It has been a wild 6-7 months – ever since March when mortgage rates dropped under 5%, the buyers have been very active. Many here thought that worsening economic news would temper buyer enthusiasm, but lately it’s ramped up instead.
In our first installment we noted the biggest reason – prices are lower than they used to be, and apparently there are motivated buyers that want/need a house bad enough that prices must be low enough for them.
We also noted how the internet has empowered people to search for homes, and serves as a gut check when people see properties they like, go flying off the market – the anxiety starts rising.
The realtor shenanigans being deployed don’t seem to turn off the motivated buyers, if anything they appear to get more anxious the next round, and bid stronger. Their realtor should control the situation, but they get anxious too, and tell the client to keep bidding higher.
Then you have people who just buy because they want to buy real estate, and in many cases don’t put any more thought into it.
In summary, tread carefully, but keep looking!
The CAR president sent a letter to realtors this week that Kris quoted on her blog:
The upshot is that, statewide, we can expect the median home price to rise 3.3 percent to $280,000 in 2010, while sales will moderate to a more sustainable pace, posting a 2.3 percent decrease next year. 2010 should mark the beginning of a “new normal” for California’s housing market, and likely will feature a steady stream of sales driven by distressed properties in the low end of the market, coupled with moderate home-price appreciation.
I commented that the guy is talking out his ear, and that 2010 sales in San Diego would be 20% higher than 2009 – maybe we’re different here? (I don’t think so). I know that might sound somewhat bullish, but I’m not enthusiastic about prices increasing.
I think as prices go lower, next year’s demand will get even hotter, as long as the Fed doesn’t mind throwing another trillion or two at MBS market.
Here’s why. Increasing sales counts will be fueled by the lower-end, but even the higher end buyers should be delighted to see more REOs coming to market, giving some relief to the stand-off.
Look at this chart of SD attached and detached sales, and cost-per-sf:
|Year||# of Sales||$-per-sf|
|2009||25,905||$219/sf thru 3Q|
If we just see the same number of closings in 4Q09 as we had in 4Q08, this year’s total will be 34,392, a 15% increase Y-O-Y. But with the tax credit motivating additional November sales, this year’s count should end up even higher. Here is how monthly sales look on average, using the nine months of 2009:
Buyers have already been reading in the MSM that prices have been going up for 4-5 months straight, and when they hear that sales are spiking, it’ll provide more anxiety. If they don’t extend the tax credit, I think we’ll still see more sales, buyers have the fever. If they do extend, look out!
The lower prices go, the more sales there will be!