Predicting anything correctly in this frenzied, government-supported marketplace takes some luck. My recent predictions were conservative – on July 1st, I guessed that sales would taper off during the second half of 2012, and then after a robust 3rd quarter, I still thought thought that the fourth quarter would slow down too.
Why? Because inventory was dropping and prices were rising. I didn’t think buyers would go for it – but they did.
The chart below is from July 1st, where I predicted that we’d have fewer than 2,000 houses come to market during the second half of 2012 – which corresponded with the trend from previous years.
At least I was right about fewer listings:
|Year||1H New Listings||2H New Listings||Chg.|
But also I thought that the lower inventory would cause second-half sales to drop under 1,200, which seemed to be in line with previous years. I ignored the momentum building in 1H12, and looked what happened – 2H12 sales went ballistic, posting a 27% increase over 2H11:
|Year||1H Sales||1H Avg $/sf||2H Sales||2H Avg $/sf|
At the beginning of 2012, I predicted that this year’s NSDCC sales would be 10% higher than in 2011, and the average cost-per-sf would drop 5%. But the ultra-low rates did their trick:
|Year||# of Sales||Avg. $/sf|
The 2012 sales increased 21% year-over-year, and average pricing was flat, so I wasn’t too far off. Who would have guessed that we’d see an extended period of mortgage rates under 3.5%?
The recent momentum around NSDCC (which happened during a boisterous election) deserves to be reckoned with, but December’s pricing cooled off after the hot November:
|2012||# of Sales||Avg. $/sf|
I’ll predict that the debt-tax exemption gets extended, and the banks surprise everyone and escalate foreclosures due to the CA Homeowner’s Bill of Rights (see this link). There will be some isolated sales at 10% to 20% over comps that will make it look like the market is on fire. In the end, the NSDCC sales for 2013 will be up 10%, and average-cost-per-sf increased 6%, and be around $400/sf.
What do you think?