The Simi Valley Housing report for August 2014 shows home sales in Simi Valley where strong and improved compared to August 2013. Still the strongest segment of the market commanding over 70% of the sales are homes sold between $400,000 and $600,000. The sector of the market that seems to be coming back to life is Simi Valley homes in the million dollar range. This August saw three Simi Valley homes over million dollars sell; these homes tend to sell 6% to 4% below the original market price. We are seeing a few homes in the million-dollar range sell every month, which was not a trend for the last several years. Increase sales and higher price ranges will push average and median prices upward, however continue looking at the market between $400,000 and $500,000, if sales remain strongest in this sector than the overall price appreciation for 2014 should remain under 10%. A good example is looking back to 2012 when the the strongest sector of the market was Simi Valley homes selling between $300,000 and $400,000. The price appreciation between the end of 2012 and the 1st quarter 2013 moved the market activity to the $400,000 to $500,000 range. Will sales in the $500,000 to $600,000 range begin to outpace lower sales prices? Most likely not.
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Looking at the chart above, the blue line represents homes sold between $300,000 and $400,000. The red line represents homes sold between $400,000 and $500,000. This chart begins January 2012 and goes to August 2014. This illustration shows how price appreciation works. In the beginning of 2012 there were more houses sold in the $300,000-$400,000 price range; however in last quarter of 2012 and the first quarter 2013 you can see the shift began. The homes represented by the red line are in the $400,000 $500,000 price range. Any of us working with home buyers at that time can attest to the frenzy and multiple offer situation that dominated sales for a short time. This shift in sales volume shows that the buyers had pushed home pricing upward. Simi Valley home prices in 2013 rose approximately 17% to 18%. The question remains will we see a similar chart appear for homes between $400,000 and $500,000 compared to homes selling between $500,000 and $600,000. Increased sales in the luxury market will drive the median and average prices up, but the real sector to watch is affordability in the sectors represented in the chart. We all know what happened when prices were pushed to the limit last time. Changes in lending practices and more wary homebuyers are not likely to sustain dramatic year to year increases.
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