In this year to date Simi Valley Home Sales Report, I am going to first cover what happened in December and then look at the year as a whole, with a prediction of how I see things shaping up for the 2010 Simi Valley real estate market. I am seeing similar activity in the West San Fernando Valley and East Ventura County areas is this is where I conduct 90% of my real estate activity. Also, it is important for you to understand that one of my duties is to provide broker price opinions for several banks. I regularly prepare half a dozen of these price opinions every week covering mostly West Hills, Woodland Hills, Canoga Park, Chatsworth, Granada Hills, Northridge, Tarzana, Winnetka, Calabasas, Simi Valley, Thousand Oaks & Moorpark. As an active agent listing, selling and providing price opinions in these areas, I get a very good look at real estate trends.
For December 2009 we had a nice increase in closings. A total of 98 single-family detached homes sold in Simi Valley for December. Compare that to the 66 homes that sold in December of 2008 and things are looking somewhat better. Taken against the rest of the year as a whole December is our highest closing month followed by May 2009. Looking at the averages over the last couple of years, in 2006 we had an average of 100 single-family detached houses close escrow each month, followed by 68 per month in 2007, 78 per month in 2008 and 80 per month in 2009. Low inventory levels and low interest rates have artificially kept the market moving, however these are fragile conditions for the market and if inventory levels rapidly grow or interest rates move up over 6% ,the market will slow.
Looking closer at the single-family detached sales in December of 2009, short sales and bank owned properties did not dominate like they have in prior months. In fact, these distressed sales only accounted for 38% of December’s closings. Additionally, 56% of those closings were purchased with conventional loans (20% or more down payments), 12% with all cash and 32% using the low down payment vehicle, FHA.
The attached homes (Condos and Townhomes) had a total of 26 closings for December 2009. Similarly, only 34% were distressed sales. They broke down as, 39% using conventional financing, 19% using all cash and 42% were FHA.
This large number of closings for December is unusual and bucks the trend of declining activity during the holiday season. This declining activity typically has not been influenced by good markets or bad markets, but in this case factors like the tax credit and distressed sellers trying to close out their books for year end probably helped the increase in closings.
The average sales price activity is interesting. The chart below takes the average sales price for single-family detached homes sold in Simi Valley for each month in 2008 and 2009. A average price low and stabilization is showing in 2009 with an increase for December. I believe prices will remain relatively stable as the low inventory and low interest rates are two of the main factors keeping buyers and investors interested in California real estate. While this chart is very encouraging, remember that this spans all price ranges from mansions to very the entry-level homes. When looking at sales by price range, December saw higher percentage of homes over 900,000 sell as compared to prior months. This dramatically drove the average sales price over $500,000.
So what does this all mean for Simi Valley and Southern California home sales in 2010? In my opinion we should expect to see some favorable activity up through April 30, as this is the drop dead date to get a home into escrow in order to qualify for the federal tax credit. Once this tax credit goes away, it will be interesting to see if the first time buyers with low down payments back away from the market. That $8000 credit has been very enticing for those with little reserves or savings.
As long as investors can continue to pick up properties at auction at below market prices, that segment of the market should remain the same. So I predict the real estate market to be very similar to 2009 with caution over interest rates, employment, inflation, and lending requirements. Any expectation that the market is in recovery at this point is premature. Our State and Federal economy has a long way to go. From the mid 1990’s through 2006 our economy was based of people using the equity in their homes to extended their spending habits, banks lowered their requirements for home loans and the drop in interest rates gave people the mis-understanding that real estate, investments and business grow at unchecked double digit rates. While our Government , Major Media Outlets and Wall Street live in denial over growth rates, everyone will suffer through a drawn out recovery that will see it’s fair share of ups and downs.
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Author – Ted Mackel Simi Valley Real Estate Agent – Keller Williams Realty
Ted Mackel is a top producer at Keller Williams Realty Simi Valley,
specializing in Simi Valley Real Estate
(805) 432-7705
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