Indian Ridge CC 2009 2nd Quarter Report
Dear Indian Ridge Resident:
To prepare for this quarterly report, I found countless websites that refer to the economy, the issues on the table in Washington and how they relate to the future of the real estate market. The unemployment according to the Bureau of Labor Statistics shows we reached 8.1% in February and were at 9.4% in May. Going back through the records to 1948, the only time unemployment was above 8% was for the entire year of 1975 and then again from November of 1982 through January of 1984. According to John Seymour in “What’s Hot What’s Not”, “the low interest rates and continuing infusion of hundreds of billions into the credit market are the real genesis for economic stimulus and Bernanke’s strategy will work as long as inflation is at bay. The inflation scenario is supposedly 24 months away and may be avoided if Bernanke pulls back on the money joystick.” We pray these aggressive monetary policies work to avoid the long term unemployment above 8% and the high interest era during Jimmy Carter’s presidency.
With Pelosi’s national energy tax, should it go into affect, I am sure most of the Congressmen aren’t aware of the impact it would have on the real estate market. Here are five major issues on the table:
- Home buyers Beware. The bill would dramatically increase home costs by mandating California’s expensive new building codes for the entire nation. Upon enactment, the bill would demand a 30% increase in energy efficiency for new construction with an additional 50% improvement several years later.
- Homebuilders Beware: If states refuse to accept the stringent California building codes, the Federal Government may assess penalties. And if the builder’s agree to the regulations, they could change due to the ‘consensus-based’ codes which could require more money from the Homebuilders at a later date.
- Home sellers Beware: It still remains a competitive selling market as we remain in the ‘price driven’ stage of these market conditions. With the new energy tax bill, all homes sales are conditioned upon an energy audit and new energy rating assessment so your home would now be subject to the new energy ratings where older windows, original fixtures and dated appliances would definitely bring down the value of your home or require you to bring these up to code, which then is adjustable if the energy efficiency requirements change.
- New Light Requirements: As early as 2012, the bill would eliminate all existing technology used in outdoor lighting and switch to the mandated technology; PLUS the feasibility of alternatives is unknown and the lighting requirements may not be an available alternative to some businesses thereby forcing them to close if they don’t meet the current required mandates.
- This same energy bill imposes a tax on every American who drives a car or flips a light switch. This bill will drive up prices for food, gasoline and electricity. All these affect every wage earner with the largest impact on the poor and middle class.
For the state of California, unemployment reached 11% in April, up from 6.6% in April of 2008. While unemployment in California is expected to remain at 11 to 12% over the next 6 months, many California economists believe we have bottomed and we will see a slight increase next year. Taxes for businesses remain high, only slightly lower than New Jersey and New York, driving some businesses elsewhere. As for personal income taxes, 75% of all federal income tax and 25% of all state income taxes come from the top 50,000 earners out of 38,500,000 Californians. What is interesting to note are the 46,000 people who make $1 million or more per year and pay a state income tax of 10.3%. Is there any wonder why so many are moving to Nevada, Florida or other states that have no income tax. So while our population is still growing, the real question is who are they and what will they be contributing in the form of income taxes.
Now for some good news. April sales of existing homes were up 2.9% compared to March according to the National Association of Realtors. Short sales and foreclosures currently represent about 45% of the sales which is down considerably. For new home sales, unsold inventories dropped to its lowest since May of 2001.The affordability was 72.5%, the most favorable reading in 18 years.
California Real Estate continues to rebound as existing home sales were up 3.2% in April and condo sales were up 6.4%. Both were up 49.2% compared to April of 2008. The median price rose 1.4% which follows the 2.2% increase in March. Unsold inventory dropped from a 9.8 month supply in April of 2008 to a 4.6 month supply. Homes over $1 million went from a 10 month supply in April of 2008 to a 17 month supply in April of this year. While the lower end of the market has bottomed and begun its recovery, the higher end market continues to be very sluggish. We are beginning to see short sales and foreclosures in the high end market making it an ideal time for buyers to purchase a more expensive home.
As each new quarter approaches, I begin thinking about the information that will be informative and helpful. This quarter I researched country club information from the multiple listing service and compared the first 6 months of 2008 to the same time frame in 2009. (Analysis included.) For example: Indian Ridge has moved from an average square foot price of $364.60 for homes sold in 2008, $290.73 for a drop of 20.25% for 2009. Total home sales for the same time frame is off slightly over 50% and the total sales volume of homes sold is off about 66%. We sold 50% fewer homes at 33% of the total sales volume from a year ago.
This is the year of price adjustment for the high end communities as we begin to see more short sales and foreclosures and sellers needing their cash out from the sale of the home. Several banks anticipate another 10 to 20% drop in price next year for homes over $1 million. We may have a better idea on the real estate market as a whole and the high end market after next season is upon us.
Windermere continues to outperform all other real estate companies here in the desert. We represent the highest percentage of sales in the desert and in Indian Ridge. Of those sales in Indian Ridge I am please to announce I represented 60% of the Windermere sales this year. If you are thinking of selling please call for a free market analysis. If you are thinking of buying, I have 30 available properties in Indian Ridge and 8 available properties in Toscana plus a multitude of other homes throughout Indian Wells, Rancho Mirage, LaQuinta and Indio.
While it remains a difficult market, we continue to work hard to bring buyers and sellers together for their mutual benefit. Lenders are more demanding and taking 45 to 60 days to close on loans and even longer for jumbo loans. So patience is required by all who are interested in taking advantage of the great buys that can be found in this market when a loan in involved—thus cash becomes a valuable commodity.
I thank you for your referrals and continued support.
Diane R. Williams
Associate Broker/Executive Premier Director
Windermere Real Estate