West Rocklin Real Estate Report – April 2014
Very Stable Sales Indicators
In the national news, I’ve been seeing a lot of talk about how fragile the housing market is right now. While that may be the case in some national markets, the Rocklin real estate market is not showing signs of weakening but a gentle strengthening.
This is a reminder that now, more than over the last 4 or 5 years, real estate sales reporting has become more and more localized. One could say that it’s now “hyper local” as it was prior to 2007.
What this means is that national indicators may be relevant for one area of the country and not for another. The west tends to buck the national trends anyway and it seems that whatever is going on in the rest of the country real estate wise doesn’t fully apply here.
That’s what I’m seeing in the West Rocklin real estate market right now. Nationally, some columnists are saying the housing recovery has been stifled by this or by that while in the Rocklin real estate market is positively chugging along with no indication that there could be an impending issue.
Last year at this time was a different story. The market was hotter than Death Valley in August. Prices were rising so quickly that it lead me to believe that we were headed for another bubble and subsequent crash or at least a soft crash until in June when it suddenly slowed down.
What I’m seeing today is just the opposite of what happened last spring. I’m seeing a very stable, slightly ascending market that looks reasonably sane. Inventory is rising although there still aren’t enough homes available for sale, sales are reasonably consistent over the last quarter and prices are rising modestly.
Homes For Sale In Rocklin Real Estate
As you can see by this graph and table the inventory of homes for sale is up almost 108%. This is a slightly misleading number as at the current pace of sales, that is just under 2 months of homes available for sale.
Pending sales are up just over 22% from last year and sales are up just under 8%. Again, this seems very stable to me. Not high, not low and slightly rising.
Average Sales Price Increases Slightly
While this graph appears to show the average sales price jumping around a lot it’s actually been in a relatively narrow range over the last year depending on whether a high end sale or two has occurred in any given month. If you took out those higher end sales, the increase would still be there just more gradual.
Notice the low end numbers..$388K, $408K, $400K, $416K, $397K, $402K then it bounces up to $472K which is an abnormal jump. This is generally because a couple of higher priced homes have closed then the very next month it pops down to $430K which is more normal along this price line.
The peaks are less relevant than the troughs in my opinion as there are fewer of them, 3 in this case, then there are troughs where there are 9.
Over the last year, that gives us about a 7% increase in the average sales price which is low by California standards but higher than the national average of 5% to 6%.
What I really like is that it appears sellers have become more realistic about the market as for sale prices are very close to the sales prices in fact the average listing price has declined just over 6% in the last year.
As a result, listing price to sales price percentages have been very high since February running at 98% to 99% respectively. The low was in December at 96% where you can see in the graph there is a large difference between the for sale prices and sold prices. Even more so in November where it’s over $100K.
The larger the disparity between the for sale prices and the sold prices the less sellers are able to net from the sale and the longer the home takes to sell. The average days to sell in April was down to 33 days compared to March where the average days to sell was 46, the highest days to sell month over the last year.
Summary
Real estate market data can be misleading. That is something we learned the hard way in 2007 and something politicians learned in September of 2008 when the stock market crashed sending the U.S. into one of the deepest recessions since the 1930’s.
I mention this because we have an indicator called “the housing affordability index”. This index measures the difference in personal incomes in any given area and housing prices in the same area. When the difference between incomes and home values becomes larger, fewer people can afford to buy homes and home values tend to decline as buyer demand wanes.
We may be at the beginning of a slow down now due to this dynamic. It was about 1995 or 1996 when a similar thing happened, the mortgage rules changed and subprime mortgages became popular allowing people to buy homes they couldn’t previously afford.
Credit is still tight by those standards or we’d be seeing higher buyer demand now. I’m glad that’s not the case and our market, for now, appears to be healthy.
Have questions or comments? Please feel free to share them here or email me.
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