It has been a volatile year in the real estate business in our little corner of Los Angeles—and the world. The good news is, every community from Glassell Park to Pasadena has had a net gain in average sales price from January to November, 2010. From as little as 1.3% in Eagle Rock to as much as 32.9% in Altadena, this is ok news.
Let’s be clear: this doesn’t mean that the value of your home has gone up by your respective community’s rate of increase. All these figures do is show that some progress has been made in the last year in terms of value. Let’s look at this in the darker terms of that fateful 15 months between the peak around the beginning of 2008 to the trough of March 2009 where several of our fair communities experienced over a 50% drop in average sales price. No! you say. My house didn’t lose half its value in 15 months! Correct.
But, looking at the graphs for these communities, there was a general peak in average sales price in May, 2010, right after the first time buyer tax credit expired, with a fair depression after that, and then a slight upturn recently. Check out my blog at www.LADigs.com for all the graphs and tables.
At last, the 50-year low in mortgage interest rates stimulated a little upturn in November. And now, December 8, interest rates have ticked up about ½ point. Thanks a lot, mortgage industry!
Over this year short sales started to be a bit easier to get through. We saw the number of foreclosures decline as the government tried to help homeowners work out their financial problems due to loss of jobs, loss of home value, loss of options. So, short sales happened more often amidst a lot of talk of loan modifications. I still only know one person who has accomplished a permanent loan modification and she doesn’t live in Southern California!
Here is my personal opinion based on a lot of subjective evidence: there is a lot of confusion about what the problem is and how to solve it because this problem is so complex, it’s like 10 blind men interpreting their touch of an elephant. Everyone feels a true part and it adds up to being wrong.
This problem is too complex to understand easily, and it’s too big to solve easily. I talk to homeowners who want to know my professional opinion of what the market will be for their home in the spring or next summer. No true professional can tell you what your home will be worth even next week! Remember the definition of market value: what a willing buyer and a willing seller agree upon, subject to a lender’s appraisal if a loan is involved. And buyers today are very nervous, they don’t want to overpay.
Our real estate values are closely related to the economic picture as a whole, and who do you know who can explain that? Just remember that if a person doesn’t have a job, they aren’t likely to be able to buy a house. The better the job outlook, the better the real estate market.