Thursday, March 27th, 2008 at 2:54 PM
Does More Traffic Mean Anything?
“Traffic is up” – you’ve seen the hype, you may have seen it on the street, but is it anything special? We saw yesterday that, compared to last year, the closed sales so far this month are sparse. Here is how the SD County detached monthly pendings have fared over the last five years, as “the spring selling season” begins:
| Year   | Feb Pendings   | Mar Pendings   | % Chg |
| 2004 | +16% | ||
| 2005 | +14% | ||
| 2006 | +14% | ||
| 2007 | +12% | ||
| 2008 | +17% |
This month’s numbers (revised since this morning) are better than last year, but all of the previous years have closed escrow. If another 271 go pending between the 27th and the 31st, which was the same as last year, then the total would be 1,999. However, if 20% fall-out of escrow, the total closed will be around 1,600 – fewer than last year.
There are currently 12,713 active listings of detached homes – can buyers look beyond all the excess inventory, and not let it affect their decision-making? At this stage of the game, buyers are so used to seeing sellers loitering on the market for months and years, I think they have grown impervious to them. “Buy the best, and forget the rest”, is a nice idea, but will the out-of-touch sellers eventually undermine the market with price reductions? Theoretically they should, especially those who are over-encumbered. But I think it’s a seasonal thing – they might figure it out in the fourth quarter of each year, after one more selling season goes unfulfilled.
Posted on Thursday, March 27th, 2008 at 2:54 PM in Thinking of Buying?, Thinking of Selling? | 8 Comments » | 
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"can buyers look beyond all the excess inventory, and not let it affect their decision-making?"
I think it depends entirely on the potential buyers’ situations. People who have decent equity in an existing house that is floating on the same tide as the inventory would probably base their decision entirely on whether they could find a new house that would be sufficiently better than what they have now to justify the effort to move up, while somebody who doesn’t own a home now and has that 20% down payment sitting in an account that’s paying even a minimal amount of interest would have an entirely different set of considerations on which to make a decision.
However, if I was in the market right now, my offer on anything currently listed would be 10-15% below listing price, and unless I had already fallen in love with the place I would probably just walk away if it wasn’t accepted.
GeneK | March 27th, 2008 at 4:46 pmTechnical question. Is that the number that go pending in March or the number that are still pending regardless of when they first went pending?
And who was it two years ago the was out in the ozone with his crazy talk about pendings falling out in unprecedented numbers?
Rob Dawg | March 27th, 2008 at 8:02 pmOK, sorry but another blogger error – that’s two this month! The 2008 numbers are revised above.
The 2008 pendings include those already closed. Of February’s 1,474, there are 850 of them that haven’t closed yet. Since this morning, seven have fallen out of escrow!
Of March’s 1,728, there are only 45 of them that have closed. If they get up around 2,000 by the end of the month, and 20% fall out, that’ll make for a weak ‘spring kick’.
Jim the Realtor | March 27th, 2008 at 10:50 pmI’ll give you another reason why more are falling out these days – the crazy listing agents.
They think it is their job to defend the sellers at all costs – even if their words/actions blow up the deal. Many want to spew on and on about the comps, their listing is different, etc, when the buyers want to re-negotiate or ask for repair credits. Rarely is it in the sellers’ benefit to have to go find another buyer!
Jim the Realtor | March 27th, 2008 at 11:47 pmThey think it is their job to defend the sellers at all costs – even if their words/actions blow up the deal.
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I think you bring up a good point here, Jim. In some of the failed transactions I’ve seen, it was the agents who blew the deal.
Whenever I’m selling something, I bend over backward to make the buyer feel like he/she is getting the very best deal. No ego, no hype, no BS.
Some agents who’ve only experienced the good times are entirely unprepared to work in this environment. IMHO, they will blow deals (the only deals they might get) left and right, as they try to play hardball with the buyers.
Today’s buyers (**qualified and informed** buyers) won’t take a lot of nonsense, and will have no problem walking away from a deal if they feel it’s in their best interests to do so.
CA renter | March 28th, 2008 at 1:12 amJim, you are probably old enough to remember when there was a phrase like "the first offer is the best offer."
Rob Dawg | March 28th, 2008 at 3:17 amOld Enough? I have the tattoo. Right under the one I got my first week in the business:
"There’s nothing price won’t fix".
Jim the Realtor | March 28th, 2008 at 7:25 amTake it with a grain of salt. When we sold our old house last year, the first offer was a lowballer at $80k below our listing price. Apparently, someone saw that we had already vacated and assumed we’d be desperate, not knowing that our expenses were being covered for us as part of our relo. We told them to take a hike, and 30 days later reduced the listing price $30k and sold the house for $50k more than the first offer that was anything but the best.
GeneK | March 28th, 2008 at 7:41 pm