We need more homes to sell! From the DQ:
“One month doesn’t make a trend, but December’s uptick in home sales might indicate renewed interest in housing thanks to lower mortgage rates and job growth in recent months,” said Andrew LePage, data analyst for CoreLogic DataQuick. “The gain came despite a continued decline in the share of homes sold to investors and cash buyers.
If demand continues to build, we’ll need more supply to keep up with it. One of the big questions hanging over the housing market is whether higher demand and home values will lead to a lot more people listing their homes for sale, as well as more new-home construction, which remains well below average.”
The ultra-low mortgage rates have gotten every buyer’s attention, and the sales are starting to reflect it – just like at the end of 2012. If the December sales are the precursor, then we are at least looking at a frenzy-lite experience over the next few months:
|NSDCC December Sales
||# of Dec. Sales
Around the NSDCC, you can sell your home for more than it has ever been worth. But is that enough to cause people to sell? For most people, no. We like living here, and have no place better to go.
We don’t need everyone to move. All we need is about 10% more listings than last year, and we’ll hit full frenzy. The 2003-2004 era was the craziest frenzy of all-time, and it’s because we had more houses to sell:
||Number of New Listings, First Half (Jan-Jun)
In a region of 300,000 people, all we need is about 80 more houses per month to sell. We need a few potential sellers to change their mind about selling later, and sell now instead.
If you know you are going to be selling in a few years anyway, but these ideal conditions look too good to pass up, here’s how you can justify moving now:
1. Move before you retire. If you were thinking about downsizing and wanted to stay local, then either buy a condo close to home, or move to the outskirts where you can still buy a home for less than $500,000 – and commute to work for a year or two. The low-end market is much hotter, and prices moving up quicker.
2. Sell and rent. If you know you are going to be leaving town shortly, sell when the market is red hot, and rent a beach hut for a year or two. Yes, rents are outrageous – but your home’s sales price will be too!
3. Retire early. You are making more money in the stock market than you are at that stinking job you can barely tolerate. Cash out while you can!
4. Sell and move when you are healthy. If you’ve been in the same home for more than 10 years, you have a lot of stuff to sort through – physically, mentally, and emotionally. It is much easier when you have your health.
5. Move up when rates are low. Obviously, if you are moving up and financing the next purchase, these low rates are advantageous.
6. Sell before rates go up. Remember that in June 2013, that mortgage rates moved back into the mid-4% range on a rumor that the Fed was going to tighten – which they never did. It won’t take much to pull this punch bowl.
Historically, the market has been a ten-year cycle, and the SD trough this time was April 2009. It got dragged out longer in the 2005-2007 era by Angelo’s nutty no-doc financing, and today’s low rates might extend the party a while longer. But it isn’t going to last forever, and mortgage rates will go up before the Fed does anything.
Once mortgage rates go up, buyers will expect lower prices, and we saw prices stall out much of last year. But do you want to sell for less? Not until you test the market for a year or two, and by then, buyers will be in control.
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