1. Listing prices are set more closely to comparable sales prices. Over the past six months, homes listed for sale at a price within 5% of the actual sales price, typically sell within 60 days. Buyers are more willing to make offers on well-priced properties. In the past six months HALF of the properties sold in the Coachella Valley were on the market less than 60 days and sold within 5% of the list price. These statistics are comparable to sales in 2005, the height of the real estate market. Unlike 2007, when list prices were still excessively high and sales were significantly slower - only 35% of the homes sold in the first 60 days, within 5% of the list price.
2. Sales prices have dropped substantially. Valley-wide, distressed sales now make up about 65% of all sales. As a result, the average sales price in the valley has dropped by 46% from the high in 2005. Note: This is an AVERAGE price decline throughout the valley – in the more distressed areas, sales prices have decreased by more than 60%! In neighborhoods where distressed sales make up a small percentage, prices have still dropped by 30%.
3. The Domino Effect. Home sales typically follow the Domino Effect, whereby families in smaller homes buy progressively larger homes in progressively nicer neighborhoods. This process includes families taking advantage of lower interest rates to buy larger homes. However, they typically need to sell their current home to do so. When the average home prices skyrocketed, prices of all homes increased to the extent that first time homebuyers were priced out of the market. With no one available to purchase the entry level homes, those current homeowners had no one to sell to, and therefore could not buy up. The combination of the dramatic drop in home values, coupled with historically low interest rates, along with the $8,000 tax credit for first time home buyers has, in effect, tipped that first domino, allowing current home owners to sell and buy up.
For these reasons, pending home sales have increased each month for the last five months. This trend has not occurred since July, 2003.
If you have any questions or comments, please respond to this blog, email us at SandL@StefaniRealty.com, call us at 760-406-1063, or visit our website www.StefaniRealty.com. We would be happy to help you find the home of your choice, or discuss with you the value of your home and our marketing strategies.