Wednesday, January 14, 2009

Housing Inventory as a Market Indicator

One common way to measure housing supply is "Months of Inventory" - a calculation of how long it would take to sell all the homes on the market if no new ones were added. A high number indicates over-supply, and downward price pressure - since buyers have many homes to choose from. A lower number indicates under-supply, and a so-called seller's market - buyers competing for a scarce commodity.

Interpreting these numbers is as much an art as a science, but here are some suggested parameters from Steve Thomas of Altera in Orange County:

Buyer's Market - 6 or more months of inventory
Equilibrium - 5 to 6 months of inventory
Seller's Market - 2 to 5 months of inventory
Hot Seller's Market - less than 2 months of inventory

In February through August of 2005, there was less than a 2 month supply of homes on the market in Orange County - right before the bubble burst. As troubles in the sub-prime mortgage market grew, housing inventory also grew - to almost 8 months supply in January of 2007, and then and incredible 16 months of inventory in September of 2007! Since that month, inventory has fallen dramatically and leveled off to between 4 and 5 months supply, where it currently stands.

It is impossible to predict where the bottom of any bear market will be, but this is yet another indication that the housing market in Orange County is settling down into a less volatile state.

Tuesday, January 6, 2009

Home Value - Price per Square Foot vs Median

One of the most common ways to evaluate the real estate market is by watching the sales price per square foot of homes sold ("sp/sqft"). Let's take a look at the results of homes sold in four local towns for the month of December 2008:

City Homes Sold Low SP/SQFT High SP/SQFT Average SP/SQFT
Coto de Caza 12 $222 $450 $319
Ladera Ranch 31 $207 $276 $242
Mission Viejo 92 $186 $362 $267
Rancho Santa Margarita 49 $204 $309 $264

For the expanded area including Lake Forest and Modjeska, Silverado and Trabuco Canyons in additon the the four above, the average price per square foot in December was $234 for attached homes (condos & townhomes) and $262 for detached single-family homes. This represents a drop of 20% for condos and 15% for single-family homes from January's average - a significant reduction, but not quite as catastrophic as is portrayed in the media. Year-over-year reductions of 25% or even 35% are often quoted, but these are based on changes in the "median" home value. The median is the value at which half the homes sold were less expensive and half were more expensive. Since an extremely high proportion of sales are occuring at the lower end of the market, the median home value is skewed significantly lower than the reduction in sales price per square foot!

Saturday, January 3, 2009

Market Snapshot Customized for You

We all know that the Real Estate market has been in turmoil, largely due to the sub-prime mortgage melt-down and related credit crunch. Have you wondered exactly what it all means for the specific value of your home? Sign up for our free Market Snapshot - just enter the basic information about your home's location and size, and you'll receive a monthly email link to a customized report with all kinds of specific data and nifty graphics. It's very informative, and of course there's no obligation of any kind - you can opt out and stop receiving the updates any time you like.

If you have questions that the report or would like a more detailed analysis of your home's value, just give me a call!

Friday, January 2, 2009

Polo field update

Here's a pic of the planned site for the new arena, off Via Pajaro and adjacent to the Equestrian Center. In addition to concerns of local residents in The Village and Los Ranchos Estates, boarders and trainers at the Equestrian Center have voiced concerns about the loss of turnouts to the polo ponies and incompatibilities between the way polo ponies are exercised versus hunter/jumpers and trail horses. "Polo players need to 'pony' their horses, cantering around in groups of 3 or more - not much of a match for kids on jumpers in a nearby arena or folks on a quiet trail ride", said one boarder who asked not to be named. Could be interesting times ahead.

Foggy morning in Coto

New Polo Field Approved for Coto Equestrian Center

The Orange County Register is reporting that construction of a new arena has been approved by an OC zoning administrator. The arena will be built on previously undeveloped land adjacent to the existing Coto de Caza Equestrian Center on Via Pajaro. The project is the culmination of 3 years of negotiations and discussions between Silver-Bronze, the group which ownes the land, and members of the Orange County Polo Club, which will lease the facility. The field has been opposed by local residents because of concerns over parking and impact on views.

Silver-Bronze plans to use the lease revenue generated to upgrade the existing facilities they own, including the Equestrian Center, the Coto Valley Sports Club, and Gentilles at Coto de Caza. Ken Agid of Silver-Bronze says he expects the new polo arena to be completed and in use by April 2009.

Neighborhoods potentially impacted by the new construction include parts of The Village, one of Coto's earliest developments, consisting of all custom or semi-custom homes set among the hills and oak groves of Coto's north-eastern section.