But that won’t stop us from trying to predict what will happen. Here’s the recent SD history below – leave your predictions in the comment section, and click the ‘Forecasts’ button (at bottom) for last year’s thoughts:
|SD County Det.||2007||2008||2009||2010 YTD|
|Total listings, year||46,056||42,567||34,241||35,874|
|Total closings, year||15,713||19,103||22,571||19,492|
|4Q Avg. DOM||71||62||59||69|
The sales numbers could be substantially higher, if it weren’t for the bumbling incompetence among listing agents. Too many think that ‘waiting for months for a buyer to come along’ makes for an effective marketing plan, rather than lowering the list price early and often in order to find what the market will bear while there is urgency. But more of them will be getting lucky in 2011, because the competition for the quality buys will be even more ferocious next year.
The average cost-per-sf for detached sales in SD County rose 9% in 2010. I think it’ll increase another 9% in 2011, fueled by the red-hot lower price ranges. But sales will struggle, possibly 20% fewer sales overall, because buyers will want to hold out for the best. The bar is rising on what buyers are willing to tolerate, but they’ll spend the money on a top-quality house.
Here is the chart for North SD County Coastal detached:
|NSDCC Det.||2007||2008||2009||2010 YTD|
|Total listings, year||5,406||5,289||5,045||5,169|
|Total closings, year||2,479||2,037||2,222||2,302|
|4Q Avg. DOM||75||72||82||83|
(Add 10%, or so, to the 2010 sales for the late-reporters, and remaining December sales).
Why would sales slow down considerably?
Because greedy or desperate sellers will be listing early and often, and tacking on the extra 5% to 10% to their already-inflated list price dream. Please refer to Rich’s excellent graph/commentary on the relationship between active inventory and sales – here – and how pricing stalls once inventory exceeds six months’ worth. This is where the buyers’ intolerance comes in – more OPTs will infuriate the dedicated buyers, because the selections will look worse than those in 2010. But in the end, I’ll guessing we’ll buck the trend in Rich’s link, and the pricing metrics will shows year-over-year increases. Here’s why – many of the same themes we’ve seen here for the last two years:
Buyer Exhaustion – The frustrated buyers might be tempted enough to pay more, but only for a top contender.
Mortgage rates – stay in the 5% to 6% range, and buyers shrug them off.
No Foreclosure Tsunami – at least one foreclosure moratorium, and more defaulters hold out for their principal-reduction dream.
MERS – government forced to cut deal, instead of enduring another banking crisis.
More and more out-of-area buyers come here who think our real estate is cheap, and buy it up – while locals shake their head.
No tax-credit cheese this year.
Spousal pressure. The kids are getting older, and the “good-buy” inventory has never been so thin.
More hype – Prudential just called us a “blistering hot sellers’ market under $1,000,000”.
I think more potential buyers will stick their toe in the water in 2011, and they’ll find out quickly how difficult it is to find, let alone buy a good house, at a good price.
Buyers are tired of waiting, but will hold out the best they can. The bigger the inventory grows, the easier it’ll be for them to wait.