Guidance for The Movement in the Real Estate Market

Market Snapshot−A Tale of Two Markets−July 2013

This article prepared by the California Association of Realtors states that:

This article describes the difference between two segments of the market. Homes priced below $300,000 and home priced above $500,000.

The vast difference in the sales trends tend to be due in part to the supply of homes in each of these markets. There has been a steep decline in inventory levels for the lower priced segments, the supply of homes being sold under $300,000 has dropped by 47.1% since last June. This lack of supply is partially attributed to the low inventory levels of distressed properties. The amount of bank-owned / REO inventory has been declining at an average of 50 percent year over year for the past twelve months. Additionally, the recent surge of home prices, has assisted in turning homes that were previously “underwater” into homes that now have some form of equity gains, this has also led to a reduction of the amount of short sale inventory in the market.

Despite the decline in other price segments the higher end market continues to show strong growth. Sales above $500,000 for the month of June increased 33.6% percent when compared to June of 2012. For the segment of home valued at $1,000,000 and above sales volume increased by 31.7% when compared to June of last year. California’s costal markets experienced double digit sales increase, those markets include cities such as San Francisco, Santa Cruz, and Marin County.

This article also states that the 30 year fixed rate jumped more than 100 basis points, increasing from 3.35 percent in early May to 4.46 percent in late June. That interest rate is the highest that it has been since July of 2011. They believe that this change has affected the volume of sales in California for the month of June. This represented the first time in four months that the sales declined on a month to month, it was also the first time that sales volume decreased by 3.7% when compared to June of 2012.

The market continues to be a seller’s market but with several economic and industry indicators showing that this trend has slowed now may be the best time to sell. Selling now could allow you to purchase another property before affordability levels increase to a level that will no longer allow you to qualify for a new purchase. For people that have thought of buying, or were previously in the market now is a good time to return as the competition for properties has slowed in some segments of the market.