Toscana CC 2014 1st Quarter Report
*To view my entire Quarterly Report, please select "View PDF Document" located to the right of this page under my photo.
Dear Toscana Resident:
Many years ago when I worked as an extracorporeal technologist in open heart surgery, there was a doctor needing bypass surgery with a 3% chance of survival. While he was wheeled into the room, he said, “I am speaking at a medical convention in 6 weeks so let’s get this done.” I could always feel the patient’s desire or lack of desire as I monitored the machine that kept the patient alive during the surgery. I told the Surgeons that I could feel the Doctor’s desire to live and said ‘this man will come flying off the pump”…and he did. Six weeks later he was at the medical convention.
The energy this Doctor exuded and I felt in the surgical room is the same feeling of the pent up desire for this real estate market and economy to take off. We thought we had started in the fourth quarter of 2013, only to find the first quarter of 2014 more sluggish than anticipated for the real estate market. Nationally the market was down 5.1% in January compared to December of 2013 and the first quarter of 2013. In the Coachella Valley, sales were moving at a nice pace in the fourth quarter of 2013. We anticipated a continued push upward in the market and to have many more sales than we had in the 4th quarter of 2013. That did not happen. Much like the economy, the real estate market moved in the very same way. We experienced fewer sales in January than in December and in the first quarter sales from a year ago. The primary reasons for this were lack of inventory, rising prices along with increased lending restrictions and guidelines that became effective the first of the year. The economy and real estate markets are wanting to surge and whether there are too many federal restrictions preventing the recovery from happening as quickly as it could is yet to be seen.
Investors accounted for a large number of sales in 2012 as they bought up many of the distressed homes. Among the 20 investment firms who were buying the most real estate in California, their purchases were down 70% in 2013. The drop in the number of home sales is partly a result of these investment firms pulling out of southern California. Their formula is to buy, improve and sell based on specific target numbers. The numbers are no longer penciling out for them so they are moving on to different markets. The investors made it harder for families to compete for the purchase of a home at the lower prices, particularly when the investors were paying cash and the families needed financing. This heavy demand has driven prices higher making it even harder now for first home buyers to qualify for the loan needed to purchase the homes. Home delinquencies are at their lowest level since the first quarter of 2008.
The inventory of homes on the market increased to about a 6 month supply in February. It is projected this will drop to about a 4.5 month supply by June. In the past few weeks, the demand for million dollar priced homes has increased significantly and million dollar homes that sat on the market for nearly six months in some cases now have the potential for multiple offers.
According to the Coachella Valley Total Homes Sold Report, there was a drop in the number of sales from 2012 and 2013. In the first quarter of this year homes selling for under $500,000 were down from 84.6% year ago to 77%. Homes over $500,000 represented 23% of all resales and homes over $ 1 million represented 7.1% of the market, the highest we have seen since 2007.
The average price per square foot in California in 2005 was $301. It dipped to a low of $121 in 2011 and has since been on the rise in the past few years to $192 to date in 2014.
Millionaires see real estate as the top alternative asset and one third of those surveyed say they plan to buy this year. This is great for the high end market which has been soft for a number of years.
According to the National Association of Realtors, the number of second home sales jumped 30% in 2013, the largest gain since 2003. While second home sales is less than the high experienced in 2006, the increase in second home sales shows the changing sentiment about residential real estate. Vacation home sales accounted for 13% of all sales, up 2% from a year ago and accounted for 28% of all homes sold in the West. The South showed the highest with 41%. While there is a disparity between the income groups with the wealthier purchasing more of the vacation and second homes, this does increase the demand for employment which can affect positive changes for many.
On the Country Club sales report comparing 1st Quarter sales for both 2013 and 2014 for the 21 Country Clubs I track, we see fifteen of the clubs’ average sale price up from a year ago. Ten clubs show a drop in the number of home sales from a year ago. This could be the result of the continued lack of the inventory of the homes the buyers want along with prices being higher than the buyer wants to spend for these properties. The average price per square foot for homes sold in the Country Clubs I track is now over $200 with the exception of three golf course communities. What is surprising is that in the three communities whose average is below $200 per square foot, the number of sales are also down from a year ago.
For the seven high end golf communities I track, the price per square foot ranges from $326 to $551. For the first quarter in 2014, the least expensive home in these high end golf communities was $915,000 and the highest at $10,450,000.
The demand for million dollar homes has seen a big increase since mid March. As noted previously, the Million Dollar + sales represented 7.1% of all sales in the first quarter, the highest it as been since 2007. The one to two million dollar homes represent most of the million dollar home sales.
In Toscana, eight homes sold in the first quarter of this year. Three were spec homes built by the builder and sold unfurnished. In the first quarter of 2013, ten homes sold. Three homes have closed in the month of April, one being a spec home. So as of April 26th, a total of sixteen homes have sold, twelve were re-sale, previously lived in homes.
The average sales price in Toscana in the first quarter of 2013 was $1,617,543 and $428.97 per square foot. As of April 27, 2014, the average is now $1,726,818 and a square foot price of $453.25. The average square foot price for the developer spec homes is $473.15 for the first quarter, showing that many buyers are willing to pay a higher price for a newer unfurnished home.
The goal to sell 50 new homes in order to complete the final eight golf holes on the north course is within reach as it appears there are approximately 32 homes either in the building stage or soon to begin construction. When I bring clients to Toscana and they see that fewer lots and homes are available, buyers see the high activity of sales activity within Toscana. While during the past five years the hardship was on the developer as they waited for this market for new home construction to rebound, this delay in new home construction should prove to be very positive for the community as it is one of a few that currently offer newer homes and new home construction keeping it high on the must see list for buyers.
So far this year, I have sold or have in escrow 30 homes. This is well ahead of last year’s total of 75 homes. The focus of my business continues to be in luxury golf course communities throughout the desert. I have a knowledge of all the golf course communities and having rated and played all the courses. This knowledge gives my buyers the added information they need to know they are buying in the right community that fits their lifestyle.
I rank in the top 10 Real Estate Professionals out of nearly 4,000 agents. I am pleased to announce the addition of three people to my team since this season began. Kristi Kramer, a licensed agent with 17 years of experience in selling and staging homes in Las Vegas, and Barbara Merrill, with a long background in real estate investments. Both bring to the team knowledge and experience in the luxury home market. Laura Flannery is also new to our staff, handling all segments of our marketing and advertising programs. Add the support and assistance of other Windermere Real Estate Professionals, we, as a brokerage firm, are able to bring in more buyers, effect more sales and reach a broader market.
Again, if you have any questions or concerns, call me. It will always remain confidential. I look forward to hearing from you.
Diane R. Williams
Associate Broker/Executive Premier Director
Windermere Real Estate Luxury Homes and Estates Division