Toscana CC 2012 3rd Quarter Report
Dear Toscana Resident:
*To view my entire Quarterly Report, please select "View PDF Document" located to the right of this page under my photo.
As season approaches we look forward to a brisk year in real estate sales in the desert. With a 43.9% reduction in inventory, fewer distressed homes on the market and interest rates remaining at an all time low, the market conditions continue to improve. Buyers are on the fast track to get the last best buy before prices increase. In some price markets, buyers not willing to pay near full, full price or over asking price learn they are once again in search of another home having lost out to other buyers willing to pay the price knowing they are still getting a great buy.
In some golf course communities buying a lot and building is more cost effective than buying a resale home. In other communities it is cheaper to buy a resale than purchase a lot and build. If you are thinking of building in a community keep in mind the cost of the upgrades and replacement costs, lot size, availability, price and its location.
There are two types of properties on the market. Those that have been beautifully decorated, remodeled or updated and those in need of a face lift. As the market improves, the value for location, exposure and upgrades will attract buyers who do not want to do any work and are willing to pay for it. This will drive up the value of these homes. The other homes requiring improvements and upgrades will be selling at a lower price. The variance in sale prices for similar floor plans with and without upgrades will continue to cause appraisal problems for the near future.
Buyers are very specific about what they are looking for and with the reduced inventory, professionals are calling homeowners to find the right home for their buyers. Inventory in California has dropped 30% this year and supply is at its lowest in seven years. A normal market has a six to seven month supply. August showed a 3.2 month supply. This is good news for the seller when the supply of homes on the market in their specific community is low. Knowing the trends in the market and how your community and property compare to the general trends provides an excellent guide to reduce the length of time your home is on the market. If your home is on the market and you have no traffic or a lot of traffic with no offers, your home is over-priced for the current market conditions.
Inventory should not increase dramatically as investors buying in bulk are not flipping but holding and renting. A decline in the number of foreclosures due to federal regulations has allowed banks to slow down the process keeping inventory low. Approximately 22.3 percent of the homes’ current market value is less than the mortgage owed so fewer homeowners are willing to take a loss, thus deciding to hold on to their home until the market swings to their advantage.
Recent sales involving loans through major banks show their reluctance to be aggressive with lending stating such reasons as Riverside county remains a distressed market even though the Coachella Valley is healthier than other parts of the county. Some lenders demand 30% down when buying a second home. Foreclosures in Riverside county are down 50.2%, a sign the market is improving so why some banks still red flag the county is unknown. If you are considering purchasing a second home, before writing an offer, confirm with your lender what they will require and if possible, contact different lenders for the program that works best with your financial situation and affordability.
Nationally the total sales in 2012 were 4.05 million. Predictions report 5 million sales in 2013. This is a expected 23.5% increase in home sales.
In-spite of some California Congressional members objecting to Fannie Mae and FHFA allowing investor bulk sales, the federal agencies continue to push the program and refuse to disclose details such as property locations, final property count, sale prices and names of successful bidders. So much for federal transparency. As a result Fannie Mae and FHFA are not getting the true fair market value that would result from the normal sales driving up the prices for these homes.
Single-family homes in California showed a 15.5% increase in sales price between August 2011 to 2012. A Real Estate Professional who knows the market should be able to determine if this appreciation applies to your area or community as it varies in certain market areas.
As we see the market improving, the affordability for first time home buyers has dropped from 66% several years ago to 51%. Equity sales (non-distressed sales), represented 62.2% of all sales in August, up from 59.5% in July. Equity sales in August of 2011 were 51.7% of the total sales. Likewise distressed sales have dropped from 48.3% in August of 2011 to 37.8% this August. Bank owned sales dropped from 27.8% to 14.4% and short sales have increased from 20.2% to 23% in the same time frame. Adding the fact that mortgage delinquencies are down 30% from the peak in January of 2010 all support a sign of a changing real estate market cycle.
I thought it might be interesting to see how experts compare the past 6 year real estate market to the early 1980’s when interest rates peaked in 1982 at 18.45%. At that time the typical American household had only 62% of the income necessary to qualify for a home loan. Sales fell 50% between 1978 and 1981, from 3.986 million homes sold per year down to 1.990 million. In contrast, the current market has a high affordability rate, low interest rates and an estimated 5 million in home sales projected for 2013.
So what does this mean for Toscana… 21 resales have sold to date for 2012, up from 14 in 2011. Price per square foot is up 10.6% from a year ago. Currently there are 14 resale homes on the market. For all resale homes sold this year, Windermere represented over 33% of all buyers and sellers in Toscana compared to all other brokerages representing just 19% of the market combined. Toscana sales represented 47.6% of all buyers and sellers. I am pleased to report the buyer’s of those properties I represented purchased the seller’s golf membership.
For the desert, inventory is down 43.9% with an 3.7 month supply of homes and an average of $144 per square foot. Toscana has a 5.5 month supply of homes, is off 59.3% in inventory with an average price of $410/SF. While lot sales in the high-end golf course communities are up 34.5%, no custom estate lots have sold this year in Toscana compared to 3 custom lots selling in 2011. Most of the lot sales occurred in the high-end golf communities in La Quinta. The average lot sale price is up 42.5% from 2011.
We have completed our strong web-base and print media marketing plan for the year. A professional photographer, well-known for outstanding photographs, takes photos for all our listings making the visual presentation drawing greater attention to the home. Other services available include an exclusive Arranger/Cleaning and Staging professional who comes to your home to evaluate what needs to be done, what items should be put away and what accessories or items can be added to increase value and marketability to the sale of our home. In the past six weeks, six of my clients have utilized her talents and have given rave reviews.
If you have a friend looking to buy a home in Toscana or you are thinking of making a change, please let me know. I have four wonderful properties available to show and would love the opportunity to show them to you or your friends.
We look forward to seeing you this season. Please don't hesitate to call if you have any questions about your home or the market.
Diane R. Williams
Associate Broker/Executive Premier Director
Windermere Real Estate