The number of Simi Valley Single Family Detached Home Sales for the month of October 2012 is up, while median price is flat. Sales remain strong and October was no exception beating out the average of 115 sales per month up to 121. Inventory has dropped below a one month supply for the first time. With few homes for sales and the closing volumes increasing, the back log of homes pending in escrow is beginning to ease. Typically on any given day there are between 350-400 Simi Valley properties in escrow. Considering that with a 115 unit closing rate per month and low inventory, a declining back log in those pending sales would seem reasonable. While the daily pending (homes under contract)average has moved lower to 315 units and added bonus is that Short Sale approvals are coming faster to those Real Estate Agents that specialize in Short Sale properties.
News reports and just word on the streets from buyers indicates stiff competition for the homes currently for sale. While competition will help drive prices up, Simi Valley Home Sales have seen Median pricing remain relatively flat.
I keep hearing from other real estate agents and buyers that house are selling for more than asking price. My observation is that if you look closely at the sales, aggressive pricing is creating overbidding. Okay so how does this work?
The homes selling between $300k and $400k have been the most active for the last couple years, outpacing the sales volumes in every other price range for Simi Valley. For October, 54 homes sold in this price range. Of the 54 homes 25 sold at asking price or higher. There were 4 of those sales at 105% of list or higher. Looking even closer we find:
- One in the Alpine tract priced aggressively. The property was a Short Sale and with the low inventory an aggressive pricing strategy, marketing time is cut and with the over supply of buyers, the price was driven back to market value.
- One in the Sunkist Tract was Short Sale similar to the property above in the Alpine Tract. Good condition, showed well, priced aggressively. Multiple offers drove it back to market value for the area. This house was not setting a new high for the area.
- One in the Tempo Tract was a Short Sale in good condition, showed well, priced aggressively. Over bidding drove the price to area market values and did not set a new high for the tract.
- One in Valley West Tract was Short Sale in good condition with upgrades, priced aggressively. Overbidding drove the price to area comps. This property did not set a new high for the tract.
The notable similarity with all four of these properties is that they were all in good condition, showed well, had upgrades and other amenities. Other properties in these tracts that were in fair condition needing repairs, had deferred maintenance, lacked upgrades; performed below these properties in final pricing. The remaining 29 sales in this price range, sold on average of 94.4% of the original asking price. There were 8 of these that sold for 8% or more below the original asking price and many times that is due to over pricing or not taking in consideration the overall condition of the home.
Certainly pricing has stabilized and is slowly moving up, but most of this is a function of 30 year interest rates below 4.0% and averaging near 3.5%, combined with the low prices points Simi Valley hit this time last year. Purchasing for the most part will yield a payment lower that market rents for a similar home in most price ranges, as long as this continues with a low supply of homes for sale on the market, competition will remain strong for the few homes for sale.
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