A copy of this report was recently provided to our local officials for the City of Menifee. We hope this information may prove helpful in determining city budget forecasts for the coming year as they evaluate the impact the downturn in our housing market has had on their revenue stream.
Of course property tax revenue is just one source of income for the city but a major one. As the state continues to wrestle with a budget that may or may not include some trade-off between property taxes and vehicle license fees, a city like Menifee, California‘s newest city, needs to know where current property values are.
As you look at the attached charts, you will notice that the number of sales has decreased steadily through 2007 even while median values continued to increase through 2006. Total home sales value peaked in 2005 at more than $278 million dollars with 763 homes sold, a number that fell to just $134 million in 2007 with just 498 homes changing hands.
Spurred by declining values, a surplus of inventory to choose from and attractive interest rates, sales rebounded in 2008 to post a higher sales volume than ANY year during the previous five years. Even considering the impact of 35% decrease in median price since the 2006 peak, the city will still end this year with total sales revenue very near to, if not exceeding, it’s 2005 volume of $278 million. That this volume of sales continue is vitally important to this new city as is addresses the impact of Prop. 8 on future property tax revenues.
By tracking these numbers an investor or prospective homebuyer can determine where they think the market is. As I pointed our last August, one month of sales increase doesn’t mark a trend. But as sales volumes continue to grow that will lead to the continued absorption of our excess inventory, the return to a more stable market and the end of the rampant price declines – 30% in just the past year. I am expecting to start seeing that stability develop by late 2nd to early 3rd quarter this year in our local market, possibly sooner depending on mortgage interest rates and federal stimulus incentives.
Please feel free to add your own comments and outlook to this post.
‘ Five Year Housing Chart for Menifee California’
The opinions ikn this commentary are strictly Gene Wunderlich’s personal opinions and while any reasonable and/or rational person should agree, these views may not reflect those of SRCAR, ActiveRain or any local or state government or other mental institution..