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2010 housing statistics for Southwest California
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This report is going to be a long one but I hope you find the information useful, or at least mildlyinteresting. In addition to the normal volume and price statistics, I’ve included annual recap numbers,some historic trends and where our foreclosure market stands.
While it’s easy, helpful and at times depressing, to see where we’ve been, it’s much trickier to forecastthe future without a crystal ball. Why? Because there are so many variables at play right now – in theeconomy in general and the housing market specifically. Experts far more knowledgeable than myselfare equally mixed on what to expect in 2011 and beyond.
Most agree that we will not see significant shifts in either sales or median prices over the next 12months as we shoulder through more foreclosures and a sagging employment base. Until the residentialmarket picks up some steam, the commercial market will continue to lag as well. There is evenunprecedented talk out there of implementing short sales and loan modifications for commercialproperties in hopes of avoiding mass default. If they do that let’s hope they’re more effective than they'vebeen in the residential sector. Yeah, that could happen.
Our local market produced some pleasant surprises of its own last year. While sales statewide were offtheir 2009 pace and Riverside County sales were down nearly 25%, Southwest California sales were upmore than 30% year-over-year. 4 cities set new volume records.
Inventory levels remained virtually unchanged when adjusted for unsalable homes (like short sales and$600,000+ homes) and in spite of the length of time lost to short sale negotiations, average days onmarket also remained fairly constant. That’s all good news compared to spiked inventories, months onmarket and no sales, which was more the norm just 3 years ago.
While the state median price was up a few points year over year, our city medians were largelyunchanged over 2009 and back into 2008. Hopefully this stability in our market is a positive harbingerthat we’ve established a baseline in spite of a market shift from bank-owned properties to onedominated by short sales. 2011 is widely anticipated to produce another tsunami of foreclosures but aslong as demand stays as strong as it has been, we’ll weather that storm with minimal impact to ourprice level.
The downsides? Distressed properties continue to make up nearly 75% of our sales. Until that numberdrops well below 50% we will not see any appreciable increase to our property values. And as long asunemployment numbers stay high, and construction jobs languish, we will continue to accumulatedistressed properties. Many expect that trend to continue well into 2012 at least. If California continuesto chase higher paying jobs out of state at the current rate (144 companies in 2010), the employmentpicture will not improve any time soon, keeping housing values low and increasing pressure oncommercial properties.
One final area to watch in 2011 – while distressed and underwater homeowners attract the headlinesand have defined our market for the past couple years, 75% of homeowners are NOT upside-down andstill have equity in their homes. Granted it’s considerably less cash than it was in 2006 but equitynonetheless. If banks start to relax their current overly-regulated loan programs and get some of theirmoney back into circulation, this could represent a significant boost from pent-up move-up-demand –especially into those upper end homes. Not only would this boost sales in 2011 but there would be animmediate positive impact on median price and general property values.
Consumer confidence is they key. Here’s hoping for more of that in 2011.
Your Happy New Year Report
Real Estate: Finally a good investment?The housing market still looks pretty bleak: There were a record 1 million foreclosures last year, home prices are still falling in many regions, and the number of "underwater" properties is at a record high.
And things don't look much better in other areas of real estate. The number of construction jobs continues to decline, even as other parts of the economy have added jobs. And mortgage rates have moved higher as long-term Treasury yields have backed up during the past few months.
Basically, the real estate market remains a mess.
Real estate encompasses a wide range of markets – homes, apartments, hospitals, office buildings, strip malls, dormitories and other properties. But for our purposes, let's focus on residential real estate, or homes. Here are four reasons to think residential real estate might represent a bargain – with one big caveat.
CNN MoneyExisting home sales jump 12 percentSales of existing homes jumped in December, marking the fifth month of gains in the past six months, based on an industry report released Thursday.
Read the full story
Los Angeles TimesHome seizures by banks decline in stateFewer Californians grappled with foreclosure last year, bucking a national trend and giving homeowners fresh hope that the state's housing market could be on the mend.
Read the full story
CNN Money1 million homes repossessed in 2010Foreclosures were at a record high in 2010, and more than 1 million people lost their homes, even as notices started leveling off during the end year.
Read the full story
• Everyone hates homes - When the housing market is in the doldrums, people tend to avoid thinking about the value of their home. Sellers complain they’re not getting offers and buyers bemoan the strict lending requirements. However, prospective buyers should be contrarian and take advantage of a down housing market.• Smart people are buying real estate - A prominent hedge-fund manager said in a speech last fall: “If you don’t own a home, buy one. If you own a home, buy another one, and if you own two homes, buy a third and lend your relatives the money to buy a home.” He believes that interest rates and home prices will rise this year, so real estate bargains won’t last much longer.• Real estate performs well during inflation – Convention says Treasury Inflation Protected Securities, commodities, and real estate do well in an inflationary environment. Real estate performed well during the period in the 1970s, when persistent inflation and high unemployment occurred. • Demand may be coming back - Job creation and getting people employed are the two major factors in the housing rebound. There’s much debate about when the job market will recovery. Optimists say the recovery will happen this year, while pessimists say it won’t happen for several years.
Read the full story
You may have read recent articles citing drops in 2010 home sales in Riverside County, Californiain general and the weakest year nationwide since 1997.
Not so in Southwest California!
All cities in the region exceeded 2009 sales volumes while 4 of the 6 surpassed previous high watermarks. Menifee set the sales pace outstripping 2009 sales by 43%. Temecula sales were up 33%,Lake Elsinore 31%, Wildomar 28%, Murrieta 25% and Canyon Lake 18%. Temecula exceeded their2004 peak by just 12 homes while Murrieta added 182 homes to the record set in 2008.
Median prices weren’t bad either. We’ve been pointing out that stability all year long and you cansee where we ended up. Maintaining stable prices in spite of a substantial increase in sales and thechanging product mix is a very good sign (hopefully) that we have hit bottom and are poised torecover as soon as the general economy allows.
And the total revenue from real estate, which impacts city coffers so directly, has also shownimprovement as a result of increased sales volumes – although still well shy of the boom years.
7 Year Regional Housing SummaryTemecula, Murrieta, Lake Elsinore, Menifee, Wildomar & Canyon Lake
Single Family Residential - Full Value Sales *Prepared by [email protected]
2004 2005 2006 2007 2008 2009 2010Temecula
# Sales 1,975 1,742 1,141 805 1,569 1,334 1,987Median $ $437,158 $484,978 $526,237 $475,522 $337,735 $289,875 $300,234
Total $ $863,387,544 $844,831,095 $600,261,385 $382,795,143$529,906,738$386,693,250$596,564,958Avg $ / SqFt $222 $249 $252 $251 $152 $124 $128
Murrieta# Sales 1,679 1,661 1,252 687 2,054 1,666 2,236
Median $ $432,511 $488,747 $530,912 $473,562 $304,466 $271,107 $270,878Total $ $726,186,109 $811,809,044 $664,702,241 $325,336,865$625,373,335$451,664,262$605,683,208
Avg $ / SqFt $204 $227 $231 $206 $126 $105 $110
Wildomar# Sales 361 327 317 218 473 287 398
Median $ $393,540 $442,018 $463,920 $435,608 $296,054 $225,739 $220,745Total $ $142,067,790 $144,539,913 $147,062,772 $94,962,580 $140,033,463 $64,787,093 $87,856,510
Avg $ / SqFt $218 $242 $238 $246 $149 $97 $97
Lake Elsinore# Sales 924 1,054 700 335 1,154 959 1,387
Median $ $306,607 $363,543 $431,158 $366,358 $183,819 $179,965 $182,925Total $ $283,304,406 $383,174,322 $301,810,425 $122,729,874$264,169,930$172,586,435$253,716,975
Avg $ / SqFt $197 $237 $265 $221 $121 $87 $91
Menifee# Sales 820 763 520 498 1,005 651 1,142
Median $ $323,138 $364,695 $418,974 $370,671 $259,504 $201,899 $206,414Total $ $264,972,818 $278,262,603 $217,866,263 $184,594,241$260,801,185$131,436,249$235,724,788
Avg $ / SqFt $197 $214 $215 $190 $119 $91 $96
Canyon Lake# Sales 468 342 286 133 330 306 379
Median $ $443,384 $480,200 $567,071 $548,205 $300,561 $241,416 $251,006Total $ $207,503,712 $164,228,400 $162,182,306 $72,911,265 $99,185,130 $73,873,296 $95,131,274
Avg $ / SqFt $225 $264 $289 $271 $148 $114 $119
* Summary data courtesy of Chicago Title & MRMLS. All figures presumed to be accurate but not guaranteed.### denotes new peak sales volume
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Murrieta Temecula Lake Elsinore Menifee Wildomar Canyon Lake
7 Year Sales by Month(w/polynomial trendline)
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
$800,000
3/04
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7 Year Median Price by Month
While unit sales in the region have described an almost perfect smile duringthe past 7 years, the trendline for median price is more like a sneer, or agrimace. The good news is that it appears to have bottomed out.
0
500
1,000
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Temecula Murrieta Wildomar Lake Elsinore Menifee Canyon Lake
1,975
1,679
361
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468
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1,661
327
1,054
763
342
1,141
1,252
317
700 5
20 2
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805
687
218
335
498
133
1,569
2,054
473
1,154
1,005
330
1,334
1,666
287
959
651
306
1,987
2,236
398
1,387
1,142
379
2004 2005 2006 2007 2008 2009 2010
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Temecula Murrieta Wildomar Lake Elsinore Menifee Canyon Lake3rd Quarter '09 4th Quarter '09 1st Quarter '10 2nd Quarter '10 3rd Quarter '10 4th Quarter '10
Annual Unit SalesSingle Family Residential
Quarterly Unit SalesSingle Family Residential
In spite of slowing sales volumes in the last half, as indicated above, the year ended on a up note thanks to strong first half sales. With an up-tick in December sales and improving economic and jobs data, we’ll just have to wait and see what 2011 brings.
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Temecula Murrieta Wildomar Lake Elsinore Menifee Canyon Lake
3rd Quarter '09 4th Quarter '09 1st Quarter '10 2nd Quarter '10 3rd Quarter '10 4th Quarter '10
Quarterly Median Price Chart
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
Temecula Murrieta Wildomar Lake Elsinore Menifee Canyon Lake
$437,
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$432,
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$393,
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$306,
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$323,
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$443,
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$363,
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$530,
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$463,
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$418,
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$567,
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$475,
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$473,
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$435,
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$366,
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$370,
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$548,
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$337,
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$304,
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$296,
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$183,
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$259,
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$300,
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$289,
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$271,
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$225,
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$179,
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$201,
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$241,
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$300,
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$270,
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$220,
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45
$182,
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25
$206,
4
14
$251,
0
06
2004 2005 2006 2007 2008 2009 2010
Annual Median Price Chart
Median prices – ehhhh, not so much. However, many areas of the state that enjoyed salesincreases this year did so while sacrificing median price. Not so in our region. Pricesgenerally showed some quarter over quarter improvement over the course of the year toend up about the same as last year. Two years of price stability in this market is definitelya good thing.
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On Market (Supply)
Pending Closed (Demand) Days on Market % Selling Months Supply
663
242
178
80
54
3.7
537
202
150
75
68
3.6
465
164 9
975 4
1
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119
114 7
7
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2.8
139
41
22
83 3
8
6.3
96 4
632
71 1
9
3.0
Murrieta Temecula Lake Elsininore Menifee Canyon Lake Wildomar
December Market Activity by Price PointPrice On 60 Day 60 Day REO PercentPoint Market Close Fail Close Selling
Temecula, Murrieta, Lake Elsinore, Menifee, Wildomar, Canyon LakeSun City, Hemet, Winchester, Perris & San Jacinto
$80,000 17 29 15 0 86%$100,000 341 257 175 130 58%$200,000 1,632 857 738 400 54%$300,000 1,295 671 532 202 56%$400,000 315 207 193 38 52%$500,000 80 36 61 7 37%$600,000 48 21 33 2 39%$700,000 36 15 25 5 38%$800,000 36 7 19 1 27%$900,000 22 6 9 2 40%$1,000,000 19 2 7 0 22%$2,000,000 72 5 33 0 13%$3,000,000 17 2 10 0 17%$4,000,000 2 0 1 0 No Sale $5,000,000 3 0 0 0 No Sale$10,000,000 4 0 0 0 No Sale $25,000,000 2 0 0 0 No Sale TOTAL 3,924 2,086 1,834 787 53%
December Demand Chart
December Market Activity by Sales TypeActive Closed Failed In Escrow % Activity
Bank Owned 22% 42% 14% 38% 27%Short Sales 52% 30% 68% 48% 50%Standard Sales 26% 28% 18% 14% 23%Other 1% 1% 2% 1% 1%
0.0
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Murrieta Temecula Lake Elsinore Menifee Wildomar Canyon Lake
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Murrieta Temecula Lake Elsinore Menifee Wildomar Canyon Lake
Average Days on Market
Inventory / Months Supply
Inventory is defined as how long it would take to sell the homes currently on themarket if nothing new came along. A healthy inventory is pegged at 5 – 6 months tostrike a balance between buyers and sellers. During the past 3 years we’ve seeninventory as high as 32 months and as low as 2. Neither inventory nor days onmarket increased appreciably during 2010. Referring to a previous chart, if youback out the homes listed for $600,000 and over, salable inventory remains right atthe 2 month level. High end properties also remain on the market for longer periodsand short sales (50% of the market) take much longer than average to close,extending average days on market. If you adjust for those variables, ADOM forsalable properties actually declined during 2010.
Source: ForeclosureRadar.com
Source: ForeclosureRadar.com
Source: ForeclosureRadar.com
Source: ForeclosureRadar.com
Menifee CA Foreclosure Trends
Canyon Lake CA Foreclosure Trends
Source: ForeclosureRadar.com
As you have questions regarding your city or have requests for specific information not covered in these
pages, please don’t hesitate to call me.
Gene Wunderlich951-205-1911
[email protected] http://gadblog.srcar.org
