Most of the sales during 2010 in the University Town Center occurred in the first half of the year. The extension of the Federal Home Buyer Tax Credit of $8,000 for escrows opened in November of 2010 through April 30 2010 and closed by the end of September 30, 2010 coupled with the California State of California Tax Credit of $10,000 over three years for “first time homebuyers” (those who had not owned a home or condo for 3 prior years) initiated on May 1, 2010 through midnight on August 15, 2010 saw a frenzy of activity which resulted in multiple offers and price increases during the period January 1, 2010 through June 30, 2010. The highest prices for each of the floor plans sold were during the first half of 2010 with 24 sales (almost 3%) out of a possible total of 888 potential properties in the University Town Center.
July 1, 2010 began a decline in both number of sales and property values throughout the University Town Center, as the traditional summer home buying season sputtered and stalled. During this quarter, we saw inventory rise to double what it had been (approximately 20 listings versus 10) for the prior year. With more properties from which to choose some of which were distressed (short sales), the summer quarter from July 1 through September 30, 2010 saw only six (6) condos sold and closed and all but one closed at a lower price point which was a view property.
The last quarter of 2010 from October 1 through December 31, 2010, saw further price reductions and declines even though interest rates fell below 5% for 30 year fixed mortgages and overall sales priced dropped again as sellers capitulated to the investor buyers some of whom were “all cash” in order for owners to get their condos sold before what sellers had come to perceive as a flat or declining market. The last quarter of 2010 saw five of the six sales close at a lower price point with the exception of an emotionally charged sale.
Where are we headed in 2011?
From January 1, 2011 through the beginning of February 2011, the inventory declined to twelve (12) active listings. The most compelling and credible reasons for this decline in inventory in the University Town Center are related to homeowners/sellers taking their condos/townhomes off of the market (as witnessed by cancelled, withdrawn, expired, or condos placed on hold in the Multiple Listing Service) rather than sellers further reducing their prices to get their condos sold. Some of these properties that were removed from the market were “short sales,” and most likely will come back on the market as REO’s (real estate owned/bank-owned) or “investor-owned”). Other homeowners may decide to rent their condos out (if there is still equity in the property and the seller can hold on until a market turn-around). Still others may come back on later this year as homeowners perceive sales prices to be firming up.
Market price stabilization or decline will depend on whether or not inventory in the University Town Center increases dramatically this spring, whether interest rates climb (as they usually do during the peak home buying season), whether banks continue to tighten their credit stranglehold on mortgages, whether the job market improves, and, whether the so-called sellers further capitulate because they can no longer hang on, and whether the “shadow inventory” flood gates (namely, the distressed properties that banks have withheld from the market) are opened up.
Check back with me again for another University Town Center Market Analysis next month.
University Town Center Specialists Since 1986 (Silver Anniversary Year), with more personal sales and leases than any other Realtors® in Cambridge Court, Columbia Square, Oxford Court & Princeton Townhomes
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