Rising prices, lack of housing, condo and townhouse inventory leads to increased demand in the Imperial Valley real estate market
Rising prices, lack of housing, condo and townhouse inventory leads to increased demand in the Imperial Valley real estate market by Frederic Din, REALTOR(r)
It’s been all over the news during the last several weeks, housing experts and analysts are excited as home prices are showing promise of growth and continued price increases throughout 2013 as Bloomberg News claims in late January 2013 “Price Gains Signal U.S. Housing to Boost Growth: Economy” while another similarly positive article by US News claims “Case-Shiller: U.S. Home Prices Continue to Climb” which both talk about the rise in home prices across the nation and in many of the markets these news organizations track on a monthly basis but what about the Imperial Valley as a regional micro-market?
Since the early part of the century, in the year 2000 average mortgage interest rates peaked at just over 7.00% for FHA and 8.00% for conventional loans. Home prices during the same time remained flat from the late 90’s showing little increase, however by 2001 housing demand changed, home builders were delivering new homes, and average days on market (DOM), an indicator used when a home is listed on the MLS (Multiple Listing Service) changes statuses from an active listing to a pending listing dropped over 60% from 133 average days in 2000 to 55 average days in 2001. Mortgage interest rates were relatively unchanged during these years with the average FHA rate at 7.08% and the average conventional loan rate at 6.97% in 2001 according to FreddieMac.
Research conducted by Frederic Din, REALTOR(r) and ICAOR member (Imperial County Association of REALTORs) during the year 2000 showed there were 529 properties sold in the IVMLS with an average price of nearly $117,500 and in 2001 there was a slight drop in sales to 517 properties with an average price of almost $131,000 which represented the largest increase in pricing year over year. Relatively flat increases continued through 2002 representing 604 properties sold with an average price of $133,500 and an average DOM of 54.
As average mortgage interest rates began to drop below the 6% range, the number of properties sold remained largely similar in 2003 to previous years at 551 units however the average price has its single largest year over year gain of over $21,000 at $154,600 as average days on market nearly doubled to 96, this was the beginning of huge market increases.
With average mortgage interest rates squarely in the mid-5% range, the market frenzy was under way as eager home buyers snatched up homes above asking price and as builders fought tooth and nail to keep up with demand, thus raising prices with each new phase release of 5-10 homes.
IVMLS home sales in 2004 were clocked at 617 units while the average price again had a stellar increase rising from $154,600 to nearly a staggering $199,500 and this time, days on market dropped dramatically from their long time frames 96 days down to just over a month, at 34 DOM.
From what many claim as the market peak year, 2005 saw lofty sales totaling 712 with an average price of $260,500 just about doubled from 2001 prices. “The market just went crazy in the last four years”, said Frederic Din. Year over year MLS inventory remained relatively flat as herds of FSBOs joined the ranks of sales and new home inventory saw Imperial Valley Press headlines of Imperial Valley’s Building Bonanza in June 2004 as builders from nearly all areas of the United States were setting their sights on the desert as a boom hub and the next suburb of San Diego and Palm Springs markets.
Home prices in 2006 seemed to peak with an average sales price of nearly $263,000 representing just over 700 MLS units while days on market nearly doubled to 66 days as home sellers began reducing prices. The local Imperial Valley real estate market continued to peak in 2007 with just under 500 MLS units sold with an average sales price of $250,442, an immediate 4.9% drops in sales price and increasingly long days on market period of 85 days.
During the frenzy years, average FHA and conventional interest rates remained relatively flat but were showing signs of increased pressure from investors and in 2007 FHA rates ended on average at 5.95% while the FreddieMac survey rates averaged 6.34%.
The local market had a boom in building and many longer term residents sold homes they owned for 5, 10, and 20 years for a handsome profit while turing around and investing those gains in new, larger and more modern homes at peak market pricing, while others refinanced their homes to the hilt.
New home builders were still entering the market during the peak periods of 2007 and suffered to get their homes sold and off the ground as home prices in 2008 saw their largest single loss in nearly a decade to an average price of $180,551 while the number of MLS units sold reached into 900s, a figure never imagined in local MLS history. The average days on market in 2007 peaked at 88 days, or nearly three months before an offer was accepted and this year also marked interest rates settling down firmly at 6% for both FHA and conventional loan buyers. The mortgage market, investors and secondary agencies were stuck as wave after wave of mortgage company’s and origination firms went out of business. As blogs gained more popularity during in the mid-2000’s, so did individuals and companies who began tracking the Imploding of the mortgage market with the website “The Mortgage Lender Implode-o-Meter” which began tracking failed mortgage companies since late 2006, the time frame were many believe was the peak of the real estate market in many parts of the country.
During the four years (2009-2012) that followed these epic and record setting paces in the surge and grown of real estate was now being defined by even larger amounts of homes sold in record time. In 2009 there were 1,509 MLS units sold, the highest ever on record with an average price of nearly $130,000 taking an average of 60 days to get under contract, resulting in a whopping $50,000 drop in sales prices year over year from 2008 to 2009.
In 2010, the second highest amount of MLS sales at 1,360 with an average sales price of just over $130,000 taking about 47 days to go under contract while mortgage interest rates began to see 30 year mortgage figures below 5%, the first time in a generation.
2011 saw the third largest record setting amount of MLS homes sale at 1,287 showing a small glimmer of hope as average prices settled in at just $133,000 while 2012 showed similar numbers with nearly 1,100 homes sold, with an average price of $133,000 which is flat from 2011 and the same time frame under contract at 43 days however the one noticeable factor in 2012 is the historic and record breaking interest rates below 4%, flirting with mortgage money at 3.5% and lower for some buyers.
So whats taking place in 2013? It’s still too early to tell but I can tell you this. Most properties on the market today are getting multiple offers, not many crazy high offers but definitely more than one. Financed offers are beating out cash offers in some cases, but cash offers are still a big piece of the market. Lack of resale inventory are causing prices to rise and increasing building inventory is helping to feed some demand.
If you’re a home buyer, right now is THE TIME TO BUY! I’m not just saying this because I’m a REALTOR(r), I’m saying this because home prices are still at similar lows found during that last four years where the average prices were around $130,000 and interest rates are at their bottom lowest level. This is creating the perfect real estate purchase storm, “low housing prices and low mortgage interest rates AT THE SAME TIME”.
Think of it this way, in 2001, prices were at an average of $130,000 but mortgage interest rates were doubled at 7% and now the prices are the same and rates are 1/2 the amount.
These are the facts and the fact is, if you are going to buy, NOW is the time.
If you are a seller, I have good news for you too! Although the average sales price is low, turn key properties or those in highly desirable areas are fetching top dollar pricing, therefore if you purchased a home in the early part of the decade and didn’t refinance or pull much cash out of your equity, you more than likely still have equity to trade up or down size for a great price and incredible mortgage interest rate below 4% and perhaps into the the mid-3% range.
Either way, I can help you and have a proven track record of helping my home buyers and sellers great results.
To learn more about buying your first home, check out my How To video called First Time Home Buyer Video – 3 Important Steps to learn more. Check out areas where you want to live by using our Neighborhood Tour Videos <— by clicking the Neighborhood Tour link.
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Are you in the market to buy a home? Get personalized information for any area in the Imperial Valley, including El Centro, Brawley, Calexico, Imperial, Heber and surrounding cities by going to ForSaleByFred.com, ImperialValleyREO.com, or First Time Home Buyer Video
Imperial County and Imperial Valley homeowners who are considering selling their home are encouraged to contact Frederic Din, REALTOR(R) for additional information about getting the most current market values for your home or area. Member of the Imperial County Association of REALTORS (ICAOR).
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With the recent fiscal cliff extension that Congress approved earlier in the month, and President Obama signed the American Taxpayers Relief Act into law last Wednesday, which means homeowners who sell their home using a short sale and other qualified means, will not be taxed for the forgiven debt and do not have to pay back the debt to their lender either.
Imperial Valley areas of El Centro, Brawley, Calexico, Imperial, Heber, Holtville Seeley, Calipatria, Westmorland, and surrounding areas are eligible for a short sale. Lenders such as Chase, Wells Fargo, Bank of America, Ally Bank, etc may offer homeowners relocation assistance to help with moving expenses when completing a qualified a short sale. Make sure you ask me for details when we meet to discuss your short sales needs.