May '07 Real Estate Market Report - Is It Really a Buyer's Market?

With all the hoopla in the media about slow sales and the market shifting to a buyer's market, it's interesting to note that Southern California's real estate market is continuing to appreciate.

DQNews reports that even though the number of homes sold is slowing down, the median sales price of a home in Southern California for the month of May 2007 is $505,000.  This is up 4.9% from May of last year when a median home cost $481,500.  Now, this increase is on top of already pretty hefty appreciation that took place in our market place over the last several years.

It is interesting to note that lower priced homes are declining in sales, while higher priced homes are flat or even increasing in the number of homes sold.

Locally, specifically in reviewing home sales in Pasadena, San Gabriel, San Marino, South Pasadena, La Canada, Montrose/La Crescenta and Altadena, we're seeing that the market is still quite a bit a SELLER's MARKET!

What constitutes a Seller's Market vs. a Buyer's Market?

Quite simply, we look at Absorption Rates.  An Absorption Rate is the number of homes sold in a real estate market over a particular period of time and is usually measured in months.  The monthly absorption rate is the number of homes sold in a month.  We then take that rate and divide it into the number of active homes to come up with the # of months of inventory for a particular area.

  • What does the absorption rate mean to the seller?  By looking at the rate, the seller will have a pretty good idea as to how long it will take to sell their home.  This will hep the seller and their Realtor in determining their pricing strategy to help position their home on the market to help sell it faster and for the most money.
  • What does the absorption rate mean to the buyer?  Quite simply, it helps them understand the demand and supply in a particular area.  Buyers and their Realtor should look at this rate as one of the components in determining their offer strategy.

A true buyer's market is when there are 6 months of inventory or more in a particular area.  In essence, it can take 6 months or more to sell your home.  There's an overabundance of inventory.

A seller's market is when there's less than 6 months of inventory.

Here's how some of our local markets are tracking with the number of months of inventory available:

La Canada:  5.3 mths

Montrose/La Crescenta:5.7 mths

North West Pasadena:  5.0 mths

South West Pasadena:3.4 mths

North East pasadena:3.6 mths

South East Pasadena:3.9 mths

Sierra Madre:2.9 mths

South Pasadena:1.7 mths

Sunland/Tujunga:4.8 mths

West Altadena:5.4 mths

East Altadena:3.6 mths

San Gabriel (91775 zip code): 3 mths 

*** data extracted from the Pasadena Foothills Multiple Listing Service

As you can see, none of these areas is at 6 months of inventory or more... granted some areas are tracking close to 6, but most are still doing quite well.

So media... please do not generalize.  Real Estate is a LOCAL market.  Let's look at what's happening in the area that you're looking to buy or sell in.  FACTS will help us make the right decisions!

Should you have specific questions about a particular area, and/or you are thinking about buying or selling your home in the Pasadena area or surrounding communities, please do not hesitate to contact me at 626.204.3340 or via email at Irina@Irina4RealEstate.com.

Good Luck in your Real Estate Endeavors!

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

For information about Pasadena, please visit the following links:

Other interesting information:

My Recent Listings:

Upcoming Listing:

  • Highland Park Architectural - stay tuned for more information