Simi Valley Housing Market Update YTD July 31, 2009

Simi Valley Housing Market Update YTD July 31, 2009

The Simi Valley housing market has not been boring lately.  Extremely low inventories, Super Low interest rates and the $8,000.00 Federal Tax Credit which expires December 1st have buyers whipped up into a frenzy competing for very few homes for sale.  This situation has stabilized the lower end of the market.  The middle section of the market has seen some side affects as listings in the middle price range, that are well maintained and in good locations, are snapped up fast.  however the middle and upper sections of Simi Valley home pricing still has a fair amount of negotiations going on, where the lower end of the market is in the middle of a bidding war.

We seen this all before in 2004-2005 and those buyers loosing their heads just for a chance at a $8,000.00 tax credit are going to wake up with a similar hang over as the home buyers did from the 2004-2005 market.  When the dust settles and inventory is more balanced,  there will be many buyers of this tight market that are going to realize they bought homes with serious deferred maintenance. This oversight is probably going to be a larger cost and job to tackle than they first realized erasing the benefit of the tax credit.

The fact is that as prices move up and buyers get squeezed out again, the next group of buyers will revolt.  We should see a pretty volatile up and down market for the next few years out, as the banks continue to sell off their bad assets and under performing loans.
Below is the activity for July. We can see a similar trend in that fewer homes sold in July than June and fewer homes sold in June than in May.    We have a tremendous amount of homes in escrow, but more than two thirds are  Short Sales and while more short sales are starting to close escrow there is still a very large balance that never close.

Currently there are 256 single family detached homes in Simi Valley that are in escrow.  165 of those homes are Short Sales, only 32 are foreclosures.  With a constant closing rate under 100 detached Simi Valley homes each month and similar escrow counts over the last few months, the fragility of the market is oh so obvious.  We have another wave of Adjustable Rate Mortgage Loans coming due in 2010 and 2011 that I discussed last fall in this post  Adjustable Mortgage Reset Schedule

If you are a buyer and are worried you are going to miss the $8,000 tax credit, all I can say is don’t make an impulse buy now because the $8,000 you get as a tax credit may be far out weighed by a house that needs a ton of work.  Knowing that with 256 homes in escrow and only approximately 80 will close in August,  that means that 176 will not close and those 176 buyers will be pressed another month closer to the December 1st Tax credit deadline. I can see bad buying decisions multiply as we near the deadline.

How does this affect Sellers? Less competition means that you can sell your home quicker and negotiate less if you are below the $500,000 price range.  If your home is not a creme puff; then now is the time to consider selling your home as the lack of competing listings will take some pressure off your home being in showcase condition.  I need to emphasize “some” pressure.  If your your home is a kin to one of Cinderella’s step sisters that needs to be dressed up for the ball then consider consulting with a Home Stager; the cost is far lower than remodeling and can really make the difference on that first impression.