We’re at the stage where everything sounds like good news for housing – after being pummeled for years with bad news, it is a welcome relief for the casual observer. But it is mostly feel-good emotions, without much detail on how it will play out.

A snippet from the Bloomberg story today on existing home sales:

“This isn’t worrisome at all,” said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, who projected a drop to a 4.95 million annual rate. “For the first time in a while, it looks like it’s a sellers’ market as much as it’s a buyers’ market. I suspect prices and sales will go up again in 2013.

But without foreclosures or short-sales to rely on for inventory, we are dependent on the elective seller.  When they catch a soundbite like that one, it empowers them to wait until prices rise further, or list now and shoot for the moon.

The new listings of NSDCC detached-homes between January 1-17:

Year #New Listings LP Avg. $/sf
2004
203
$488/sf
2005
224
$526/sf
2006
366
$552/sf
2007
338
$537/sf
2008
278
$490/sf
2009
261
$520/sf
2010
256
$518/sf
2011
303
$458/sf
2012
241
$461/sf
2013
228
$551/sf

The inventory keeps dropping, while sellers’ expectations keep rising.  Something has to give, and it’s likely to be the buyers’ willingness to keep chasing these prices – at this rate, we’ll be above peak pricing before too long.

Who will keep the buyers in check?

  • Appraisers don’t get paid enough to over-inflate values. They will bring in a higher price if it is within reason, but they aren’t going to do any favors.
  • Mortgage underwriters are still conservative, and have the right to whack an appraiser’s value if they think it is out-of-line.
  • Friends and family are going to tell them they are crazy paying that much.

The smart sellers are those that list for a reasonable price about 1% to 5% above comps – they will look like a deal, compared to the rest, and the resulting bidding war should run it up further!

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Jim the Realtor
Jim is a long-time local realtor who comments daily here on his blog, bubbleinfo.com which began in September, 2005. Stick around!

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