I thought this week I’d share some statistics on where we are compared to our recent past. Taken from a recent realtor report from our SRCAR Government Affairs Director, from 2009-2011 we experienced very minimal gains, until last year. Most of our cities saw some significant gains here in SW Riverside in 2012 and ended up doing well. Temecula prices were up 21 percent, Murrieta up 19 percent, Wildomar and Lake Elsinore both up 17 percent, and Menifee up 14 percent.

Please note that since our peak in mid 2006, we still have a ways to go. For example, Temecula is still 38 percent under its peak of $575,935 in June 2006. Murrieta is still 44 percent below its peak of $576,224 in May 2006. Will we see those prices again? Most likely, but when?

I have heard from others, a lot smarter than me, that homes prices are greatly influenced by household income and unemployment. Neither has yet to see any significant change in recent years locally or elsewhere. California history has shown us from 2003 to 2006 the CA median home price rose from $371,000 to $556,000 while at the same time CA unemployment rate dropped from over 7 percent to just below 5 percent during that same time period. Locally, unemployment – which varies some from city to city – is still above 10 percent, which will need to drop before you see any increase in wages. Advertisement

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With that said then why the recent spike in home prices? Simply put, we are experiencing unprecedented times. This recent seller’s market is influenced more by lack of inventory than anything else, caused by a variety of government policies put into place by both the state and our federal government.

The state made it more difficult for banks to foreclose via the newly enacted Homeowner’s Bill of Rights that went into effect Jan. 1. The feds in part by federally endorsing bulk home sales and the introduction of Wall Street types representing equity management companies are buying homes by the hundreds across southern California.

All these factors have absorbed our current inventory of affordable homes making it almost impossible for the first time buyer to finance a purchase. Is this sustainable? Time will tell. Will builders start building again? That will definitely improve unemployment, if they do. Stats show a slight increase in SFR housing starts year after year with about 30,000 in 2012 – nowhere near the 150,000+ homes built in 2005. Nonetheless, we are in a recovery. So plan accordingly.

If you have questions regarding this and/or other real estate matters, contact Mike Mason, Broker/Owner of MASON Real Estate DRE: 01483044, Board of Director of your Southwest Riverside County Association of Realtors® (SRCAR), Short Sale & Foreclosure Resource certified by National Association of Realtors® (NAR) at Mike@GoTakeAction.com or call me anytime at (951) 296-8887.