Real Estate Article: Chino Hill's Direction in 2005
01/19/2005

(1/19/2005)

Chino Hill"s listing inventory has decreased dramatically. This means that Chino Hill’s housing market has moved out of the danger zone and back into stability. Compared to 360 houses on last year’s listing inventory, there are currently 190. The prices of homes will finally cease to drop.

     Last April, the unsold inventory of Chino Hills was a mere 50 houses. This led to prices of homes skyrocketing. Due to the large number of buyers pushing their homes on the market for profit purposes, the unsold inventory surpassed 370 during August and September later that year. The buyers were scared off by the situation the market was in. The combined sales of those two months were only about 60 homes. If we compare the number of single family homes sold in Chino Hills between 2003 and 2004, there was 20 percent less sales. The decrease was caused by rising prices and a dropping affordability index. If we compare the medium price of homes, in 2004 the medium price was $487,000 but in 2003 it was only $384,000. Prices have increased by 27 percent which is considered extremely fast.

     During the course of 2004, from June to September, because the unsold inventory increased so much, prices of homes dropped a lot. Things changed, however, starting from October. From October on, the inventory started decreasing which helps the prices of houses stay at a constant level as opposed to dropping. Since then, the prices of homes have not only stopped dropping but have risen back up to prices equivalent to the peak of 2004. For sellers this I good news, but for buyers, it is something that’s going to be hard to stomach.

     If we look at the quantity of houses sold per month in 2004, only January and December had sales higher then the corresponding month of the previous year. Last year, in December there were over 100 homes sold in Chino Hills. Numbers such as that will inspire prices to rise and also demonstrates that there is still a large demand for homes. The leading factor as to why there is still such a large demand for homes is because interest rates on loans are still very low.

     Whether the price of a home rises or drops depends on 3 different statistics of the real estate market:

1. The listing inventory: A large number of houses listed means that there are a large number of sellers. In that type of situation prices will decrease. The unsold inventory can be found by looking up C.A.R.’s (California Association of Realtors) unsold inventory index.

2. The number of completed transactions: A lot of sales means that there is currently a large demand for homes.

3. Affordability: C.A.R.’s H.A.I. (Housing Affordability Index) represents the nuber of people who can afford a median priced home. The higher the percentage, the more people who can afford a median priced home. Currently the H.A.I. is around 19 percent.

     Our current listing inventory in Chino Hills is 190. The average number of homes being sold each month is about 80. Unsold inventory in pervious years has been around 150 so the number of listings right now is still considered higher than normal. If we look at It from a sales perspective, in 2003 there were about 100 houses sold per month, in 2004 there were about 80. From analyzing those two statistics, the prices in Chino Hills are still pressured to fall. Aside from those factors affecting prices, there are also a few others:

1. 1. The majority of the people buying homes in Chino Hills are from Orange.The higher the demand for homes there, the more home sold here.
2. 2. The mortgage rates staying low and stable: Interest rates affect the H.A.I. If interest rates rise too quickly, the housing market will be impacted greatly.
3. 3. A variety of other environmental factors:

• The strength of California’s economy.
• The growth of California’s population.
• Whether or not the U.S. economy is prospering
• Etc…

     There is nobody that can predict the market’s forecast perfectly. Your best bet is to carefully study statistical data and get advice from an experienced professional.

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