We are plagued by many uncertainties because of this Aliso Canyon gas leak. Parents worry for their childrens’ physical and emotional well-being. The elderly and folks with significant ailments worry about exacerbated health problems. And we are all worried about property value. But as with anything in life, it is important to maintain perspective and a grounded sense of reality. I’ve been keeping a close finger on the pulse of our market. Here is what’s really going in our market so far, the text of an article submitted to our Valley Voice paper (scroll down for a link to the paper):
WHAT’S YOUR HOME WORTH?
I have no crystal ball. Neither does anybody else, Realtor or otherwise. Had someone had one, we would have seen exactly when this Aliso Canyon gas leak was coming and prepared accordingly (although recent reports indicate that SoCal Gas Company in fact knew about the declining integrity of their system and began anticipating such a failure in 2014 or earlier, but that’s a whole other article out of my scope of expertise.) There is a looming fear here in Porter Ranch of a drastic decline in real estate value, and many are bracing for it. Will it come? Is it inevitable? Nobody can accurately predict this. To do so would be pure conjecture and such conjecture should be taken with caution.
What we can do, though, is take a look at some numbers we have on hand. According to the Multiple Listing Service (“The MLS”) these are some real estate statistics for properties in the “91326” zip code within varying parameters, not including builder-direct and for-sale-by-owner sales:
- As of this writing there are 52 Active listings at an average asking price per square foot (“ppsf”) of $324, with a median asking price of $839,450, and an average 69 days on market (“DOM”)
- As of this writing there are 30 listings in escrow at an average asking ppsf of $312, with a median asking price of $680,475.
- From 10/23/15 to 01/01/2016, the subject period, there were a total of 76 homes sold at an average ppsf of $307, with a median sales price of $672,450, and an average 76 DOM.
- Third quarter 2015 statistics show a total of 188 homes sold at an average ppsf of $317, with a median sales price of $670,000, and an average 54 days on market 54 DOM.
- The first three quarters 2015 statistics show a total of 384 homes sold at an average ppsf of $309, with a median sales price of $665,000, and an average 57 DOM.
Now let’s take a glance at 2014 for a little perspective:
- From 10/23/14 to 12/31/14 there were a total of 75 homes sold at an average ppsf of $295, with a median sales price of $605,500, and an average 61 DOM.
- Third quarter 2014 statistics show a total of 134 homes sold at an average ppsf of $300, and an average 55 DOM.
- Total annual 2014 statistics show 385 homes sold at an average ppsf of $297, with a median sales price of $629,000, and an average 57 DOM.
And overall, over the past two years, homes in 91326 have sold for 98%-99% of their original asking prices, the subject period included.
What do all these snapshots tell us? For now it appears there is no alarming change, no drastic drop in home values, and no flurry of panic sales. The subject period, from the date of the Aliso Canyon gas leak “discovery” to 01/01/2016, does reflect some attrition but nothing more than expected considering Q4 is historically a slower real estate season year after year. When compared to the previous quarter, homes tended to stay on the market longer, average ppsf was down 3%, and homes sold for an average 98% of the original asking prices as opposed to 99%. Does this indicate a continuous decline into the coming months? We will have to see, but as of now these numbers point towards a generally stable forecast.
Further, when we look at this same period in the previous year homes stayed on the market for an average 10 days less, average price per square foot was 4% less then, and homes sold for the same average 98% of original asking prices.
And the current available inventory indicates overall seller confidence. Average asking price per square foot and median prices are up from Q4 2015 and the highest asking price for a single property is $1,500,000. Thus far the average days on market are at a normal pace and there is also a healthy number of properties in escrow.
There have in fact been several canceled escrows though, my own deals included, and it would be fair to attribute many of them to the Aliso Canyon gas leak. But that comes as no surprise considering the current climate of uncertainty. And as buyer confidence increases after the completion of anticipated resolutions, these cancellations should naturally dissipate and activity should grow.
Will there be a considerable decline in property value? Common sense would say it is highly likely. Some panic sales will likely occur, and those sellers cannot be blamed. But my guess would be the total number of these will be much less than expected. The passion and resilience with which our community is enduring and fighting this situation does not indicate, to me, a coming mass exodus or immediate plans to leave. Rather it indicates a resolve to stay, to protect, and to rebuild and elevate our community. Further, the same reasons why we all chose to call Porter Ranch home, to lay down our roots and plan out our futures here are the same considerations that will help in property value retention. We have some of the best schools in the nation here. We have some of the lowest crime rates in all of Los Angeles. We have diversity, safety, and relative peace. We have governmental leaders that care for our community and are committed to ensuring our well-being. Not to mention the continuous growth and expansion of this community: a world class park being planned and developed by Toll Brothers and our Councilmember Mitchell Englander’s office; the continuous development of exquisite luxury homes also by Toll Brothers; and the Shapell Company’s pending high-end retail center called “The Village at Porter Ranch.” These are still exciting, these are still happening.
Of course the ultimate assurance of a rebounding market at this point, should there be a decline, will be the complete and successful closure of the gas storage facility. But an infrastructural change of that scale and magnitude could take years if endeavored for at all. The obvious and immediate resolutions to ensure future stability are the overhaul of governmental regulation and strict enforcement of safety measures to guarantee such a disaster does not ever happen again.
But beyond that, and this has been said many times before by those smarter and wiser than me, we as stakeholders and homeowners should exercise good judgment and discretion should we decide to sell our homes or even pursue legal measures for recompense. We have endured much and will continue to for some time to come, and absolutely any and all measureable damages and losses should be pursued to the fullest extent the law allows. But we should exhaustively vet the lawyers we may hire. And further, we should exhaustively vet the real estate agent we may hire. To play off a popular bumper sticker, “think global, hire local.” Porter Ranch has some of the best Realtors in the industry who conduct business with utmost integrity, have extensive knowledge of the local market, and uphold the community’s interest if not for anything than the fact that they too are residents. Be wary of lawyers and agents with potentially questionable interests and intents, those who may proclaim certain conjectures as fact in order to induce the panic sales we fear. These are our homes, this is our community, and this calamity will pass. We will endure, recover, and rebuild.
Nobody can say with absolute certainty if property values will drop drastically, and if so for how long values will remain low. I also won’t pretend to be blind or naïve and ignore certain realities we are all facing. But what I do know for sure is that the strength and value of Porter Ranch is in its people, us, the stakeholders. We have astoundingly vigilant parents and school staff who have championed for our children’s well-being. We have strong, passionate, and educated residents fearlessly standing up to the gas company and the appropriate governmental authorities responsible for this disaster. We have community volunteers and leaders committed to keeping our neighborhood whole. We are the fabric of this community. Property values may fluctuate temporarily, but the intrinsic value of Porter Ranch as a whole will hold steady and continue to grow. You don’t need a crystal ball to know that.
Original article: Click here