ACADIA NEW HOME SALES PACE SLOWER BIG INVENTORY STRONG PIPELINE BUT......

ARCADIA NEW HOMES – SALES PACE SLOWER –BIG INVENTORY – STRONG PIPELINE BUT …..

The pace of Arcadia (detached) new home sales continued to decline in 2017.

2015 was the “peak” year for Arcadia new (detached) home sales. In 2015 the MLS reported 68 new Arcadia homes sold, 5.6 sales per month. In 2016 sales declined 19 percent. Sales totaled 55, 4.6 sales per month. So far this year new home sales have continued to slow. The MLS reported 43 new Arcadia homes closed escrow in the ten month period of January thru October. This 4.3 sales per month pace conforms to the declining sales trend.

New (detached) home inventory is at a very high level. At the end of October, fifty-one (51) homes were listed for sale on the MLS, four (4) of which were in escrow.  Those fifty-one homes translate to more than a ten (10) month inventory given recent new home sale velocity.

Even with the high inventory the pace of new construction should be steady (FOR AWHILE).  The Arcadia Building Department reported 112 single family home (detached) building permits were issued in 2016. Through September 2017 fifty-nine (59) SFR building permits were issued. This is a strong pipeline but THINGS ARE CHANGING. During the months of August and September only seven (7) permits were issued. This is a big drop-off. It is reported demo and building permit applications/requests are “way down”. It appears the slower new home sales and large inventory are finally having an effect on the market.

Many factors contribute to the steady decline in new and upper end Arcadia home sales. Chinese individuals have always faced Chinese government constraints to overseas investments. For years wealthy Chinese have figured out ways to get around these  constraints  – a kind of “cat and mouse’ game. The Chinese government has been tightening its monetary policy and further increasing restrictions to slow outbound capital flows. It has had an impact. Chinese home buyers have extended their  reach/search beyond Arcadia/San Gabriel Valley to “more affordable” US cities  in the last few years. Seattle, Portland, Bay Area, Dallas and Florida cities are generating more interest and investment.

Credit Suisse estimates there are 1.6 million U.S. dollar millionaires in China. These millionaires will continue to figure out how to invest in overseas markets in order to diversify assets and hedge against potential Chinese economic and political uncertainties. Arcadia/San Gabriel Valley will continue to be a primary destination for these millionaires’ capital.