1. For the sellers who are waiting to list because they think the economy is getting better, hopefully a bad jobs report will cause them to think otherwise. The economy isn’t stable enough to expect it to get substantially better anytime soon.
So hopefully more sellers will decide to sell now, while mortgage rates are at 60-year lows and we need the inventory. In August, 2006 there were 21,000 homes for sale in San Diego County, today there are 6,101.
2. Hopefully bad economic news will dissuade some buyers, and soften the rip-roaring demand we are experiencing. Of the sales I’ve closed this year, 80% of them had multiple offers.
3. You read everywhere that housing depends on jobs, but how many people who find a job this month are going to buy a house next month? None. More jobs today might fuel some future real estate demand, but more new jobs today won’t equal more home sales today.
4. Consumer confidence – won’t today’s committed homelookers pause when they see the Dow dump 2.22% in one day over a bad jobs report?
Don’t most people think the stock market is a rigged casino by now, and expect it to bounce around? I don’t think committed homelookers will back off until we see a change in the low-inventory environment. It doesn’t look like there will be any new surge of inventory from banks or elective sellers, both who seem content to wait for higher prices.
The only hope for increased inventory is from short sales, with the looming debt-tax exemption set to expire on January 1, 2013. But you don’t see any soundbites about Congress extending the exemption, which enables potential short-sellers to delay the decision, thinking it will somehow miraculously happen later. If the tax exemption does expire at the end of this year, it will cause many of those potential short-sellers to NOT move, rather than to sell and pay the debt-relief tax.
The best thing that could happen today for buyers is to have banks to unleash their inventory to help satisfy the demand throughout San Diego County. Unfortunately, there are only around 5,000 homes owned by banks, so it would be a short-lived rally. But if they cut them loose, and the REOs were gobbled up, maybe it would help banks recognize that demand is healthy – and they should be putting more pressure on defaulters.