Toscana CC 2014 Annual Report
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Dear Toscana Resident:
The real estate market continues to show signs of improvement and stability in spite of some setbacks along the way. Some of these setbacks are due to overall price appreciation, tightened lending guidelines and lower inventories of available properties. Price appreciation realized in 2012 and 2013 reduced buyer affordability. Lenders continually tightened loan qualification requirements and as noted above, the inventory of homes on the market was low. As a result, the number of properties sold in 2014 was down and overall price appreciation slowed.
The conditions experienced during 2014 will likely prove to be helpful for 2015 and beyond as the market continues to improve. With appreciation moving at a slower pace, affordability will remain more stable with fewer buyers priced out of the market. Additionally new loans are being offered making it easier to purchase a home and the inventory of available homes will increase giving buyers a larger selection of homes to choose from.
First time buyers through the first 11 months of 2014 represented 29% of home sales. It is anticipated this will return to its normal 40% as a percentage of homes sales due to the higher rental costs and potential increase in interest rates. Other economic factors such as the drop in unemployment, more companies hiring, the stock market at its all time high and personal income up 4.2% this past year, will contribute to a growing and improving real estate market.
The 2015 forecast for new homes construction is expected to grow by 26%. We also see that multi-family units building experienced a 15% growth in 2014 and should remain steady in 2015.
Two new mortgage programs are being offered that will help sales in the Coachella Valley. One is the international 30 year fixed loan. This is important to use because with the weaker Canadian dollar, the number of these buyers dropped significantly. With this loan these buyers can leverage their investment and can coordinate their exchange to US dollars over time. The second new loan program is focused on retirees with strong financial portfolios but no steady income. In the past, these buyers found it extremely difficult to obtain a loan. Renovation loans up to the maximum conventional load of $417,000 will be available and can help buyers buy and renovate a home that needs updating. Job loss insurance for first home buyers will also be available where if they lose their job within the first twelve months after purchase, their mortgage payments will be paid for a pre-specified period of time. All these are expected to increase home sales.
The rental market is experiencing a seven year high. With the higher costs to rent along with the lower interest rates and moderate price growth, 2015 is expected to see about a 5.6% national appreciation and increase in the number of homes sales.
California home sales were down 11.9% in November from a year ago. Price appreciation slowed with little to no increase in sales during last three months of 2014. Even with the lower number of homes sales, the number of homes that sold for more than $750,000 experienced a higher number of sales from a year ago while those selling for less experienced a drop in the total number of sales. There was a 4.4 month supply of homes on the market in November, an increase from 3.6 months a year ago. The median days on market increased from 36.9 days to 43.9 in the past year as well.
The drop in sales in Southern California between October and November was in part tied to the fewer number of business days in November due to the holidays. November showed the median price of $412,000 for all new and resale homes as well as condos in the six counties in Southern California. This reflects an increase of 7% since November of 2013. The appreciation of homes in 2014 varied according to prices of homes sold with the lower third of homes showing a price appreciation of 12.9%; the middle third with 6.5% appreciation and the top third with a 2.3% appreciation. Riverside County is expected too see a 6.2% appreciation in home values in 2015.
Distressed sales have continued to decline in our market. Foreclosure resales represented 5.3% of the total sales in November and short sales 6.2%. This continues to remain far below the all time high of 56.7% of the sales being foreclosures in February of 2009. For homeowners who had a short sale in 2014, the Mortgage Debt Forgiveness Act was signed into law by Obama, enabling short sale owners to receive tax relief from any unrealized gain due to their short sale.
The U.S. Department of Energy (DOE) has placed into effect two new regulations that will affect homeowners. Air Conditioning units energy efficiency ratio requirements have been raised from 13 to 14 effective January 1, 2015 with a grace period to July 1, 2016. When installing new units, they will need to meet the increased ratio standards.
The 2015 DOE Final Rule, effective April 16, 2015, requires high energy factor ratings for water heaters. When replacing water heaters, these potentially taller, wider and heavier water heaters may not fit in the confined space where current water heaters exist and may require structural modifications to the residence. Before replacing your units, be sure to check with the installers to confirm they are complying with the new laws. We do see a buyer preference these days toward tankless water heaters.
The number of million dollar home sales in California are up due to increased demand and a robust appreciation over the past year pushing more homes back over the million dollar line. All homes selling for more than two million were at record highs. There were 265 homes that sold for more than five million; 213 between four and five million; 469 between three and four million; 1,595 between two to three million all record highs. Homes that sold between one and two million (8,381) are still behind the all time high record (9,885) in the second quarter of 2005. Cash is still king. In the luxury market, the higher the sales price the higher the number of cash sales. The median square foot price of million dollar homes sold was $729.
Sales of the 21 country clubs I track show 13 of the clubs experiencing increases in home appreciation with seven of the clubs showing appreciations over 10%. Of the homes sold in each country club, six clubs sold more homes in 2014 over 2013.
The Coachella Valley when referring to the number of homes sold by price point shows homes selling under $500,000 continued to drop. This past year these homes represented 77.7% of the sales, down 4.1% from a year ago. Homes selling for over one million represented 5.8% of the homes sold, up 1.2% from 2013. Country Clubs showing the highest increases in average sale prices this year were Indian Ridge, Ironwood, Rancho La Quinta, The Hideaway, Toscana and the Vintage with three clubs selling more homes in 2014 than in 2013.
The number of homes that sold for more than $1 million in 2014 was up 6.9% from a year ago. As of January 1st, 2015, there were 653 homes for sale over $1 million in the Coachella Valley with 63% of the homes with list prices under $2 million. There were 106 homes that sold in 2014 for more than $2 million, up from 97 a year ago with 237 homes over $2 million currently on the market. Thirty-eight homes sold for over $3 million, up from 27 a year ago; 21 homes sold for over $4 million, up from 14 in 2013. In the month of December, of the top 20 most expensive homes sold, two of these homes were custom homes in Toscana.
The luxury home market in the Coachella Valley shows the number of homes selling for over $2 million are up 9.3% from a year ago; $3+ million up 41%; $4+ million up 50%; $5+ million up 44% and $6+ million up 125%. As a result, 2015 is shaping up to be a good year to consider buying a home in the luxury market.
Sales in Toscana have been brisk with 29 resale homes selling in 2014, the same number as in 2013. The average selling price for 2014 is $1,968,328 up 13.5% from a year ago. There were 43 new homes sold last year which helps contribute to the escalating price appreciation for the resale market in Toscana. The base price for new home construction starts at a higher price than most homes on the resale market. As a buyer adds in upgrades and enhancements for a move-in ready home, the costs far exceeds the price of the resale homes. As this market continues, new homes sale prices will continue to drive up the values of the resale homes. Buyers looking for great value should look to the re-sale market for a home to purchase.
Currently, I represent seven sellers in Toscana with several more potential coming on the market. As a specialist in selling the re-sale high end market, I expect this to be a great year in Toscana as the additional holes are scheduled to be completed and the community moves closer to build out.
New housing trends for 2015 include open spaces with fewer walls separating rooms, free-standing bathtubs, off-the-shelf plans that don’t require custom building, more and more energy efficiency, the use of Quartzite, porcelain tiles, electrical equipment charging stations, multiple master suites, fireplaces and fire pits, upgraded and efficient storage, keyless entry, water conservation, wall to ceiling art, human scale (smaller kitchens), shades of white and outdoor living spaces. If you were able to attend the House Walk in Indian Ridge on January12th, the homes remodeled with these trends received the greatest amount of attention. The homes that showcase these upgrades will be able to compete with the new home construction where many of these recommended upgrades are included.
In summary we anticipate 2015 to be a great year with appreciation and greater number of home sales. The buyers who elect to purchase a home closer to fair market value should benefit from their purchases as appreciation continues to rise.
If you have any questions or concerns, or want a complimentary market analysis, 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