Sales averaging 60 a month, about a third of those on market
by Jeb Bing
Although the housing boom has ended both for new construction and quick resales in Pleasanton, houses are continuing to sell at historically healthy levels, and price appreciation is projected to return to normal patterns, according to the National Association of Realtors.
In reports made at the Valley Marketing Association and by David Lereah, NARÃs chief economist, Realtors are finding that home sales are settling into a slower pace.
ìIn recent years we were occasionally challenged to find appropriate superlatives to describe surprisingly high home sales,î Lereah said in a report to the NAR. ìNow the housing market has cooled, but 2006 is still expected to be the third strongest on record.
“In this case, experiencing a slowing from a hot market is a good thing because we need a solid housing sector to provide an underlying base to the economy, and slower appreciation will help to preserve long-term affordability,” he stated. “But this is a time for the Fed (Federal Reserve) to pause on rate hikes because we have some interest-sensitive housing markets that have become vulnerable.î
In a news story written by Walt Molony for the NAR, he reported that existing-home sales nationally are projected to drop 6.8 percent to 6.60 million this year from the record 7.08 million in 2005. New-home sales are forecast to fall 13.4 percent to 1.11 million from a record 1.28 million in 2005. Housing starts are likely to decline 6.2 percent to 1.94 million in 2006 compared with 2.07 million last year.
In Pleasanton, however, sales are continuing to average about 60 a month despite a rising inventory that is approaching 200 homes. New homes are also under construction in the Vineyard Corridor, with 189 homes planned there between Ruby Hill and Montevino Drive. New homes are under construction in Ponderosa Home’s Ironwood community off Valley Avenue and Greenbriar’s developments west of I-680.
NAR President Thomas M. Stevens said rising interest rates have slowed home sales in many high-cost markets, such as Pleasanton, while job growth has boosted sales in some moderately priced areas.
ìBroadly speaking, rising inventories have taken the pressure off of unsustainable home price growth,î said Stevens, senior vice president of NRT Inc. ìFor most of the nation, this means future home price gains will be much closer to the normal returns we expect from housing.î
The 30-year fixed-rate mortgage should average 6.9 percent during the second half of the year, and the unemployment rate is expected to average 4.8 percent in 2006, he added.
The local median existing home price is about $850,000, compared to a national median of $231,300, according to local Realtors and the NAR. Major new home construction is not projected in Pleasanton until an agreement is reached on a new General Plan, which is currently being updated. That decision is not expected before spring 2007.
ìHistorically, home prices rise 1.5 to 2 percentage points faster than the rate of inflation, so the rise we anticipate in existing home prices this year is actually a little above the high end of historic norms,î Lereah said. ìThe double-digit home price gains we saw in 2005 underscore what a superlative year it was.î
Inflation, as measured by the Consumer Price Index, is seen at 3.1 percent in 2006, compared with 3.4 percent last year. Growth in the U.S. gross domestic product is likely to be 3.4 percent this year. Inflation-adjusted disposable personal income should grow 3.1 percent this year.
