Monday Morning Coffee Break: Ventura County Real Estate Doing’s for Week Ending June 28, 2008

June 29th, 2008 Categories: Weekly Real Estate Activity In Ventura County

It has been only a week but there are some hints of a retraction occurring in the Ventura County real estate market. What does it mean?

First it could be a simple aberration. It is summer and things do slow down during the summer months. People have other things to do and selling a home is not a high priority.

People are of the mind set to hold and wait to see what the overall economy is going to do.

There are some major financial adjustments happening with family budgets.

More funds have to be redirected to basic necessities such as food and fuel. With the rains and flooding in the farm country, many crops destroyed, food prices will start increasing rapidly due to the shortages of corn and other basic crops.

As an aside—- this action of Mother Nature is having people re-think oil drilling, coal conversion to fuel and nuclear plants. As prices for gasoline zips past $ 5 per gallon, upward to $ 10 per gallon, there will be a rapid out cry for the United States to start drilling.

Europe has many nuclear plants. America is looking and asking why not us?

Also, there is a slogan now taking root “Drill Now!, Drill Here!”

It will not be long for the political astute to sense the change (if they haven’t already) and then we will see drilling. But it is going to take time. The change however has taken place…..we will have drilling.

Politicians being politicians want to be re-elected and many things will be done to appease the public regarding soaring prices for both fuel and food. Unfortunately the political forces end up doing the wrong thing and the problem becomes bigger. Today the political course is to say one thing and be working on doing something else.

OK….back to real estate. The bottom of the market has been set and people will start seeing prices going upward within a few months. There have been a few properties, not many, that have revised their list price upward.

As shown in the top of the chart below, the appreciation rate for Ventura County over the next 12 months will be about 5.5% and will increase to 24+% (or more) within 36 months.

Add to the mix the fact that sellers are not willing to part with their property without getting the value they think it has. The pendulum appears to be swinging back in favor of sellers. We will know in a few more weeks.

The total number of listings were down for the week, meaning that inventory is being reduced, which is good and will favor higher prices.

Expirations over the last month or so has been down. These homes are sitting in the back ground just waiting for the time and price to come up to sellers expectations. Also the variance of homes sold list price to the actual sales price dropped significantly over the last week. Homes that are selling tend to be around $ 500,000 or less price range.

I do know that people are looking and most are looking for a deal. But the “deals” are getting leaner as sellers begin to dig in for their price. I do know this for a fact. Just this past week two clients that had planned to sell a few years ago and didn’t, wanted to know what their properties were worth now. When told they just looked at me and said “I’ll wait”.

Keep in mind none of this means much unless buyers are qualify to buy. Good income, good debt ratios and good FICO scores have come back into vogue. Those that can qualify for VA loans should take advantage of the opportunity offered by the VA.

It is readily apparent that the neighborhood banks in general are hesitant to make mortgage loans (they are looking for less risky ventures). So buyers will seek out lenders such as Provident Funding and other type real estate only lenders who by the way tend to be far better with rates than banks.

The areas with the steepest decrease of listings in Ventura County over the last week occurred in the Conejo Valley. Fillmore is still in a downward spiral but it appears that it has abated somewhat and things should at least flatten out.

However areas such as Fillmore have to settle the flood plains issue. If they don’t their growth as a city and the building of homes and attracting industry in general will be hampered.

Let me leave you with a mid-year, 6 months comparison between 2007 and 2008 of Ventura County.

For 2007 (January 1 thru June 29) there were 3,529 homes that had sold; the average list price for sold homes averaged $ 722,009; the homes sales price averaged $ 699,077 for a variance of 3.3%. These sold homes were on the market for an average of 76 days.

For 2008 (January 1 thru June 28) there have been 2828 homes sold (a decrease of 25% for similar period in 2007). The average listing price for sold homes this year for this period was $ 703,304 (about the same as 2007). The average sales price of sold home is $ 555,877 this year. The variance between sold homes list price and sales price is down 26.5%. Sold homes are taking 92 days now compared to 76 days in 2007.

On that sobering note I will talk to you next week. Yes the market has bottomed and is headed upward. Good news is starting to be printed about Ventura County real estate. It began with the University of California annual report last month and positive news will continue.

One more item…….cities will be the place that real estate will grow the fastest. Read Is $5 or $10 Per Gallon Gasoline Going To Kill Real Estate In Ventura County? Or Any Other Place. Driving to work from suburbia will lose its luster because of the high gas prices. This will be offset somewhat with many professionals working from home.

Your comments are welcomed.