It’s July 1st! What’s going to happen the rest of the year?
The presidential election is likely to become a distraction, especially if it is a close race.
Both buyers and sellers will wonder if it is better to suspend their efforts, and wait to see if the election results might bring changes to the real estate market (doubtful).
With mortgage rates in the 3s, market conditions this year have been unlike any other. We have seen more detached sales in the North SD County Coastal region in any first-half since 2005, when there were 1,548 sales averaging $474/sf:
| Year | 1H Sales | 1H Avg $/sf | 2H Sales | 2H Avg $/sf |
| 2009 | ||||
| 2010 | ||||
| 2011 | ||||
| 2012 |
It would be a miracle if we came close to duplicating the sales symmetry of the last two years! Unless there is an eye-popping change that causes more listings (there are 1,064 actives today), sales should dwindle over the next few months, even though there is demand.
These are the NSDCC detached new-listing counts for each half – lately we’ve been seeing 22%-29% fewer listings in the second half, compared to the first half of each year:
| Year | 1H New Listings | 2H New Listings | Chg. |
| 2009 | -25% | ||
| 2010 | |||
| 2011 | -29% | ||
| 2012 |
At this rate, we’ll probably see fewer than 2,000 new listings the rest of 2012, which should pull down the second-half sales to under 1,200.
What do you think will happen in the real estate market during the second half of 2012?
If the media keeps pumping the bottom is in, prices are going up, we might see a bunch of Over Priced Turkeys hit the market in the second half. In general I think it’s probably going to go the same as it has been over the last couple of years, lower prices/lower sales. By November/December the hype will have probably died down and we’ll be back in the pessimistic phase again.
If we see a surge of OPTs, some of them (the higher-quality homes), will get lucky and sell.
If we do end up with fewer sales, the prcing trend should be harder to identify.
You can see how the CV trend line (in red in right-hand column) has bounced around, and it’s because there are only 30-40 sales to measure each month.
8% increase m-o-m?
Buying into optimistic sales reports from the NAR is like buying into a car dealerships optimistic newsletter on low financing and limited stock on hand will score you a great deal. Truth is the real estate market will predominately be run by investors through late September. Similarly this is like investors buying up all the advertised car specials on the lot and don’t even have a driver’s license to drive them. Real family’s who are looking to buy are hoping to get financed and hoping for an affordable home and are not winning the bids or not qualifying for the debt. Truth of the matter is when you look at California on the verge of bankruptcy and government spending decreasing, San Diego is up a creek without a paddle and the investors are the river under us. There’s a predominately high percentage of government and military spending in San Diego and when things dry up, taxes go up, unemployment goes up, interest rates go up, and real estate investors go away, the only thing not going up are sales numbers and prices. This is the time to sell and buy back after the house of cards has collapsed on itself.
Mr. Oracle,
If you are new, welcome, and take a look around. You won’t find any NAR sales reports or glossy hype about the market.
The doomer comments are always vague and all over the map – that’s why I call it carpet-bombing. Do you work for the competition?
REO and foreclosures are still high but lower than last year. I predict they will steadily decrease.
“You can see how the CV trend line (in red in right-hand column) has bounced around, and it’s because there are only 30-40 sales to measure each month.
8% increase m-o-m?”
Yeah, small sample size produces that kind of volatility. There’s probably months of 8% declines as well in the past couple of years. You can smooth the volatility out by using rolling averages or things like case-shiller which attempt to measure like homes but that produces lagging results.
OK. I’ll take a shot. I think instead of the usual fall/winter drop we will see more of a flattening out, even in the face of the recession of 2012. Yeah, I said it. Recession. In Nov. of 2013, the official recession people will say “hey, we were in a recession in the late fall of 2012.”
There may be a little life in the current price increases left, but when that’s done, I think prices will tail-off ever-so-slightly until January. The surprise may come in 2013 when the Spring bounce doesn’t happen. Not a collapse, just continued flatness where there should be a bump up.
Hi Jim,
I apologize to you and any readers who may have felt damage from carpet-bombing. No I’m not part of the competition and I’m not even sure who the competition is. I’m a realist who happens to have a pessimistic outlook. I have an interest in economics, finance, and real estate. I see real estate as the landscape to a larger picture and in my opinion it’s the larger picture that will keep the landscape underwater. I’m neither in the market to buy or sell, but have rather enjoyed reading your blog. I think you’re doing an excellent job and I have an appreciation for your passion and knowledge about the market.
That’s cool – no offense.
I have to bide my time because I’ve popped off a couple of times after deleting far worse comments and people don’t understand why I get upset. I should have left the comments for people to see.
It’s because I spend hours every week trying to cobble together the pieces of the real estate puzzle. All it takes is one comment for readers to question what else they see here.
I don’t mind pessimistic or realist, I encourage it. The difference is facts – can you lay out specific supporting evidence to confirm that investors are running the real estate market predominately, or that owner-occupiers are losing bids or can’t qualify.
Because I win 90+% of the bidding wars, and 100% of my buyers get financed. All are owner-occupiers.
Furthermore, there are very few investors/speculators above $600,000 or so, hoping to flip much higher. So for the NSDCC market, investors are encouraged but not required.