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Residential real estate
forecast: Home prices up, home prices down: It's hard to know where the housing market is headed in today's economic climate. But the experts agree on one thing: Residential real estate isn't the safe haven it used to be. The median home price in Calabasas gained almost 8 percent last year over 2005--to an areawide record of $1.39 million--but in Thousand Oaks prices dropped nearly 3 percent, according to last week's Ventura County Real Estate and Economic Outlook Conference at the Hyatt Westlake Plaza. The event was sponsored by First American Title Co. Home prices in Agoura Hills, Camarillo, Moorpark and Simi Valley fell slightly, while Westlake Village and Newbury Park showed marginal gains. Housing prices statewide have remained stagnant since March 2006. Guest speakers at the conference said psychological factors were as much to blame for the slumping housing market as the economy. "A guy sees his neighbor's house sell and he automatically wants 10 percent more," said Robert Kleinhenz, deputy chief economist for the California Association of Realtors. With buyers' and sellers' desires at odds, homes last year began to sit longer on the market. In 2004, Ventura County's unsold inventory levels stood at an all-time low, but last year a more than seven-month backlog had developed. Even in the slump, home inventory levels remain in line with long-term averages, Kleinhenz said. While sales of existing homes fell 28.5 percent in 2006 to the lowest level since 1992, the price depreciation was not dramatic. "We came off a stellar peak in '04-'05, yet we're still on a level that's among the best of all time," Kleinhenz said. "By no means are we looking for a market that's headed for the tank. . . .We've got a number of hopeful signs going forward." When bad is good A longtime prognosticator of local real estate trends, Mark Schniepp of the California Economic Forecast said weak growth in the housing market stands to be offset by the low interest rate environment. "I'm predicting more bad news, but bad news is good news for interest rates," Schniepp said. In addition, the area's housing market continues to be pumped by record job growth. Amgen boasts an all-time high of 8,400 employees, he said, and as the office market continues to boom along the Calabasas to east Ventura County corridor and the overall population grows, more potential buyers will come to the table. Schniepp said the number of new homes in the "pipeline," those receiving government approval and those under construction, may not be able to keep pace with demand. The new home market declined 34 percent last year, according to Schniepp's report. The forecast said new home sales will increase during the year "simply because production will increase and price concessions will be made." Although home sales have dropped precipitously, some related industries such as construction remain stable due to the ongoing demand for renovations and remodels. "No major collapse is being forecast," Schniepp said, but warned, "It doesn't really look like we've hit a plateau yet at the bottom." Kleinhenz said the gap between buyer and seller expectations began to close late last year. "Buyers began to realize that there was no fire sale out there. If they wanted value they were going to have to pay for it." But could they afford it? Kleinhenz said only 22 percent of Ventura County residents can afford to buy the median-priced home. In Los Angeles County the affordability rate remains at just 18 percent. Looking ahead Howard Roth, chief economist for the California Department of Finance, thinks the housing turnaround will be slow in arriving. "The California and national housing sector downturns are not yet over," Roth said. While both economies will decelerate in the first half of 2007, he does expect a "pickup" in 2008. According to Schniepp's forecast, sales of existing homes in Ventura County and the Conejo Valley will bounce slightly in 2007 following an "exaggerated pullback" in 2006. The average sales price of new homes will show very little if any appreciation. "The real estate bubble has effectively burst as sales have collapsed and price appreciation has subsided," Schniepp's forecast said.
2006 median home prices | |||||
