It’s been a while since my last blog, but as things have been pretty uneventful, there hasn’t been much to blog about. I didn’t want to blog for the sake of blogging.
Looking at June 2009 Los Angeles County median housing price, we saw a spike to $325,000 where the median price has been crawling sideways at around $300,000 from January 2009 to May 2009. The data is a bit confusing as different analysis has different numbers, but my data set is consistent with the data coming from Data Quick courtesy of California Association of Realtors.
The chart above shows the median housing price from April 2003 which was chosen as a starting point since it matched the recent lows from Jan 09 to May 09 as the median price crawled sideways. You can see the spike in June 2009 which is a 9% increase from the previous month and makes it look like the housing market has bottomed out in price and has maybe started an increasing trend.
Working with my customers and submitting offers, this impact of the price spike can be felt. Many houses are being listed below value resulting in a bidding frenzy and houses getting sold above listing price in a matter of days if the house is nice and is in "move-in conditions." On the other hand, I have offers in on short-sale houses that are awaiting bank approval forever…
There are some speculation that the price spike is the result of people trying to take advantage of the $8,000 First Time Home Buyer Tax Credit which will be coming to an end on November 30, 2009 and that prices will collapse once again when the tax credit is over. Yes, it is nice to get $8,000 back, but when you are buying a house at a real low price and with 5.5% interest rate, would getting back $8,000 really make a difference in your purchase decision? If you are buying a $400,000 house (which may rise to $500,000 by the end of 2010), I would think that the $8,000 is a "nice to have" but not a real deal breaker…. For my thinking, I would say that the low house price and the low interest rate is the bigger contributor to home purchase and the tax credit going away will have minimal effect on house price…but more on the Tax Credit on my next blog.