The first quarter of 2010 was the busiest 1st quarter in a long time for most of the Southern California market, especially the Westside and South Bay. As you can see from the numbers posted on this blog, activity is way up thanks to the convergence of three main factors:
1) Sellers pricing more realistically (at least 15% off market heights)
2) Low inventory
3) Low interest rates/fear of higher rates
Reminiscent of days in 2003-2006, we saw quick sales, multiple offers, cash buyers and people getting asking prices and beyond. The micro markets of the Westside/South Bay definitely did not match what was going on in other parts of the nation where sales were flat or down year-over-year. We are definitely seeing what the value of wonderful weather and having an international fascination with your city can do to stabilize housing prices.
What the Westside/South Bay saw in the first quarter did seem to be more typical of higher-end housing markets in several parts of the U.S., as reported by CNBC and others last week.
“People are not as uptight as they were a year ago,” says mortgage lending company exec Steve Habetz. “It seems as if they are more comfortable in thinking the high end housing market is not collapsing. Home values have stabilized and it’s been a matter of following the leader. One person sees others buy or sell and they join in. That’s been happening.”
Simply put, this confidence has created some stabilization in housing prices on the high end which has been struggling while other Westside/South Bay locales under a million dollars were recovering.
With realtors fielding quite a few calls from both sellers and buyers seriously inquiring about the market, activity should stay strong through the second quarter but the market will probably cool down some with the government beginning to quiet its involvement in the market (Federal Tax credit expires April 30th and no longer buying mortgage backed securities) and interest rates beginning to climb.
As the finance and economic blog Calculated Risk (I highly suggest book-marking this site- great source for constantly updated economic news) noted this Monday, a strong drop in refinancing’s is to be expected now: “With the yield on the Ten Year Treasury increasing to 4%, and the end of the Fed MBS purchase program last week, mortgage rates will probably rise and refinance activity will fall sharply.”
However, rates aren’t the only thing that drives the market. It might bring prices down but as long as the overall economy continues to recover, the market will probably not see a major double dip which some economists are predicting…Who knows, if I had a crystal ball I wouldn’t be writing this blog right now and would be playing golf at Pebble Beach:)
Remember, if you are thinking of buying or selling real estate you should call our office. More than ever it is important that you align yourself with a real estate professional that is trustworthy, hard working, covers the details and truly understands the market. We pride ourselves on exactly that.