My post from earlier this week displayed statistics suggesting a favorable relationship between inventory and demand across most price segments in the Lamorinda real estate market. Since markets are driven by the relationship of supply and demand, the local stats seem to be suggesting that we may have reached the point of price stabilization in Lamorinda. This past week, national data was released that is very supportive of what I’m seeing in our market.
According to Corelogic, an independent provider of financial and market data, “many housing statistics are basically moving sideways.” The Corelogic stats suggest an emerging trend of price stabilization when one removes distressed sale transactions from a given market area. In the case of the Lamorinda real estate market, there are very few distressed property transactions, therefore even a stronger case can be made for the stabilization of our market.
Early in the housing downturn, non-distressed properties were falling in price at at the same rate as bank-owned, distressed properties. Not wanting to hold inventory longer than they had to, banks quickly cut prices to move foreclosed homes. The downdraft in prices took non-distressed properties along for the ride. That appears to be changing as consumers differentiate between distressed and non-distressed real estate. In fact, according to an article in the Wall St. Journal, “…while price declines are resuming, they are not yet falling from one-year ago for non-distressed homes. In fact, during the first nine months of 2011, prices of non-distressed homes remained relatively stable, with year-over-year declines between 2% and 3%.” This is on a national basis, and analysts at Barclays Capital called this “the most important trend in the housing industry right now.”
Taking this a step further, Barclay’s housing analyst Stephen Kim stated, “a distressed home is increasingly being seen as a poor substitute for a non-distressed home….bifurcation between distressed and non-distressed homes will only widen with the passage of time.” To a large extent, I have seen this in the Lamorinda real estate market, with buyers shying away from the small handful of distressed properties that we’ve seen hit the market. They are often in poor condition, and with a bank’s limited disclosure obligations, the buyer must be extraordinarily careful during their due diligence period.
The greatest stabilization in Lamorinda real estate will be found in the sub-$1.2M price segment, with progressive softening as one moves up-market. Once the market re-awakens from its seasonal winter hibernation, I am expecting a fairly robust spring market.
