This is an update of my November 2008 Blog reporting on the state of the real estate market. The California Real Estate Association (C.A.R.) has just released a report stating that the number of single-family homes sold in California increased 84.9% in December from the same period one year ago, with year-to-date sales nearly 27% above last year. Further, the C.A.R. report states that prices of sold homes have continued to decrease throughout California. Okay so far, as prices fall, sales increase – no surprise there. But then the report compares the current median price of $281,000 in December 2008 to the higher median price of $480,820 a year ago in December 2007. Wow! That’s a 41.5% decrease. Does that mean my house is worth 41.5% less than last year? No! Not at all!
As about 80% of sales presently taking place involve lender owned or seller owned distressed properties, going at rock bottom prices, even a casual observer can understand why we are seeing such a sharp drop in statewide selling prices. So unless your property is being foreclosed upon, or if you have to sell now in a short sale, the median price trend only means that, in general, your home may be losing value. Otherwise, in absolute terms, the statistic means very little to your specific situation.
These market trends do however fuel more and more headlines, unfortunately offered without clarification as to region. This practice suggests that all properties everywhere are taking very steep nose dives. Well, that just isn’t the case in all cities of California, nor in all neighborhoods within those cities. Again, remember that averages and statewide statistics and trends are meaningful only on a macro level when looking at the general health of the industry. However, when we buy property, it’s on a micro level – one house, in one neighborhood, at a time. So if you are buying or selling, make sure to find out what is happening with prices and with sales volume in your own city and neighborhood. Then analyze your decision to buy or sell, based on what is happening in your locale. Never mind what is happening somewhere else.
I think we can safely say that all property across the Palm Springs region has decreased in value since the peak years of 2005/2006. But the amount of decrease in market value has greatly varied from community to community, neighborhood to neighborhood, from a reduction of as little as 10-15% in certain neighborhoods of Palm Springs, to 50%+ in parts of Desert Hot Springs, to cite two examples.
Punch Line – So, if you refer back to my last blog on market conditions in November, you will see that the news is basically the same – prices are down and sales volume is up. Don’t be misled by the hyped up averages or trends being talked about daily on MSNBC or even in local headlines. Rather take a hard look at your community and your neighborhood. You might find out that things aren’t really as bad for you as these headlines suggest. As always, contact your local real estate professional for detailed information about what is happening in your neighborhood before making any buying or selling decisions.
To read a Desert Sun article with more stats for this time period, go to Dec 2008 Market Report.