By Bruce Cathcart
August is behind us and cooler weather can’t be far off! Whether it is due to the high temperatures or vacationing buyers, sellers and real estate agents, August is usually the slowest month of the year when it comes to initiating sales and second only to September for closing sales. This year is following that same pattern but the number of pendings and sales are considerably less than last year which really makes me wonder how all the “experts” can continue to make their claims that the housing market is in recovery!
Last month (July) according to the Desert Area MLS (as of 9/01/14) there were 667 pendings of residential properties in the Coachella Valley. There were only 435 pendings in August representing a significant drop in the level of sales activity. Last month there were 704 solds and this month (as we predicted) there were only 518 solds representing a 27% drop in closings. When compared to last year, we closed 604 homes in August representing a year over year decrease of approximately 15% in home sales.
Overall inventory available to buyers this month was down significantly again (approximately 10%) from 3,161 properties available for sale at the beginning of August to just 2,857 properties available for sale at the end of August. To add some perspective, we hit our high point in inventory at the end of February this year at 4,318 homes available to buyers. This was up from a low in 2013 in July when only 2,439 homes were available to buyers. So even though our current inventory is down compared to the high of 2014, we are still 15% higher than we were last year! 15% higher inventory and 15% less sales… Hmmm, doesn’t sound like recovery to me.
These numbers continue to support the trend of less sales activity, fewer closings and lower inventory. With only 435 opened escrows in August we can be pretty sure that the September report will live up to its reputation of being the worst month of the year for closings and continue the declining trend!
Last month I wrote about housing prices being “hyper-local” meaning that some home sale prices are up and some are down depending upon their location (which can be as specific as the individual neighborhood in which the home is located). This remains true for the month of August. Taken as a whole, Coachella Valley housing prices appear to have remained stable. Both CAR (California Association of Realtors) and NAR (National Association of Realtors) posted statistics this month stating pretty much the same thing for housing prices both statewide and nationwide. The bad news about that fact is that while the summer months for Coachella Valley housing sales are our WORST months, statewide and nationally the summer months are usually their BEST months for housing sales. Stable home prices with low inventory and near historically low interest rates is not a sign of recovery, it is a sign of survival. Look for more of the same through the end of 2014.
This month’s top sale goes to a beautiful, four bedroom, six bathroom golf course home with 5,905 square feet on an almost ½ acre lot in the Toscana Country Club in Indian Wells which sold for $5,000,000.00! On the other end of the real estate spectrum a couple of condos sold in Mission Lakes (Desert Hot Springs) with 1 bedroom and 1 bathroom and 565 square feet for $29,900.00. That sounds like a pretty good bargain if you have a mother-in-law you need to park somewhere!
Real Estate Tip of the month: This month there were more refinance loan originations (new loans) than purchase loans. Now is the time to re-evaluate your mortgage!!! With near historically low interest rates it may be possible refinance your current loan and save on your monthly payments, or better yet, shorten the term of your loan and pay it off sooner. If you have an FHA loan on your home and are paying a mortgage insurance premium talk with your trusted real estate agent and see if your current mortgage balance is 80% the current market value of your home. If it is you can refinance your current loan with conventional financing and eliminate the monthly mortgage insurance premium and significantly lower your monthly payments.
Bruce Cathcart is the Broker/Co-Owner of La Quinta Palms Realty, “Your Friendly Professionals” and can be reached by email at email@example.com or visit his website at www.laquintapalmsrealty.com.