We always like to draw comparisons. How is this month versus last month? How was last year versus the previous year?
This issue, I am going to compare the Conejo Valley statistics with the Simi Moorpark statistics. You would think that they would be very similar. You will see they are not. All real estate is local. That’s why, when you get asked how the market is doing, you need local information. That is what your clients really want to know. How is the market for their home?
Let’s begin by looking at the price history for the past two years.
I drew the black lines to indicate how different 2012 was to 2013. For January to December 2012, the median price increased 30%. For 2013, it increased 3%.
2012, large price increase. 2013, basically flat.
Now lets look at Simi Moorpark.
For January to December 2012, the median price increased 7%, relatively flat. For 2013, it increased 29%.
2012, relatively flat. 2013, large price increase.
Not a mirror image. More like looking at it in a mirror. Just the reverse of Conejo. Makes you wonder. (All real estate is local—but these two valleys are local, they are right next to one another. I guess real estate is more local than the next valley.)
Why? My first thought was to suggest low inventory. Let’s look at Conejo first. In view of the big price increase in 2012 and the relatively flat 2013, it would seem that 2012 must have had extremely low inventory, while in 2013 it grew.
Yep, that’s what happened. 2012 was a year of declining inventory, and the supply and demand relationship made prices go up. And for 2013, the inventory grew in the expected seasonal curve. But was it the growth of inventory that moderated price appreciation? For 2014, inventory continues to grow, up a whopping 46% from the same period last year.
Let’s compare that to Simi Moorpark.
Hmmm. It looks remarkably the same. Inventory decreasing in 2012, normal pattern in 2013. And for 2014, inventory is growing even more rapidly. Up 261%. Huge percentage.
We have seen what happened to prices, and we have looked at the inventory growth. The last part of the equation involves demand, which is indicated by closed escrows. First, Conejo Valley:
Sales were very strong last in 2012, and 2013 looks about the same. 2014 started off slowly, as the beginning of the year generally does, and we are the 8-week average is at about 35 solds per week, a higher amount than the previous two years. The inventory is growing, closed escrows about the same, prices stabilizing. The market is balancing. Compared to the previous year, the number of closed escrows are down about 7%, while prices are up about 15% for the same 5-month period. Total dollar sales are 7% higher, while units are 7% lower.
Now for Simi Moorpark.
Very different chart. 2012 units were stronger than 2013, The low inventory probably kept the number of closed escrows lower than expected. But look at the 2014 8-week average. For the previous two years, it dipped to just below 30 per week. Now it is heading much lower, closer to 20. Compared to 2013, the number of closed units are down 21%. Prices are up 20%, dollar sales are 9% lower than last year. But a 21% decrease in units is very significant. And look at the increase in inventory. True, it was extremely low a year ago, but it is up 261%.
Let me put all this information into these next two tables. Except for the inventory numbers, the figures and percentages are based on a 5-month span, October through February.
So we have the tale of two cities (two valleys). And two answers to the question “How is the market doing?”
Conejo Valley, sales remain strong for this time of year, inventory is growing, and prices are stabilizing.
Simi Moorpark, the number of sales has dropped off, inventory is growing quite rapidly, and although prices have recently risen dramatically, the competition of more inventory is beginning to have a moderating effect.
Many of us heard an update from Leslie Appleton-Young last week. The statewide forecast is for 3% higher sales and 6% higher prices. A good year, a decent year.
But what is the forecast for where you live?