It’s about time! Things took off like a rocket in the second quarter. In fact, the gains were so strong that this is the first year in a long time that prices for the year are actually up. Summarizing the results, prices and sales volume are up, inventory, selling time, distressed sales and mortgage rates are down.
Prices for the second quarter were the highest in years, to the point that it positively impacted the results. The average home price for the coast now stands at $759,000, up 12 percent from the first half of last year and up 7 percent from full-year 2011! Prices ranged from $165,000 for a cottage in La Honda to $2,400,000 for an ocean-view Ocean Colony home. Prices peaked in 2007 at $1,031,000 and are down 26 percent since then.
Sales volume has improved considerably over the past three years, our worst stretch in recent years. A total of 137 homes sold this half compared to 109 homes in 2011, 87 in 2010, 52 in 2009 (our worst year), and 206 in 1999, our best year. Volume is up 26 percent from 2011 but down 33 percent from 1999. Distressed sales accounted for 26 percent of total sales this year, down from 35 percent of total sales last year.
What’s driving the market now is the tight inventory situation. It ended 2011 at a low level and continued to drop throughout the year. As of June 30, there were 134 total listings of which 73 were available and 61 were sale-pending. Inventory has not risen as much as would normally be the case now due to increased volume and cheap mortgages.
With rising volume and low inventory, homes have been selling faster. Average selling time has fallen to 114 days compared to 134 days in 2011, 118 in 2010 and 51 days in 2005. More than a third — 35 percent — of all sales occurred in less than 30 days. Forty-three percent of all sales in 2005 went over list price compared to 9 percent in 2009, 11 percent 2011 and now 20 percent are selling at more than list.
This chart shows average home prices by quarter from 2006 to present. As you can see, prices were high in 2005, dipped in 2006 (Devil’s Slide closure), rebounded in 2007 and have been declining since the beginning of 2008.
Based on what’s sold and sale-pending, I expect the third quarter to show prices below this quarter, inventory still tight and sales volume remaining strong. Let’s hope the second quarter wasn’t a statistical fluke, but the beginning on a nice long-term upward trend.
Steven Hyman is the broker and owner of Century 21 Sunset Properties. He can be reached at 726-6346 or at www.century21sunset.com