Real Estate Year at a Glance

Condo graphic for newsletter

A homeowner in my Lake Forest Tierra Vista condominium community asked me to come over and talk to him about the idea of selling his condo and purchasing a single family residence.  I spent about 20 hours putting together all of the data to give them the most accurate picture of the market so they could make a very well-informed decision.  This first chart shows what has happened in 2009 to the condo market I their area.  Inventory declined by 64%.  That is indicated by the green bars.  Buying activity (red bars) remained constant until October.  I placed a red circle over the months that the first $8,000 Federal Tax Program was in effect.  What is interesting to note is that buying activity did NOT increase in this segment of the market place.  It would be natural to wonder what the Realtors and Media were talking about.  Here is my analysis.  During these summer months there was only about a 2-3 month inventory of condos.  That is considered a seller’s market. It would have been normal for sales activity to have decreased simply because there was not enough attractive homes to meet the demand.  Instead of dropping, the $8K program caused buyers to buy up the less desirable homes and keep the buying activity steady.  There was also something that was going on.  Look at the chart and analysis below:  

SFR graphic for newsletter

This chart represents the activity of entry level single family residences during this same period of time.  Can you see what happened ruing the summer months?  Stead buying activity increased during the same months of the first Federal Tax Credit program.  What happened is that not only did condo owners move up to single family residences, but renters were able to skip the condo stage altogether and move right into a single family residence.  There is now less than a 2 month inventory of single family residences under $500,000.

 What does this mean?  Low inventory has moved entry level SFR pricing upwards.  It may not be as easy for a renter to move straight into a SFR.  I anticipate that condo prices will continue to climb as they will be the best options for first time buyers.  We all know that the end-of-the-falling-market bell rang earlier this year.  If you are extremely happy where you are and can live there for an indefinite period of time, I recommend that you enjoy your home.  What a great place to be. On the other hand, if you know that you want to be in a new housing scenario sometime in the next few years, it is imperative that you get on track immediately so that you can get in just after year that home prices turned back around.

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