Home Sale Re-examined

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Randy Kraft’s article “Home Sales:  Good News & Bad News” in last week’s Indy contained errors that and I would like to address.  Ms. Kraft states that the inventory at the end of the year in Laguna Beach was 411 homes.  The correct number is 228.  I am a meticulous keeper of this data and my data going back to 2003 never shows an inventory as high as 411 homes. The highest it ever reached was 404 homes in June of 2009 and again in August of 2010. The 228 Active Listings on the market on 1.1.2012 represents the fewest number of homes that have been For Sale since December of 2007 when the number reached a low of 219.

Secondly, she says that the number of homes sold last year of 328 “…returned to the peak of 2006.”  The peak was much higher than that and occurred in 2003 when 542 homes were sold. There were 511 homes sold in 2004 and 426 in 2005. The average number of homes sold in Laguna Beach during the past ten years is 375 homes per year. Thus, the 328 homes sold in 2011 is about 13 percent below the 10-year average.  Ms. Kraft is accurate when she talks about the increased sale activity towards the end of last year.  In fact, the fourth quarter of 2011 saw 92 homes close escrow in Laguna Beach, the highest quarter for any time in 2011. Historically, the 4th quarter in any year tends to be one of the slowest quarters of the year, which is usually attributed to the impact of the  holidays. So to have the 4th quarter be the best quarter of the year would seem to bode well for the improving health of the marketplace.

At the end of January, the number of Active Listings was 234 homes, an increase of just six homes since the first of the year. As the inventory tends to rise after the holidays the fact that the number of Active Listings increased by just six through the month of January might also be significant. It will be interesting to track the inventory as we move into the springtime when more homes are typically sold and the inventory tends to rise.

Ms. Kraft is also accurate (and maybe even a little kind!) when she discusses the loss in value from the peak of the marketplace. The median price of a home in Laguna Beach reached a peak some time in late 2007 or early 2008 when it was at approximately $1,690,000. The median price for 2011 was $1,111,000 representing a loss of almost 35% from the height of the market.

I can’t predict what 2012 holds in store for home prices and sales activity, but it would seem that the conditions are in place for a much better year than we have seen in any of the last five years. Inventory is the lowest we have seen since the end of 2007 and is not rising significantly and home sales for the last quarter of 2011 was the best quarter of the year. The biggest unknown is what will happen with prices.  Let’s hope that the low inventory and the increased sales activity will finally put an end to the erosion in values.


Michael Gosselin, Laguna Beach

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