Is the Market Improving?

The Real Estate Market must be improving as The Daily Breeze and LA Times have not had a feature article on the decline of real estate for several weeks.


From the Bloomberg News there is an article quoting Wells Fargo & Co. Chief Executive Officer Richard Kovacevich. He says, based on internal data, that about 20 percent of the 375 metropolitan statistical areas in the country are experiencing 20 percent declines in home prices. 20% out of 375 major areas is not very high... unless of course you are in one of those areas. Kovacevich thinks next year is going to be better. "There's no way that the housing market is going to be bad if you have 4.4 percent unemployment, 6 percent mortgages, and the economy is growing at 3 percent," he says.
The above numbers are what really tell the truth about housing. In past years when the housing market has cycled downward it has been due to a bad economic picture, especially high unemployment or as in 1979-1982 very high interest rates.

In our local market new homes east of Sepulveda have been quietly selling after a period of little activity in the fall. There are currently only 16 new homes available; 5 have gone into escrow in the last three weeks and 4 of the 5 were over $2,500,000. Townhome inventory in North Redondo is at the lowest level since May 2006. There are 109 available and 33 are pending.

This doesn't mean we will see a return to the marke of 2003-2006 anytime soon. I think you will see a fairly flat market over the next few years with some submarkets seeing higher appreciation then others. Over all I believe we are finally reaching a normal market where prices increase 2-6% per year with some over priced or high inventory markets seeing a slight decline until inventory stabilizes for that particular niche area. As an example not much is moving in townhomes in Hermosa Beach in the Valley and Hill section over $1,300,000. I think you will see a slight drop in prices after the first of the year which will spur sales. Ups and downs in prices and inventory, along with a longer market time are signals of a normal market. I am very glad to see to see a return to normalcy after the frenzy of the last few years. We all need a chance to catch our breath and remember what homeownership is all about.