With apologies to Bob Dylan, the times here in the Southern California real estate market are “a changin’,” and the new dynamics accompanying the change are bringing new challenges to the industry.
• Inventory of both land and existing homes is down
• Foreclosures and distressed sales are down
• Median home prices hit a 56-month high in March
• Investors and all cash buyers are at a near-all time high in the market (34 percent)
• Credit conditions are good but credit seekers are at war with all cash buyers
• FHA loans continue to fall to the lowest number of loans since 2008
• Existing homes continue to sell at well over list prices
• New home tracts selling out within days (hours) of being brought online
This is a competitive market. According to many close to the resale market, there have never been so many investors in the market. Some are big money from Wall Street like Blackstone Group, and some are absentee buyers gobbling up second homes and rentals. The fact that new listings coming on the market consistently sell for more than the list price is also playing havoc with appraisals, conventional loans, and the ever vital component of good business: inventory.
“Every single home builder I talked to at our luncheon in April had one thing on their mind,” says Jim Lytle, Managing Director of the Rancon Group. “Inventory is a major challenge throughout the industry. From new home builders to brokers and agents, the biggest challenge today is coming up with something to sell.”
According to DataQuick, absentee buyers, mostly investors and second-home buyers, bought more than 30 percent of the homes sold in Southern California in March. This same group represented 32.4 percent in February. Buyers with all cash offers on homes represented 34.1 percent of the market in March and almost 37 percent in February. Since 2000, absentee and all cash buyers have represented about 18 percent and 16 percent of the market respectively.
“This is a tough market for traditional buyers,” says Darryl Stephenson, Vice President of the Rancon Group and Manager of Rancon Real Estate’s Menifee Office. “While our mission and priority in both companies is to sell real estate, our legacy at Rancon is founded on building communities that stand the test of time, and building relationships that are mutually beneficial with our clients. For the Rancon Group that means developing properties that have a positive impact on the community and the market where they are located. For Rancon Real Estate it means helping first time buyers buy a home, and then helping them again with their move-up plans. For us, it’s all about the long term.”
In the short term, prices for homes continue to rise and inventory continues to be a challenge for buyers and homebuilders. Stephenson says Rancon Real Estate has been specializing in Residential and Commercial Real Estate for the past 42 years. Our integrity and experience have guided many buyers and sellers to successful closings over the years. Rancon Real Estate continues to shine in Southwest Riverside County as its Premier Real Estate Brokerage.
On the land side, the Rancon Group is offering several residential projects in Southwest Riverside County to a select group of merchant builders this year. All have approved entitlements and infrastructure improvements and several have finished and blue-top lots.
“This is a challenging market, but in my forty-plus years in the business, it’s always been a challenging market,” says Rancon Founder and Chairman Dan Stephenson. “Through the years we have hired the best and the brightest for both our Rancon Group and Rancon Real Estate. In fact, in meeting the challenges of the today’s market, we’ve just hired 19 new real estate agents at our new office in Menifee. These new agents will be trained by our experienced agents, many of whom have been with us for decades or more, in how to deal with these market conditions. It’s exciting for me to see sharp young men and women getting back in to the workforce as real estate agents. Especially in this expanding market.”