Toscana CC 2011 Annual Report
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Dear Toscana Resident:
Happy New Year and may you find 2012 a prosperous, healthy and enjoyable year. The real estate market is showing signs of improvement and with 2011 better than 2009 and 2010, we anticipate 2012 to be equal or better.
Currently there are 4890 homes and 806 lots for sale. This is down from a year ago and supports what is happening when working with buyers. Buyers are more specific, want a certain price range, location and style of home which reduces a buyer’s options to a smaller number of homes. Unless a huge number of homes come on the market the first part of the year, the supply will continue to be less than last year. This along with other market changes, the lower inventory shows the real estate market beginning to recover. While there are signs of recovery, we have an estimated 3 years to go in this difficult real estate market. Homes in a good location, are upgraded and well furnished will be in demand and should command a higher price and sell sooner. Homes on the market need to be in pristine condition, move in ready and at a price that will attract buyer attention. If it doesn’t have the bells and whistles, the sale will be driven primarily by price.
According to the National Association of Realtors, distressed sales, (foreclosures and short sales), accounted for 29% of all home sales in the U.S. in November, down from 33% a year ago. Many foreclosed homes are neglected and in need of repair. Buyers considering a foreclosed property should take into consideration the costs to bring the home up to proper condition comparable to homes on the resale market that require less work and money.
The number of delinquent borrowers is down more than 25% from a year ago. With the banks delaying foreclosures in 2011 due to the question about the ‘robo-signing” controversy where bank employees signed thousands of documents and affidavits without verifying the information, we may see more foreclosures come on the market. If this happens, we may see a further drop in prices. Much depends upon whether the banks will work with the borrowers in distress or simply choose to foreclose.
The resale market shows investors accounting for 18% of the buyers. With Freddie and Fannie extending the “flipper” program through the end of 2012, investors will remain a strong segment of the market. Cash buyers accounted for 28% of existing home sales in November, down from 29% in October and 31% a year ago. First time homebuyers accounted for 35%, up slightly from a year ago.
Freddie and Fannie have reduced the maximum limit for a conventional loan to the old limit of $417,000. FHA is now authorized to make a maximum conventional loan of $500,000 for Coachella Valley homebuyers. This change will increase the demand for FHA loans that should help first time and primary homebuyers as the higher limit can include renovation costs and the purchase requires only a low down payment.
Nationally, existing home sales showed a 12.2% increase from a year ago and inventory down 5.8% in October. California home re-sales are up 8.5% from a year ago. Unsold inventory is at a 5.3 month’s supply. Anything below 6 months shows a trend moving away from a buyer’s market. It may take less time for certain price markets to sell, however, the more expensive homes will continue to take longer to sell due to the smaller demand and higher inventory.
The National median price of existing homes (both single family and condos) in November was $164,200, down 3.5% from a year ago. Single-family homes sales were up 4.5% in October showing a 12.9% increase from a year ago and down 4% from last year’s median price. Condominium sales were up 6.8% from a year ago with little to no change in price. California’s median home price has remained the same since last March at $290,000, significantly higher than the national average.
Pending home sales in California were up 10.7% from October last year to this October, a six month’s year over year increase. California continues to perform modestly well and should be on pace to do as well or better in 2012. Distressed sales remain about the same with 20.7% being short sales and 24.9% REO bank sales. Distressed sales in October of 2011 represented 46.1% of all single-family home sales.
While US Corporations sit on about $1.5 trillion in cash, uncertainty is what holds them back from expanding business and creating jobs. Taxes, regulations, federal spending and high debt are their primary concerns. According to John Seymour in his January issue of “What’s Hot, What’s Not”, “In spite of the doom and gloom, American Capitalism and the American worker, combined with creative genius and a highly productive American workforce, the US creates and produces 23.3% of the world’s total economic output with only 4.5% of the world’s population. We are ranked first in medical research, technology development, aircraft production and others. We continue to be the largest producer of 16 different agricultural commodities. Despite the historic record of foreclosures, the American dream of owning a home remains high with 66.1% owning a home and the others still wanting to pursue that dream.”
Seymour goes on to add: “New home construction rose 9.3% in November with a 2.3% rise in single-family home starts and a 25.3% increase in multi-family home starts. Residential construction is up 24.3% from November of 2010. New homes represent 20% of the overall home market and have a bigger impact on the economy as it creates an average of 3 jobs for a year and generates about $90,000 in taxes according to the National Association of Home builders. Over this past year, apartment permits have increased about 63% and single-family homes have increased 6.6%. It is difficult for single-family new construction to complete with the distressed homes as they are typically 30% higher than the median price for a distressed sale, that’s nearly twice the markup in a healthy housing market.”
The total number of sales in the communities used for the statistical reports included with this letter are up 3.3% from last year, primarily in the under $500,000 homes. Windermere Real Estate is up 15% from last year so not only is the real estate market improving, the real estate company with whom I am affiliated continues to gain even more market share and remains the top firm in the desert by a very large margin.
The total home sales for the primary area of the Coachella Valley show little change since 2009. For the past three years 87-89% of all sales were homes under $500,000. The only other area that has grown in the past two years is the $500,000 to $1,000,000 price rage, up 2% from 2 years ago. Million dollar homes remain basically unchanged.
Yearly home sales show the hot spot country clubs – Indian Ridge and Rancho La Quinta show the largest % of homes sold at approximately 7.3% of the total number of homes within the community. While other country clubs show increased sales, their percentage of sales to total number of homes is lower. Nearly all the country clubs show a drop in average sold price.
In the more expensive country clubs, The Hideaway, Bighorn and Toscana have shown an increase in sales. Bighorn does not post all homes sold in the MLS, so their number is higher than what is reflected in this report. The MLS documented sales are used to show a more consistent reflection on what is happening in the market.
In Toscana, 26 homes sold in 2011. In the 4th quarter alone, eight homes sold. The fourth quarter proved to be strong in sales. As shown on the Average Country Club Sales included with this letter, it shows the average sales price was $1,538,060, down approximately 10% from 2010. Only nine of the 26 homes sold for more than $1,500,000. Four of the homes were developer spec homes, three were bank owned sales and two were resident trades. The great news is Toscana was leading in total sales in 2011 by four homes with The Hideaway taking second and Bighorn taking third. In actuality, its more likely Bighorn remained number one with a number of sales not recorded in the MLS skewing the numbers somewhat.
As we slowly move away from the worst real estate market towards the next cycle, there are many potential buyers who know this is a great time to buy with the prices and interest rates low. We are beginning to experience multiple offers once again for great priced properties where the buyer sees good value, another sign of improvement.
If you have any questions or concerns, give us a call. We would love the opportunity to speak with you.
Diane Williams, GRI, Associate Broker/Executive Premier Director
Ingrid Brown, Professional Realtor