Below is a listing of the Long Beach Bixby Knolls Area home sales closed in March 2010.

Long Beach home sales

March 21, 2010

What's Happening with Home Prices?

I’ve updated the look of my website and added more content.  It’s packed with useful information on real estate in general but even more valuable for residents of Long Beach, or really anywhere in Southern California where I work.

At the end of the month I’ll be updating my local market data charts.  I cover five cities/areas to understand the trends affecting each.  The areas are Beach Cities (Manhattan Beach, Redondo Beach, Hermosa Beach), Palos Verdes (Palos Verdes Estates, Rolling Hills, Rolling Hills Estates, Rancho Palos Verdes), Carson, Torrance, and Long Beach.

The direct link to my site is: www.philipmccollum.com

On the subject of home prices, I think everyone knows that the past few months have show strong recovery in prices in the Southern California area, at least on the low end of the spectrum.

The linked article suggests that home prices will be heading lower in 2010. Get all the details here from a Bloomberg article:

http://www.bloomberg.com/apps/news?pid=20603037&sid=a1nQ57v_2e5g

With all the talk about upticks in the pace of home sales, and clearing out the backlog of home inventory, it’s easy to assume that the worst is behind us and prices are on an upward trend. Certainly there are plenty of investors with that point of view, as I’ve seen them bid up the prices on homes to the point that a great deal is not much better than an average deal. For example, offering 290K for a home listed at 217K. That’s an extreme example of poor buying discipline. How can you get a great deal if you pay so much over the asking price? Do you think somebody will come along and offer even more?

I continue to feel that home prices will turn downward soon, and it seems I have some company in that point of view. The following article addresses this topic:

http://finance.yahoo.com/news/Homes-About-to-get-much-cnnm-699910894.html?x=0&mod=real-estate

As the summer comes to an end, it marks a period of increased real estate activity and an increase in prices.  To some extent I attribute these increased to normal seasonal trends.  The situation improved somewhat and some buyers got off the fence.  In some cases, competition heated up into a buyer frenzy with multiple offers coming in.  I’ve been a bit surprised by that.

My take on the situation is that no fundamentals have changed.  The housing market is driven by jobs and the economy.  I can’t see much reason to justify more than a minor up-tick in home prices right now.  But apparently many people have forgotten all about the “housing bubble” and are out trying to scoop up great deals.  In their excitement, if they enter bidding wars they are most certainly defeating their own purpose.

This may be the right time to buy for some people due to low interest rates.  After all, payments are the main driver of affordability, not price.  So for now, low interest rates are helping to support prices.

Time will tell how long interest rates stay low.  They are being manipulated to keep them low now, but at some point the helping hand of the government may run out of money.  We will see.

My advice to buyers is to shop around.  Don’t go crazy and get into an auction atmosphere of competing bids.