Thursday, January 8, 2015

Mark’s Ventura County Market Analysis 4th Quarter 2014 - (October, November, December) & Year End Review


Camarillo saw a gradual decline in home inventory from 239 homes in Oct to 226 homes in Nov, and finally falling to 192 homes for Dec. The market is still stronger than a year ago when we finished 2013 with just 164 homes in our Dec inventory. Most of the decline in inventory was in SFD (single family detached) homes while condo/townhome inventory remained fairly stable.

The number of homes which go under contract and into escrow during each month is a fairly strong indicator of the number of homes which will close escrow during the succeeding month. In other words, most of the homes which go into escrow this month become closed sales by the end of next month. This is why monthly sales numbers are a good indicator of the previous month’s sales market. But sometimes we are fooled.

Sept had 78 homes go into escrow, Oct had 85, and Nov had 83. So, we expected to see somewhere close to 78 homes close in Oct and indeed 74 homes did close escrow. We had 85 homes go to escrow in Oct so we expected closed sales of about 85 homes in Nov. That didn’t happen.

We had 53 homes close escrow in Nov! This was 32 homes fewer than we would have expected. So what happened to the 32 homes? Some probably dropped out of escrow (which is more common than most people know) and some took longer to close (maybe due to the holidays) and reflect into the next month’s sales numbers. So the 83 homes that went into escrow in Nov morphed into 75 homes sold in Dec. which equaled Oct sales numbers! This happened despite the fact that Dec had the lowest home inventory of the 4th quarter.

Obviously, home inventory is not a good predictor of monthly sales or monthly buyer demand in a transitional market like ours. We are still in a fairly strong seller’s market but nowhere near as strong as the market in the Spring of 2013 when prices and interest rates were much lower than today. If buyer demand remains constant, then home inventory will often help drive home prices. Smaller inventory increases competition among buyers and helps to raise home prices. Larger inventory increases competition among sellers and tends to lower home sales prices. In our transitional market, anything can happen.

Most of the foreclosures and short sales are gone. Foreclosures were 19.7% of our state market in 2011 and just 2.5% of our market in 2014. Short sales were also 20.2% of our state market in 2011 and just 3.6% of our market today. So total distressed property sales have dropped from 40% of our market to roughly 6% today as shown in CAR’s (California Association of Realtors) “2014 Annual Housing Market Survey”. Many investors have left our market since home prices and loan interest rates have risen steeply during that same time frame. 

Prices in Camarillo have risen close to 26% by my calculations since Jan of 2013. There was roughly a 20% increase in 2013 and about 6% in 2014. The Median home list price for Nov was $665,000 as reported by our local VCCAR realtor board in the “Ventura County Market Report for Nov 2014”. This is a staggering 25% increase in price from the previous month. I believe this reflects more on a smaller number of higher priced homes which sold rather than on the actual overall market. We can check this next month. The median Sept sales price in Camarillo was $540,000 which compares more closely with the Ventura County Nov median home price of $512,000 for a SFD and $330,000 for a condo.

Less expensive distressed home sales are almost gone, investors are leaving the home buyer market and home prices have risen above what many first time home buyers can afford. As I discussed in my 3rd quarter report – most new home developments in Camarillo are beyond the reach of first time home buyers as well. According to CAR, first time home buyers made up 50.8% of the market in California in 1995. In 2014, first time home buyers made up just 30.5% of the market in California, a decline of 20%. Student loan debt is also affecting our home sales. According to the Federal Reserve Bank of New York, student loan debt has tripled over the last 10 years with over 78% of students owing more than $10,000.  

So who are buying homes in Camarillo? Affluent home buyers appear to be the only group comfortable with our market and indeed, we have seen a surge in their purchases as our economy continues to improve. The major challenge we will have in Camarillo is in the market for trade up homes which would normally be purchased by folks who come from the first time home owner segment. As the first time home owner segment continues to shrivel up, it will become an issue to trade up home owners. According to CAR’s 2014 Market Survey: “This occurred in the late 1980s, when low affordability curbed first-time homeownership, which in the early 1990s exacerbated the decline of the trade-up market in California.”   

Sellers have seen their homes appreciate to levels near the market prices we had at the peak in 2006. Most home owners are once again building equity, often refinancing their homes or entertaining the possibility of selling their homes for a profit. They are generally reluctant to accept low price offers from buyers. They can afford to wait. People who chart the stock market will recognize this market pricing as a resistance ceiling. At some point, buyer demand will recognize the new home values and the volume of sales will markedly increase to match this realization. Looking at our local trends, I think this will happen within the next 2 years

I believe that home prices will continue to rise at a modest rate in 2015, moderated by a gradually increasing home inventory and by rising mortgage interest rates. In California, the median household income of a first time home buyer is $80,000 … I’d guess that is a bigger number in Ventura County.  Better keep your kids’ bedroom available to them when they graduate from school, because they probably won’t be buying their first home in Camarillo.

 

Oxnard  The number of homes for sale have fallen from 314 homes in September 2014 to 212 Homes in December 2014. This is down from the June peak of 344 homes.  212 homes were listed Dec 2014 mostly unchanged year over year from the 220 homes listed in Dec of 2013. The number of monthly home listings has fallen from 117 homes in Sept to 57 homes in Dec. Total home sales have remained remarkably consistent at 108 homes in Sept, spiking to 155 homes in Oct and dropping back to 109 homes in both Nov and Dec.

The Nov  median home price in Oxnard was $415,000, up from $410,000 in Sept. Port Hueneme had a median sale price for Nov of $300,500 … the lowest in Ventura County.

Ventura The 4th quarter saw a predictable fall in home inventory from 219 homes in October to 145 homes in December up slightly from 136 homes listed in Dec 2013. So there has been a small growth in inventory. The number of homes coming to market each month has trended downward from the third quarter with 91 homes in July, to 85 homes in August, 76 homes in September and continuing down in the 4th quarter all the way to 33 homes in Dec. Total sales numbers remained remarkably constant at 79 for Sept, 81 for Oct, 80 for Nov and finally tapering a bit to 70 sales in Dec – close to the 74 sales in Dec of 2013.

The November median price of a home in Ventura was $471,500 down from $505,000 in September.

 

Santa Paula and Fillmore have seen no appreciable increase in total home inventories during the 4th Quarter.  Santa Paula listed 28 homes for Oct, 24 for Nov and 24 again for Dec. Home sales also stayed flat with 12 homes selling in Oct, 10 in Nov and 12 again in Dec. Year over year home sales remained nearly unchanged with 10 homes selling in Dec of 2013.

The May median price of an existing single family home in Santa Paula was $352,000, rising to $412,000 by Sept, and on to $475,000 in Nov. This is a very steep upward pricing trend.  Fillmore had a median home price of $336,000 last May, which rose to $354,500 by Sept, and continued upward to $393,450 by Nov. Again, this is a very aggressive upward pricing trend.

 

Moorpark saw inventory decrease from 102 homes in Oct to 84 homes in Nov, to 72 homes in Dec . The number of homes going into escrow with accepted offers has remained fairly constant with 44 homes in Oct, 41 homes in Nov, and a slight dip to 27 homes in Dec’14 which is very close to the 25 homes which came to market last Dec’13. Total closed sales were 23 homes in Oct, 23 again in Nov, then a spike to 43 homes in Dec… up from the 37 homes sold in Dec’13.

Median home price in Moorpark for May was $620,000,  up 19% from April! Then in September the median price dropped back to $609,000, and fell precipitously to $505,000 in Nov. I’m not sure what’s happening here. Possibly with such a small number of home sales, which continued to decrease each month in the 4th quarter, each sale has an effect on the averages out of proportion to what a larger market might show. 

 

Simi Valley & Wood Ranch  The home inventory has bounced back and forth between 290 and 310 homes since August. In Dec’14 the inventory dropped to 231 homes - which is still a big improvement over the 158 homes available in Dec’13. Sales stood at 114 homes in Oct and dropping slightly to 99 homes in Nov and 97 in Dec’14 ... down slightly from the 107 homes which sold Dec’13.

The median price of an existing single family home in Simi Valley was $489,000 for May, rose over the 3rd quarter to $510,000 for September ... and fell back slightly to $482,500 in Nov.

 

Thousand Oaks and Newbury Park  have seen their total home inventory steadily decline from 355 homes in July, to 344 homes in Aug, to 339 homes in Sept in the 3rd quarter.  The 4th quarter continued down to 309 homes listed in Oct, 253 in Nov and finally 184 homes in Dec. That is a long slide down. Year over year home inventories are very close for the month of December. Basically the 2014 home inventory boomed during the first 3 quarters of 2014 and then gave back all the inventory increases in the second half of the year. The number of home sales has remained fairly stable at between 90 and 100 sales each month since Sept and finished Dec’14 at 100 sales vs 99 sales in Dec’13. This appears to be a re-occurring theme in most of the towns in Ventura County. Year over year home sales are very close for the month of December.

Median May price for a home in TO was $619,450… $717,500 in Sept… and back to $674,000 in Nov.

Median price for a home in Newbury Park was $629,500 in May… rose to $639,000 in Sept... and fell back to $585,000 in Nov. (ref: www.terradatum.com )

 

Agoura Hills & Oak Park  saw their total market inventory build to a peak of 136 homes in July, taper back to 128 in August, 122 homes in Sept, spike to133 homes in Oct, then continue the slide down to 115 homes in Nov and 81 homes in Dec’14. This compares to 84 homes in Dec’13s inventory.

Sales began at 25 homes sold for Jan and ratcheted up to a high of 58 homes sold in July. Sales dipped back to 32 by Oct, 31 in Nov and remained close at 33 homes sold in Dec’14 – nearly identical to the 32 homes sold in Dec’13.

Oak Park saw its’ median May home price rise to $840,000, dropping to $685,000 in September, then rising once again to $874,000 in November.

Agoura Hills Saw it’s median home price drop year over year from $837,500 in Sept’13 to $542,599 in Sept’14. (ref: www.ClarusMarketMetrics.com ) We have to remember that Oak Park and Agoura Hills are smaller markets than most Conejo Valley communities, so it takes fewer home sales to skew the numbers.

 

Westlake Village & Lake Sherwood   Total home inventories rose from just 96 homes in Jan to a high of 175 homes in July, and 174 homes in Aug. Thereafter the numbers dove from 165 homes listed in Sept, to 151 in Oct, 134 in Nov and 106 in Dec’14 – down from Dec’13s - 118 homes listed. 

Monthly sales began at 25 in Jan and built to 58 homes sold in June. From then on it was a gradual downhill slide, with sales bottoming in Dec’14 at 33 homes sold… compared to Dec’13s - 40 homes sold. 

Median May price for a home in Westlake Village was $1,081,500. By September the numbers had fallen to $830,000, and finished in Nov at $1,200,000 for a median home price.

Summary

2014 was a roller coaster market that started weak and built in both inventory and  number of sales until the middle of summer. Then the market gave back much of its’ gains.

This Decembers’ county- wide inventory is generally very close to last Decembers’ inventory.  However, almost every town studied showed a 4th quarter decrease in total inventory and sales from the previous 3 quarters.

Prices rose more slowly in 2014, on average about 6% in Ventura County. Though prices were soft in the 4th quarter, I predict prices will strengthen again with the new year. Sellers have reason to be optimistic about our market with home values in many areas building upward towards levels we haven’t seen since 2006. 

Home buyers are struggling with the new higher prices, relatively low inventory, and lender requirements. On the plus side, inventory will likely improve during the 1st quarter of 2015. Also, mortgage rates fell in Nov’14 to about 4.0% …  down from 4.25%  in Nov’13.  They will probably not rise again until after the first quarter if you believe the FED. The forecast is for rates to reach somewhere around 4.5% before the end of the year.

All in all, I think the Ventura County market is continuing to mend, with prices and inventory moving towards a more natural balance. Future challenges include finding a way to encourage first time home buyers to invest in our market. Or maybe to encourage developers to build homes in a price range first time home buyers can afford.

Just the way I see it.

 

Mark Thorngren    

(805) 443-3366    mark@movewest.com     BRE# 01413932

All data taken from VCCAR MLS or as quoted. Display of MLS data is deemed reliable but is not guaranteed accurate by the MLS. All opinions are those of the author.

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