What is AFG Realty’s summer market forecast for the Morongo Basin?
Several weeks ago I posted my guidelines for establishing a purchase price for a single family home in the Morongo Basin. Each season I will post my forecast for the upcoming new season. I have dusted off my crystal ball so here goes!
First we should look at where we are today, Thursday June 4, 2009. Traditionally the months of March, April, May, and parts of June are the best sales months in the Valley. This is stimulated by military moves. Military families get orders for July/August moves to new bases and many are moving to and from Twentynine Palms. As they enter the market, local families have the ability to sell their home and move up to the next level. To some extent we saw this again this year. Currently approximately 200 homes are in a pending sale with an average price of $125,000. Over 25% of these have been pending for over 60 days (which indicates some problem with the escrow so the sale may not complete). So far this year approximately 500 homes have sold with an average price of around $108,000. The average days on market for sold properties is 108. Almost 80% of these sales are bank owned property (REO).Less than 35 of all pending and sold properties are from short sales! Today we have over 800 single family homes for sale in our market. The average price is over $200,000. The average days on market for current listings is over 225 days. Morongo Basin’s current listings are more than double the current sales days on market and almost double the average sales price!
What does all that mean?
1) Of the over 800 properties for sale in our area, only 220 are priced at or below the current average sales price. Therefore most listed properties are overpriced.
2) Most Buyers are looking at REO properties and not private sale properties. Probably because of item 1!
3) Completed short sales are few and far between!
If this was not enough, we have more foreclosures on the way! The Press Enterprise reports that thousands of properties are about to be foreclosed on and put on the market in the Inland Empire. Just look at the Hi Desert Star legal section and you will see a dramatic increase in trustee sale notices. I anticipate several hundred new REO homes to hit the market starting in late July or August and continuing through the end of the year.
For the summer sales season, my crystal ball tells me:
1) If you are a Seller, take a good look at your price point and adjust it to market value. If you are unable to drop the price low enough (see our April 24th posting), take the property off the market until we see an improvement! Most likely this will not be until at least next spring.
2) If you are a Buyer, You are king! Take your time, review our April 24th posting, and have fun. Don’t look to educate an unreasonable Seller. Offers of 50% of asking price rarely work. Look for properties that are priced right and make fair offers. Do not be in a hurry. You have the time and inventory to find that perfect home! I do expect interest rates to remain steady through the end of the year but watch them carefully. We may see an increase of up to ¾ point between now and then. This can make a big difference in your monthly payment.
3) The season will be slow for sales with approximately 85 homes a month closing escrow (see current pending sales). I would expect that by the fall season we will see pending sales decline to 100.
I will review my forecast in September before I make my fall forecast. Good luck!
Bob Armstrong
Broker
AFG Realty
*all figures are from the Desert Area and Desert Communities Board of Realtors MLS.
