Unfortunately, a bit of a whimper. Let’s look at all the numbers.
CONEJO VALLEY
Let’s start with the Conejo Valley. We will compare the current four month period (October-January) with the same period a year ago.
We can see that inventory is up 47%. Last year, high demand and the lack of inventory were primarily responsible for the increase in prices. In the comparison above, prices did increase 15%. But what is somewhat of a concern, the number of sales actually decreased 8%, even though there was more inventory available to sell. That is why I think we are starting off with a whimper.
Let’s look at prices over the past two years.In the chart below, prices increased early in the year, month by month, but were actually flat over the past 6-7 months.
Next, let’s look at the inventory graph, to see how this year compares to the past four years.
2010 and 2013 represented what we would usually call a normal graph of inventory. The intervening years, 2011 and 2012, were correction years. 2014 seems to be starting out normally, as far as inventory is concerned.
However, we have started out slower than last year as far as sales are concerned, and inventory is building.
How are sales doing? Remember, the graph below represents closed sales, so the information is perhaps two months behind what is happening today.
Overall, we should be very pleased with the last two years. The bigger the “mountain”, the better the year. But when comparing the current four months (October through January 2014) with the same four months last year, the number of closed escrows is down 8%. This year is starting off slowly; but then again, it is January. We now have more inventory (up 47% from this time last year), and mortgage rates are still consistently low. If you want a forecast, I would go with the CAR forecast for the year, with sales up 3% and prices up 6%.
We will see how the year progresses. It is amazing how easy it is to forecast the year as we approach the end of the year. You can be so much more accurate.
In the Conejo Valley, we are seeing moderate sales, a slowly growing inventory, and price stability.
SIMI VALLEY/MOORPARK
Simi Valley had a lower inventory all year, which resulted in higher prices. While their pricing increase has been more consistent, they are also experiencing a dropoff in sales.
Measured by percentage, Simi/Moorpark inventory is up 78%, but in real terms is only 100 homes. When measuring October 2013 through January 2014 as compared to the same months, prices are up 20%. The monthly pricing figures show a different picture than Conejo.
Prices have been more regular in their increase, and still appear to be on the rise. The main reason is inventory. Last year at this time there was less than one month worth of sales in inventory, this year the inventory has increased to two months of sales. However, the inventory of lower priced (below $750,000) in both areas continues to be less than one and a half months worth of sales.
We start this year with an inventory in between the 2013 year of too little inventory and the 2011 year of too much, with 2012 as a year of declining inventory.
Of concern is the number of homes sold. The decline in Conejo was 8%, the decline in Simi/Moorpark is 20%. Hence, the description of the start of the year as a whimper.
Compare this with Conejo, and some may say it is lacking the growth Conejo experienced, some will say it is more consistent. The two areas are in many ways very different.
With this wide variation between the two areas, you have to ask yourself why, and is this happening throughout the state? My computer keys can almost type these words on their own: ALL REAL ESTATE IS LOCAL. The real estate market is a dynamic market, and is constantly changing due to a wide variety of reasons.
My advice to you—continue to follow your business plan. Don’t have one? It’s never too late. There is nothing magic about January 1st. But make your plan. Without a plan, all you can do is watch what is happening to you, with no control, like a sailboat without a rudder. With a plan, you can make things happen.
Not sure how to do a plan? Come see me. I can help. That’s is why Dilbeck has me here–to help.
Chuck