The recession hit housing in August 2007. Every other section of the economy has recovered, but the housing was missing.
We can now absolutely declare that housing has recovered, and the market is normal.
I started to put down a whole series of dates and events outlining the collapse of the economy and how various sectors have recovered. It is interesting to see the many lists of events, and the reasons why various sectors have finally recovered. If you want to see short but excellent timeline, go to USATODAY.
Maybe because housing (specifically mortgage financing) was one of the main causes of the economic downturn, it is fitting that it was the last to recover. But recover we have.
People have to live somewhere. At first we consider apartments and homes. As many families lost their homes, apartments were not a good choice. Where do you keep the kids and the pets? Many lost homes were picked up by investors, and turned those into rentals. Supply and demand created a strong rental markets for homes. Large companies were formed that bought up homes specifically as use for rentals. Those homes were removed from the inventory of homes for sale, as they were now dedicated to rentals. Individual investors were renting their investment homes rather than flipping them, because the rental market was so strong, and the sale market was so weak. Investors now are back to flipping.
We have come full circle. Finally. We can now say that the market is normal. Thank goodness.
Let’s see what normal means for our valleys. For two years in a row, the available inventory curves have been identical. They have increased in the spring and decreased in the fall. Just the way they should.
The escrows-closed graphs show three years one after another, unlike the inventory graphs. Again, similar graphs, with different heights. And the activity this year has been much increased, so the peaks are higher.
Sometimes you can see things visually easier, sometimes the numbers add to what you are describing. You can send graphs to your clients, but in a conversation we have to use numbers, percentages. Below are the important numbers to date. Rather than using the entire 7 months of this year compared to last, these statistics compare the two months of June and July to the same months last year. Pay special attention to the number of sales, up 15% and 31% from the year before. Wow.
For the entire country, economists generally use an inventory representing 6 months worth of sales as being a normal inventory, a balanced inventory not favoring either buyer or seller. For our excellent areas, I suggest that a 3-4 month inventory would be more appropriate for a normal inventory in our market. We are well under that in the Conejo Valley, even lower in Simi/Moorpark. This portends price increases. Prices are up significantly in both areas. In Conejo, the Median is up 3%, the Average up 10%. Big difference, mostly because of higher priced homes. In Simi/Moopark, we have the reverse, Median up 10% and Average up 7%, due to a much higher percentage of lower priced homes. Either way you look at it, prices are going up. See the graphs below.
That is our market in a nutshell. Normal inventories, strong sales, prices increasing but not going crazy. A good market to be a homeowner, a homeseller, a homebuyer.