Toscana CC 2013 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.
It is anticipated that the real estate market will explode over the next few years. The buyers will be some of the 10,000 baby boomers retiring every day for years to come and the Echo Boomers, children of the Baby Boomers. Baby Boomers are the first generation to have two household income earners, multiple careers and a 50% divorce rate. They began retiring in the early 2000’s and the ground swell will continue until 2020. They are more likely to down-size from their current home and move to an area where previous employment did not allow them this option. Their children, the Echo Boomers, born between 1977 and 1995, are willing to take more risks and tend to purchase larger and more expensive homes at an earlier age. They are more likely to be investors and often times receive financial assistance from their parents when purchasing a home. These two groups will have the greatest impact on the real estate market in the future. There are 80 million Echo Boomers in the U.S., roughly 1/3 of the population and who currently invest nearly $170 billion in real estate each year.
The Baby and Echo Boomers are tech savvy and are the main reason 93% of the buyers looking to purchase a home start their search on the internet. Just having a website has no value until you have a program that draws people to it. This requires those in the industry to continue expanding their internet marketing program in order to draw attention to the properties they are marketing. It isn’t the number of visitors, it is the quality of the visitors and how they interact with the website. Visitors to my website spend an average of 5.44 minutes searching for homes which is exceedingly high. The average time a consumer spends looking on competing real estate websites is only 42 seconds. Over 50% of those visiting my website return and use my site repeatedly.
I found it interesting to note that nationally in the month of August, 17% of the existing homes sold for more than the asking price while 63% sold for less. Foreclosure and short sales sold for 16% and 12% less than the asking price. Cash buyers represented 32% of the sales, up from 27% a year ago. First time homebuyers represented 28% of all sales and homeownership is at 65%. The highest was 69.2% in June of 2012.
Homeowners who previously have gone through a short sale or foreclosure had to wait at least two years before they could qualify for a new loan. This has now been reduced to one year. We are seeing more and more one year leases where in the past leasing was long term or with the option to extend. The question of whether to rent or buy shows consumers in California can save an average 32% per month by buying a home. This drops to as low as 11% when considering Orange, Alameda and Santa Clara counties.
The impact from the Federal Reserve is powerful. The rumor of tapering off the purchase of securities caused interest rates to rise 50 to 75 basis points. When the Federal Reserve then decided as a result that perhaps this consideration should be delayed, the basis point dropped 26% and there was a 5.5% increase in loan applications. With Bernanke gone after the end of this year, it is predicted the person being considered will continue with the same policies.
For the state of California first time homebuyers affordability dropped to 36% in the 2ndquarter of 2013, down from 51% in the same quarter in 2012. This is the first time it has been below 40% since the third quarter of 2008. In Riverside County the affordability dropped from 65% to 49% in the same time frame.
August median price for existing single-family homes in California was $441,330, the highest since December of 2007, up from $343,800 a year ago. Contributing to the increase is a result of lack of supply and increased demand that drives the price up. We are beginning to see a slight increase in the number of homes on the market that may prove to be a positive for the growth and continued improvement of the real estate market.
Selecting the right Real Estate Professional is very important. The average realtor in the course of a year does only 7 transactions a year. To date, I have represented 58 buyers and sellers with a number of homes in escrow waiting to close. Toscana and Indian Ridge remain the markets where the majority of my listings and sales are done. From selling the first resale in Toscana back in 2007, I remain a significant consideration for many Sellers and Buyers in Toscana with strong support from the professionals within the Windermere family. Experience is the key to being creative in negotiations and making the purchase work for both buyer and seller.
So what is going on in the real estate market? Everyone knows supply and demand determines the outcome. The Market Action Index (MAI’s) for single-family homes and condos in Indian Wells is about 28. To be a seller’s market we have to be 30 or higher. While we haven’t quite reached the ‘seller’s hot market, we are up from a low of about 9 or 10 in January of 2013 to 28 in September of this year.
Bringing back Proposition 90 gives homeowners over 55 the opportunity to carry their real estate tax base over to their next purchase of a primary residence if the county permits it. Riverside approved Prop 90 for purchases completed on or after September 19, 2013. The only caveat is that they purchase a home of equal or lesser value in order to qualify. There are several other obligations that must be met as well. The good thing is the market is improving, so the ‘current market value’ for now can mean greater value farther down the road and at a lower real estate tax rate.
Included in this report is the Country Club Home Sale Comparison. In this report, it shows the change in sales price from 2012 to 2013 for the 21 country clubs I track. It also shows the number of homes sold to date in 2013 compared to the total in 2012. Clearly the high-end golf course communities are seeing excellent results. Several clubs have seen a decline in sales and price possibly due to buyers wanting something different than what the club is offering in today’s market.
Looking at the Coachella Valley Home Sales Evaluation, it is clear to see how this market is shifting. Total sales for 2013 year-do-date are at 76% of the total sales in 2012. However, homes over $500,000 are at 96% and homes over $1 million are at 89%. This clearly supports the stats in the club sale comparison report as well.
In the 3rd Quarter, four homes sold in Toscana for an average sale price of $1,497,500 and $425 per square foot. Since the first of the year, eighteen homes have sold for an average sale price of $1,780,108 and $436 per square foot average. Custom lots are starting to move as buyers become more willing to build a home to their personal preferences. Many of the resale homes in Toscana are selling for less than their original cost and below what it would cost to build new. During the past five years in the down market, new home construction was almost non-existent. This has proven to be good with Toscana just over halfway completed. Toscana is still offering new home construction drawing greater attention to the community compared to other built-out communities. Andalusia has also experienced excellent sales as well.
With the introduction of the Merano series and the Amalfi 641 (a larger version of the Amalfi 621) and the offering of new lots sales, buyers continue to have more choices in floor plans. The timing couldn’t be better to move to completion of the community as this market continues to improve. During the past two weeks, most of my showings have been the million dollar plus properties.
This is my 39th Quarterly report. Each issue of these reports can be found on my website under ‘About us’. I try to keep it simple by giving you easy to read reference pages comparing golf course communities and sales activity since 2003. I hope you continue to find these reports beneficial and please don’t hesitate to contact me with any questions you might have. As always, I am available to provide you with a confidential true market analysis of your home. Just give me a call.
Looking forward to everyone returning to the desert for another great year in this beautiful area of the world.
Diane R. Williams
Associate Broker/Executive Premier Director
Windermere Real Estate