Toscana CC 2009 1st Quarter Report
Dear Toscana Resident,
We are now past the first quarter of the third year in this down market in real estate. Sales remain slow as buyers continue to believe we are not yet at the bottom and have no sense of urgency in making a purchase. Recent reports indicate we are beginning to stabilize. California home values have been stable for the past 3 consecutive months.
The California Association of Realtors predicted an increase in sales for both 2008 and 2009 as the market absorbed the distressed sales. The impact of the pile up of foreclosure, REO’s (real estate owned) and short sale properties will continue until the mortgage problems subside in the second half of 2009. Approximately 19.8% of the sellers sold their property because it was a foreclosure, REO or short sale and 1/3 of the homes sold were distressed sales. There were twice as many REO sales as short sales. This is brought about by banks slow to respond to short sale offers, giving buyers time to find more readily available properties for the same price or less. Foreclosures accounted for 55% of all sales in March for Southern California.
California existing home sales increased 100.8% in January of this year. The median price decreased 40.5%. Unsold inventory dropped from a 16.6 month wait to 6.7 months. The average days on market for homes in the desert over $500,000 averaged 4 months.
Southern California sales increased 52% for March (19,486 homes sold) compared to 12,808 in March of 2008. March was also the 9th consecutive month with over-the-year sales increases.
California Desert Association of Realtors shows home sales increased 69.6% from February 2009 compared to February a year ago with a decline in median price of 53.4%. These declines are primarily in the low end of the market, but this percentage thrown out randomly without clarification often leads buyers to believe they can purchase higher end homes for prices well under the asking price. As sellers begin to accept these lower offers in the high end market, the comparables will bring prices down until the high end market levels out and the number of sales increase.
For the first quarter of this year, real estate sales in the Coachella Valley remained at the lower price range with 88.5% of the homes sold under $500,000. Homes under $250,000 represented 66% of the market, homes over $250,000 represent 34%, homes over $500,000 represented 12.2% and $1 million+ properties represented 3.1%. There were 35% more homes sold in the 1st quarter of 2009 compared to 1st quarter of 2008. Sales of homes over $250,000 is down from last year. Homes sold this quarter over $500,000 were 226 compared to 428 a year ago. Homes over $1 million were 138 in the first quarter of 2008 to 58 this past quarter.
What will it take to shift things around? Either sellers will have to accept the lower priced offers and/or buyers have to lose the home they truly wanted as more aggressive buyers step up to the plate and make the purchase. We are beginning to see multiple offers on some properties where buyers see great value. Total monthly sales continue to rise. Windermere’s bank owned sales have dropped from over 50% of the total sales volume to 38% as more people find good value in homes that are not short sale or bank owned. The advantages: quick close, better condition of property and no need to wait for the bank to respond to the offer. The biggest reason for repeat buyer sales: desire for better/other location (21.2%) wanting a larger home (19.5%), and 18% buying for investment and tax considerations.
Sales in Toscana for the first quarter show 2 custom estate lots have sold. Both south facing properties. Of the two, the highest priced lot sold for $1,325,000. This is down from the south facing lot I sold several years ago for $1,400,000. Two homes are pending, an Amalfi 622 and a Cortona 972. Three homes have closed escrow including a spec home.
Currently there are 40 homes on the market, 12 of these properties are spec homes so in reality only 28 homes are actual resale properties. Included with this letter is a list properties currently for sale in Toscana by floor plan and the quarterly sales and listed properties for the high end communities that normally compete with Toscana in home and lot sales and golf course communities who don’t necessarily compete with Toscana.
The showing activity has increased dramatically in the past month as people consider taking advantage of a buyer’s market. We anticipate a late selling season this year or an early buying season next fall as the real estate market nears the end of the down market and begins to level off.
This is truly the best time in our history to purchase a home. Interest rates are below 5%, prices are down to 2003-2005 prices (depending upon the market area) and golf club initiation fees at the lowest in years. Projections predict that by the second half of 2009, the market will have leveled off and we may be in a more equal playing field as the ‘buyer’s market’ days are drawing to a close. Equally as important is with increase in government spending for ‘bail outs’ and such, loans to cover those debts will require incentives to the investors in the way of increased interest rates. With these expenditures, inflation will occur. So waiting to purchase a home for less just may cost the same or more down the road for buyers who want to wait.
I have a number of properties available in Toscana so please give me a call if you are looking to make a change or know of someone seriously looking to purchase a home in Toscana.
Thank you for your referrals and your continued support. Please let me know if there is information you would like included in these quarterly and annual reports.
Diane R. Williams
Associate Broker/ Executive Premier Director
Windermere Real Estate