The Simi Valley Housing Report shows Single Family detached homes sales were slightly higher than November of 2013, however the the median price retreated as well as the average sale price. The luxury market is still selling however Simi Valley homes are on average (across all sectors) selling for approximately 3.83% below the original list. Much of what we are seeing is a more welcome stabilization of the market. While the double digit price gains for the Simi Valley housing Market in 2013 was welcome news to home owners, that kind of price appreciation is not sustainable and will only lead to another housing bubble. So far the 2013 Simi Valley housing market is up approximately 8.5% from the beginning of the year.
DataQuick news reported “Southern California home sales are closing on a low note in 2014,” said Andrew LePage, data analyst for CoreLogic DataQuick. “Inventory still lags demand in many markets and traditional buyers haven’t filled the void left by the investors who’ve pulled out. Among would-be buyers, affordability and mortgage availability remain as hurdles, as do concerns about job security and the direction of the housing market.”
Despite the somewhat bleak news, slower sales in the 4th quarter is a cyclical norm. What most market watchers will need to adjust to is seeing slower more normal growth which is good for the hosing market. It’s better to keep sustained year after year slow growth, than rather accelerate into another bubble.
Here are the key factors that will continue to influence the housing market:
Affordability – As prices rise, buyers will have to make a decision if they want to make house payments significantly larger than area rents. As reported in the Los Angeles Time Leslie Appleton-Young, chief economist for the California Assn. of Realtors commented “We kind of got the signals wrong. A lot of people did. The economy is doing better and rates are still really low, but it looks like housing affordability is keeping a damper on things.”
Interest Rates – We keep seeing warnings of rates increase and surely rates are up, but up from what? 3.5%. The below 4% rates were great, but also not realistic. Those that were able to take advantage of rates in the low 3% range were lucky. Those now in the 4% should take note that these are good attractive rates. Will the market go into the 5% range in 2015? Consider if the refi market slows and the buyer market slows, banks will be forced to keep rates lower to attract lending business. Additionally if sales prices hike up unrealistically the market will cool forcing rates to back off as well.
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