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Is There An Inventory Shortage?

People keep saying that the inventory is low, but it means that there’s not a lot of active listings sitting around not selling (which will be the sign that the frenzy is over). Let’s determine whether the inventory has actually been lower than normal by comparing the number of sales to previous years:

The inventory must be fine, considering the number of 2021 sales in EVERY area were at least the median number of their five-year group, or higher, and the highlighted counts were the BEST of the five-year group. The total of 3,176 will probably increase in the coming months and end up #5 of all-time!

If you are a buyer and feel stymied by the lack of inventory, you may want to reconsider.  It’s more likely that you’re not moving fast enough, you’re not doing it right, or you’re on the outside looking in.

(more…)

Just Buy Something – Quick!

Last year, home buyers viewed a median of eight homes before purchasing — the lowest number on record, according to research from the National Association of REALTORS®. That’s fewer than in 2009 and 2011, when housing inventory was more plentiful and buyers viewed a median of 12 homes before buying.

Among the median eight homes viewed by buyers, three were viewed online only with the help of virtual and video tours as well as virtual open houses, according to NAR data.

Source: National Assn. of REALTORS®

ER Inventory Surge

The new listings of 2022 are only trickling out, but we know that there can be spurts.

We’re seeing one underway in Encinitas Ranch, where five listings are hitting the market this week! The three Coming-Soons will all change to active listings on Saturday.

Buyers – there is hope!

Whenever there are two or more homes for sale in a neighborhood, there is one fact of life:

Either yours is selling mine, or mine is selling yours.

The chances of EVERY house being perfectly priced to reflect their condition AND compare favorably to all other choices is about the same as the Padres chances of winning the World Series.  It’s possible every year, but come on.

There are times when NONE are perfectly priced, causing a stalemate and no sales.

The market is hot enough that at least one of these listings will compare more favorably than the rest, and will sell this weekend.  With few or no other choices for sale currently, the ultra-hot frenzy conditions could pick up two of more of these listings.

Let’s see how many go pending in the next seven days!

Sevana

Hat tip to Rob for the intro to Sevana, who describes her musical sound as “every sound but with a Jamaican filter. Like if a modern Anita Baker was Jamaican and was creating music for Jamaica.”

The Fed and Rising Rates

Today’s conforming rate with no points

From MND:

Fed policy is critically important to interest rates and January has marked a shift in the Fed policy outlook.  In not so many words, the Fed sees itself hiking rates  and decreasing its bond purchased more quickly than previously expected.  It has conveyed this in various ways since the beginning of the month.  Today’s policy announcement and press conference were just the latest iterations.  They were also arguably the least equivocal.

Despite the relatively clear communication from the Fed in recent weeks, financial markets were increasingly laboring under the misapprehension that the Fed would take a softer tone in light of recent market drama.  In other words, stocks have dropped significantly and rates spiked to 2 year highs as the Fed began its communication push this month, so perhaps they would “communicate” in a more market-friendly way today.

While it’s not uncommon for some market participants to hope for such things, it was never very likely in this case (one of the reasons I reiterated that the Fed is not tasked with babysitting the market in yesterday’s commentary).  True to form, the Fed paid zero attention to recent market movement.  In their view, rates are still low, and asset prices are elevated.  If anything, they feel they need to hustle when it comes to hiking rates and decreasing bond purchases.

Bottom line, the market was a bit flat-footed heading into today’s Fed events.  When the Fed stuck to the tightening script rather religiously, rates were forced to snap back to the reality they’d previously done a good job of understanding.  Case in point, Treasury yields and mortgage rates are both very close to levels seen last Monday.  Mortgage rates just happen to have edged slightly higher, thus earning the dubious distinction of “highest in 2 years.”

What will happen to our local real estate market now?

Speaking of misapprehension, the potential buyers who think home prices will come down will be disappointed.  Not only will sellers ignore such frivolity, there will be enough motivated buyers who don’t care either. If they don’t mind paying $300,000 over list price, then they’re not going to care about a silly rate hike.

The coming Fed rate hike in March appears to be already priced in.  Mortgage rates have gone up 1/2% this month, and the Fed will probably only raise their rate by 1/4% next month.  We could see slightly better mortgage rates 60 days from now.

In the past, homebuyers have rushed to purchase before rates went up, and I think that will be the case this time too…..if there is only something to buy!  We have had 150 NSDCC listings this month so far, which is dreadful.  Last January we had 288 listings!  Link to contest.

NSDCC Annual Sales & Pricing

Let’s do a final round-up of the 2021 numbers:

NSDCC Annual Sales & Pricing

Year
# of Listings
# of Sales
Median Sales Price
Median DOM
# of $2M+ Sales
2013
4,911
3,287
$950,000
54
424
2014
4,794
2,899
$1,020,000
54
434
2015
5,066
3,096
$1,090,000
53
488
2016
5,178
3,107
$1,160,000
53
523
2017
4,637
3,082
$1,225,000
33
606
2018
4,840
2,799
$1,325,000
22
615
2019
4,741
2,827
$1,327,500
25
641
2020
4,494
3,183
$1,482,500
19
885
2021
3,613
3,175
$1,900,000
12
1,469

The median sales price went up 28% YoY, and the number of $2,000,000+ sales went up 66%!

The number of listings is deceiving because listing agents don’t have to refresh their listings any more.  There were 580 expired/cancelled/withdrawn listings in 2021, and the number was 1,888 in 2019 – so the number of properties offered for sale each year were probably more similar than we thought.

San Diego Case-Shiller Index, Nov.

We can see how MoM pricing started to slow at end of summer, only to have it pick up again in 4Q21:

San Diego Non-Seasonally-Adjusted CSI changes

Observation Month
SD CSI
M-o-M chg
Y-o-Y chg
Jan ’20
264.04
+0.2%
+5.1%
Feb
265.34
+0.5%
+4.6%
Mar
269.63
+1.6%
+5.2%
Apr
272.48
+1.1%
+5.8%
May
273.51
+0.4%
+5.2%
Jun
274.91
+0.5%
+5.0%
Jul
278.00
+1.1%
+5.4%
Aug
283.06
+1.8%
+7.6%
Sep
288.11
+1.8%
+9.4%
Oct
292.85
+1.6%
+11.5%
Nov
295.64
+1.0%
+12.3%
Dec
297.52
+0.6%
+13.0%
Jan ’21
301.72
+1.4%
+14.3%
Feb
310.62
+2.9%
+17.1%
Mar
320.81
+3.3%
+19.1%
Apr
331.47
+3.3%
+21.6%
May
341.05
+2.9%
+24.7%
Jun
349.78
+2.6%
+27.2%
Jul
355.33
+1.6%
+27.8%
Aug
357.11
+0.5%
+26.2%
Sep
359.88
+0.8%
+24.9%
Oct
363.80
+1.1%
+24.2%
Nov
367.62
+1.1%
+24.3%

Mortgage rates didn’t move much in October and November, holding between 3% and 3.25% for the average on the popular 30-year fixed. While that was slightly higher than the early summer levels, it was still historically low and considerably lower than where rates are now. Rates are now about 75 basis points above year-ago levels. Low rates over the last two years have given buyers more purchasing power and consequently fueled today’s sky-high prices.

“We should soon begin to see the impact of increasing mortgage rates on home prices,” added Lazzara.

A recent report from Realtor.com found that 14 out of the top 50 largest U.S. cities experienced listing price declines over the prior year in December.

More on Inventory

We had 1,782 new listings of houses and condos last month, in a county of 3.3 million people?  And only 1,332 active listings (I believe that is the count at the end of the month).  Look at Phoenix and Las Vegas for comparison, where they have 2x and 3x as many listings.

If we get a surge of inventory, it would just make the frenzy conditions even hotter!

Thanks Bill!

https://calculatedrisk.substack.com/p/final-look-at-local-housing-markets-424

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