Let's take a look at what's been happening with Pasadena home sales over the last year or so. Overall, the real estate market has exploded not just in Pasadena, but in all surrounding cities and neighborhoods. Home buyers are out in force and unfortunately, property inventory is non-existent.
What's causing all this activity?
Partly, it's seasonal. Real estate market is cyclical and we always see an uptick in activity as we get closer to summer months. Families are waiting for kids to finish school before they move and others are just in a sunnier mood and can focus more on looking for a new house.
However, for the most part, consumer confidence in housing is up in response to positive news coming out from various real estate analysts:
So... did we hit bottom? That's to be debated, but the majority say YES it has.
More importantly, I think what is driving real estate market activity in the San Gabriel Valley is affordability. With the interest rates, dropping even further, it is makes a lot more sense to buy a home vs rent one for many consumers. Let's take a look at this chart:
Buying a home for $250,000 in 2003 even at really low interest rates of 5.83% would mean a mortgage payment of $1,472. Buying the same home today at 4% interest, even if the price is exactly the same would cost you a bit under $1,200. HUGE difference!
And, consumers are realizing that it makes much more sense to buy then rent if they have the financial ability to do so. Plus, you get tax deductions and long term equity gains. And, for many, the importance of having a home to call their own!
Let's take a look at how Pasadena's housing market is fairing.
Pasadena Housing Statistics - May 2012
- Let's look at the # of pending sales... this item represents the number of Pasadena properties under contract or in real estate lingo for California - in escrow. It's interesting to note that in the last six months 141 homes went into escrow, almost as many as in the entire 2011! What does that say? Homes are moving and buyers are writing contracts.
- The number of homes sold are running pretty much the same as last year. So... significantly more homes are pending, but about the same number of homes as before are closing. I think that speaks to the tightening of credit and a lot of short sales that do not culminate in the actual sale.
- A lot more price changes - 402 in the last six months compared to 432 last year. Home sellers are becoming more realistic and are adjusting their home prices accordingly.
- And note... Notices of Default have been non-existent in the last month and really went down drastically compared to last year. Take a look at my post on the National Mortgage Settlement and how it will affect the foreclosure process.
It'll definitely be interesting to look at Pasadena housing statistics in the next few months. That's when all the escrows will start closing on homes that sold over the last month or so.