What will buyers do when faced with rapidly-rising list prices?
We know that sellers are going to be adding more frosting to their already better-tasting cake. Here is the San Diego detached-home graph, showing the recent list prices going through the roof (note how the sales-price gains are moderating):
Look at the difference in list pricing between 2011 vs. 2012!
The natural thing for buyers to do is pause.
Then some combination of outrage/disbelief/indifference kicks in, followed with the typical scoff, “we’ll see if anyone else goes for that!”.
Thus, from February 4th to around mid-March is the critical “flinch” period.
Because those first few weeks after the Super Bowl will be when we see if the most-motivated buyers, spurred by low rates, inflation fears, and overall frustration & anxiety, will jump in and pay whatever it takes.
If the scoffers see a bunch of OPTs go pending in their target areas, then they might follow. If they don’t, then the standoff is on for 3-4 months, as a glut of unsolds starts to build.