January 22, 2015
Today we’ll continue our update on sales activity and average selling prices in the nine cities in the Southwestern area of Riverside County with Menifee, Canyon Lake and Lake Elsinore.
In case you need help interpreting the information in the graph, remember it visually illustrates the data in the data table above. Each vertical blue bar represents the average selling price of homes during that month in 2014, while the vertical green bars represent the average selling price for the months in 2013. The red line represents the number of homes sold in each month in 2014, while the black line represents the number of sales each month in 2013.
The real estate market in Menifee exhibits patterns similar to those in the other cities we’ve reviewed, but there are some variations. Where in Temecula and Murrieta monthly average selling prices in 2014 increased over the same month in 2013 for a number of consecutive months, they then suffered at least a slight reversal. Prices in Menifee, on the other hand, are higher in every month of the year in 2014 than in the corresponding month of 2013. Even November, which was basically the same in both years, had an average selling price $280 higher in 2014 than in 2013. Nothing to be excited about, but at least the trend toward higher prices remained unbroken. Although prices in Menifee hit their peak in June 2014 at just above $300,000, and have not returned to that level since then, they did come close in December 2014. Though prices were generally higher in 2014 than in 2013, they appear to have reached a plateau. We’ll need to watch for any new trends as the year progresses and we move into Spring and early Summer, traditionally the most active buying season each year.
The number of homes sold in Menifee doesn’t appear to be very different in 2014 from 2013. In both years there is a noticeable decline in numbers from September to October (2014) and September through October to November (2013). But for each year as a whole, there were 1,355 homes sold in Menifee in 2014 compared to 1,342 in 2013 – which is the first year-over-year increase we’ve seen so far in number of sales in any city. Looking back, there were 1,297 homes sold in Menifee in 2012, and 1,100 sold in 2011, so 2014 was the peak year in sales in the last four years! It’s difficult to pinpoint the reasons for the increased sales in Menifee when sales in other nearby cities have declined, BUT – Menifee’s average selling price has hovered below $300,000 even during the uptick in pricing, and many beautiful, newer and very attractive neighborhoods provide good housing values for many buyers. The average selling price in Murrieta is generally in the neighborhood of $370,000 and in Temecula is above $400,000. Good pricing and value, combined with improving convenience and breadth of choices in shopping and improving quality of schools make the city an increasingly appealing place to live.
As was the case with Wildomar, we expect the City of Canyon Lake to demonstrate more volatility in average selling prices and the trend lines for number of homes sold, simply because of the small number of sales per month. Canyon Lake is the smallest city in the area, and has a population of around 11,000, or about one-tenth the populations of Murrieta or Temecula.
For most of the two year period of 2013 and 2014, average monthly selling prices were higher in 2014 than 2013. The one exception was the month of June, when prices were about $21,000 higher in 2013 than in 2014. All the other months saw higher prices in 2014, though there wasn’t much difference in prices in September or October in both years. Prices hit a peak in May of 2014, reaching $495,000, but dropped off after that, and never returned to that level. Also, prices in November 2014 were considerably higher than in September, October or December. There isn’t a clear trend in pricing, because of the degree of price volatililty.
The volatility is caused by the small number of monthly sales – which means that a couple of sales of very high priced or very low priced homes can have a major impact on the average price. Monthly sales in 2014, however, were fairly consistent and there is no discernable trend in the number of sales at this point. In 2014 a total of 265 homes sold in Canyon Lake, an average of 22 homes per month. In 2013, 323 homes sold, which means that 58 fewer homes sold in 2014 than in 2013, a decline of almost 18% in the number of sales. In 2012, 313 homes sold in Canyon Lake, while 288 sold in 2011.
Though each city’s pricing pattern differs from all the others, there can be similarities. The pattern for Lake Elsinore may resemble that of Menifee more than of any other city. Like Menifee, there’s more consistency in Lake Elsinore in the upward pricing trend in 2014, but where Menifee had only one month when prices in both years were roughly equal, Lake Elsinore has only one month, November, where the 2013 price was higher than the 2014 price. That said, looking across the full year 2014, prices could appear to be leveling off. However, looking at the low price on the graph, $216,755 in January 2013, to the high price, $293,888 in December 2014, we have to say that is a solid increase of $77,133, or 35.6% in the full two year period. Like Menifee, Lake Elsinore has many beautiful new neighborhoods and developments, and the affordability of housing overall is very attractive to many buyers, especially those who may commute to Orange County or Corona/Chino. Again, price increases seem to have slowed, but if there is a trend it should be for ongoing price appreciation.
The numbers of monthly sales has been somewhat inconsistent. As with some other cities, there was a decline in the number of sales from either September or October into November. 2014 was a much more volatile year for sales than 2013, and after a lackluster start to the year, sales spiked to a two year high in July 2014, then went into a four month decline. In 2014, 1,019 homes sold, a decline of 52 homes or 4.9% from 1,071 sales in 2013. In 2012, 1,177 homes sold in Lake Elsinore and in 2011 there were 1,270 homes sold. As we’ve seen with other cities, price increases reduce affordability for a number of buyers. A stronger economy and more and better jobs are needed to provide a strong foundation for ongoing home price appreciation and sales growth.
© January 2015 Terry & Kathy Slavin All rights reserved.