Sellers, Buyers Adjust to Market Realities

While down by one-third from the torrid pace of last year's hyperactive housing resale market, sales of existing single-family homes increased slightly during August from the July total as buyers and sellers adjusted to the calm, new realities of methodical sales, two-way negotiations, a wider selection and modest price increases.

A total of 825 single-family homes changed owners last month, down 32.9 percent from a year ago when 1,230 homes closed escrow, but up 2.0 percent from the July tally. Condominium sales of 283 units f ell by 34 percent from a year ago and were off 10.7 percent from July.

Being 33 percent below a white-hot-out-of-control market that was unsustainable is still a very good market. For the last several months we've been right at a balanced market.

The continuation of 67 percent of a crazy market seems like all that was lost was the 33 percent of pure insanity. Today's market is sustainable and can be used as a benchmark not last year's inflated, artificial madness.

Prices continued to rise, although not at the 20 to 25 percent plus pace that was reported virtually every month over the last four years. The median price of the 825 single-family homes sold last month was $610,000, up 2.0 percent from a year ago. The record-high median price of $625,000 was set in June of this year.

Likewise, the condominium median price of $380,000 was up 1.3 percent from a year ago. The condo record high of $415,000 was set in February.

Sellers who are realistic, willing to negotiate and not pining for last year's mad market are selling their homes and finding the biggest selection of replacement properties in years. Buyers who are looking to live in a property for five to seven years have great opprotunities.

The only people who have to worry about what will happen in the next five to ten months are the investors who hoped for a quick flip and a fast profit. Looking back, homes bought five, ten 15 or 20 years ago are worth signficantly more than when they were purchased. Unlike not that long ago, buyers today find the widest selection of properties listed for sale in years.

A total of 6,832 single-family homes and condominiums were listed for sale at the end of Auguest. That figure was up 115.7 percent from 12 months ago when there were only 3,167 active listings.

At the current pace of sales, today's inventory represents a 6.2 month supply, up from the less than 1-month to 2-month supply common over the last two years., but still only slightly above the 5-to 7-month supply that is deemed to represent a balanced market.

An increase of 116 percent in active listings soun ominous, but the inventory was so low, for so long with so many buyers chasing too few listings and driving prices ever higher, that any increase in inventory is welcomed news.

The Valley would require nearly three times as many listings before the tables would be turned enough to suddenly transform today's balacned market into a buyers' market, and nother on the horizon suggests that will happen.

Unlike the economic upheaval of the early 1990's, the Southern California's diversidied ecomony remains solid with more g ood news coming from an array of industires than signs of stress. The housing market is taking a welcome breather, but this is exactly the kind of market needed by buyers wo want to stay in the region and upgrade to a nicer house.