Palos Verdes home prices are trending up.  But this article published by “Realtor®Mag” doesn’t get the whole story, in fact I think they’re missing more than half the point.  Sure, interest rates being as low as they are clearly help home sales.

But when they report "Tim Iacano of Iacano Research credits the majority of the recovery and rise in home prices—if not all of it—to the Federal Reserve’s aggressive actions to keep mortgage rates low. The Fed’s quantitative easing (QE) program has prompted mortgage rates to fall to all-time lows in recent weeks.” they are missing a critically important law of economics.  They don’t even talk about the issue SUPPLY & DEMAND. 

Interest rates are so low, that even if they were to go up 1-2 percent, they would still be incredibly low relative to decades long historical standards.  So it can’t be that low interest rates are sole driver let alone major contributor as Mr. Iacano would have us believe.  While I can’t speak for a national real estate market, I can certainly provide you hard fact documentation on Palos Verdes home prices and what is happening with the supply & demand dynamic for Palos Verdes homes as well as for the Greater South Bay area.

Let’s take a look at what’s happening. Palos Verdes Home Prices trends are patterning this chart on the South Bay

You can email me for a larger copy of this chart if you wish.  The red trend line shows the volume of Pending Sales going back to May of 1990 (yes, I keep track), the blue line tracks the New Listing Volume.  Think of Pending Sale Volume as a measure of demand and think of New Listing Volume as a measure of supply.  Clearly, it’s starkly evident, the number of new listings coming to market is the lowest it’s been in nearly 20 years!  At the same time that supplies have been dropping of Palos Verdes homes and other homes around the South Bay, demand has been picking up. 

We all know what happens when people want more of something, but that something is less and less available.  And as you can see by green line, prices indeed have been firming, in fact they’ve been going up.

Visit this link to get more information on Palos Verdes Home Prices.

+George Fotion