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Southern California Market View |
July 2007 |
Click this link to see a Flash Demo of this new feature and to sign up for a FREE 10-Day All Access Pass. You will get unlimited access to thousands of dollars worth of the best research in the homebuilding industry. This is a limited offer, so sign up here.
Here are just some of the ways this new technology will be used by our subscribers:
• Search Developments Using a Map – All developments appear as points on a map to make it easy to see which developments are close to each other
• Select Only What You Want – Zoom in or out, then pick a point and select all developments within a radius, a drive time or even draw any shape you need to capture a specific area.
• Get a Bird’s Eye View – The map can be shown in a road map view, full satellite aerial photo view or a hybrid of the two.
As always, we are committed to a completely web-based solution using a Software As Service (SAS) model, so there is no software to load, no discs to mail and it can be accessed from any computer, anywhere. All you need is a high speed internet connection and you are ready to go.
For more information or for a live demonstration of this exciting new feature, contact the Sales Director in your area or visit our website
Jennifer Banks
Director, Sales and Marketing
Southern California Division
(949) 502-5151 ext. 108
Jennifer's Email
Survey-to-Survey New Home Market Changes in
Southern California
Each quarter, Real Estate Economics conducts a thorough new home field audit of all actively selling developments throughout Southern California. For a limited time as we demonstrate our new GIS-based website, this quarterly field audit information can be accessed at no cost, by contacting our Director of Sales and Marketing, Jennifer Banks, at (949) 502-5151 x 108...or by clicking here.
This newsletter presents survey-to-survey new home market changes stemming from our quarterly field audits, as shown in the table below:
As shown, there has been an increase in the number of actively selling new home communities since 2nd quarter 2006 – rising to a net total of 739 new home developments, or 2.5% during the past 12 months.
During this same 12-month period, the average net base price for new homes has fallen by 8.9%, and the average net price per square foot has fallen by a similar percentage, as shown graphically below:
The trends reflect downward price adjustments from builders reacting to reduced sales activity as prices fall to a level more fully supported by the local economy.
Not only have prices fallen, but advertised concessions have increased dramatically, averaging $10,442 during 2nd quarter 2007, as shown below:
Currently, advertised concessions average almost $10,500 per home sold. It should be noted that, in many areas of Southern California, the level of undisclosed concessions may be more than double the disclosed amounts.
The economic foundation that supports new home prices remains stable in Southern California, but the unrealistic run-up in pricing (largely caused by speculative buyers during Year 2005 and the first part of Year 2006) is now in the process of settling down toward local economic support. Demand remains, but prices became grossly overstated, and are now receding back toward supportable core demand levels.
The rate of total monthly sales has fallen dramatically by 84.9% since 2nd quarter 2006, and the average sales per development has fallen by 86.4%, as shown graphically below:
Currently, the overall average absorption rate for actively selling new home developments in Southern California is 3.7 per month per development, while the incremental rate of sales per development since the previous quarter is 3.4 sales per month. The rate of incremental sales more accurately reflects the current market disruption that is being faced in Southern California. Nonetheless, it also reflects the continued sales success of appropriately priced product in the region. Those new home communities that are blatantly overpriced have suffered in terms of absorption, while the underlying economic foundation in Southern California has allowed for stable absorption for those communities that are offering market-supported prices.
The overall level of inventory has increased by 15.6% during the past twelve months, while the total months of inventory (which accounts for slower sales rates) increased by 77.4%, as shown below:
Though inventory levels are forming a plateau, high inventory levels for both new and existing homes will continue to produce fierce competitive levels in many areas of this region during the next few months.
These survey-to-survey new home market changes reflect the severe market disruption that has occurred during the past 12 months. However, there are some initial signs of stabilization. Stable market conditions are likely to emerge in core markets near major job centers during the next 12 months as economic growth continues at a healthy pace in Southern California, and as the lower pricing structures implemented by many new home developers begin to more effectively tap currently latent demand.
If you need assistance or technical training on how to analyze your specific market areas, please contact Jennifer Banks at (949) 502-5151 ext. 108 or at Jennifer.Banks@RealEstateEconomics.com.
Here is a sample of our New GIS Mapping feature that includes aerial photos like this and shows the location of every new home community.
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