, things around the community, computers etc. I hope to see you there!