• Summer Heat Brings Market Cooling

    by Carrie Benuska

    Responding to rising interest rates, growing levels of inventory, and high seller expectations, the San Marino real estate market has cooled a bit in the past two months.  Home buyers seeking to purchase a home in the competitive San Marino market might not detect the change, but sales data shows a slight decrease in average sales price for both June and July of 2013.

    It is not surprising that San Marino’s strong seller’s market has softened a bit.  Rising sales prices have lead to increasing list prices and a rising level of inventory.  Some Realtors are perceiving a generalized decrease in the number of offers received on their listings.  They are still receiving multiple offers but not quite as many as a month ago.
    The real estate company, Redfin, which also operates a very successful real estate website, confirmed what local Realtors are experiencing.  According to their June 2013 “Bidding Wars Report,” “In June, the percentage of Redfin offers facing competition fell to 68.6 percent, down from its peak of 75.7 percent in May.  As is evident from these numbers, most home buyers are still having to fight for their dream home, but not quite as hard as they did a few months ago.
    Although real estate markets across the country are showing steady signs of recovery, the slight cooling is evident on a national basis.  The S&P/Case Shiller composite index of 20 metropolitan areas showed seasonally adjusted gains during May of 1%, which is shy of economists’ forecast for a 1.5% increase, according to the website financialpost.com.  That marked a slower pace than April’s 1.7% rise.
    Somewhat significant increases in mortgage Interest rates over the past few months has definitely contributed to the mild slow down.  According to mortgage broker Paul Baldecchi of Riviera Financial, conforming rates for a loan amount up to $417,000 have climbed to as high as 4.5%.  This is over a 1% increase from record low interest rates in late 2012.  According to Baldecchi, this increase in rates means that buyers will spend 20% more for the same loan than they did less than a year ago.  This increase in monthly costs could price some buyers out of the market.
    The attached graph is based on Multiple Listing data and shows average list and sales prices from April, 2012 through June, 2013 in the city of San Marino.  Average sales prices peaked in May, 2013 and experienced a decrease in June, 2013.  This trend appears to be continuing through the month of July.  As of July 30, 2013, the average sales price on homes sold during the month was $1,850,693, representing a further decrease from the June figures.
    On the opposite end, average list price increased from May, 2013 to June, 2013, and the trend continues into July.  As of July 30, 2013, the average list price of homes in San Marino was $4,788,353, a large increase over the May figures.
    I discussed this inevitable leveling of the San Marino real estate market in a May article titled, “Where Do We Go From Here?”  At that time, prices were spiraling upward at a dizzying speed, inventory was low, and homes were selling lightning quick.  The frantic pace of the market was bound to steady out.
    Luckily, the San Marino real estate market continues to be a standout across Southern California, and data over an extended period of time shows impressive growth.  To use a metaphor, the changes in the market are similar to slowing from a sprint to a brisk jog.  We are still moving forward, just not quite so quickly.  No one knows for sure what the future holds, but I am confident San Marino will stay at the front of the pack.

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