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 | ||
| 2005 | ||
| 2006 | ||
| 2007 | ||
| 2008 | ||
| 2009 | ||
| 2010 | ||
| 2011 | ||
| 2012 | ||
| 2013 |
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!
Here’s a good example too – they paid $1,098,000 in 2010, and just listed for $1,479,200. It went pending today after 3 days on market:
http://www.sdlookup.com/MLS-130003398-1463_Paseo_De_Las_Flores_Encinitas_CA_92024
That’s a ~40% appreciation in 2 years. The insanity is back…*sigh*. I’ll say it differently: I’ve seen at least a dozen sellers in the past couple of months RAISE their list AFTER their home had sat on the market for 30+ days.
I agree, that is a large price increase. Although I have to say…I like that house a lot. The Easy-ranch view is pretty awesome also. This house may actually be worth that much? Maybe?
Do you mind getting plunked by an occasional golf ball?
First house in this video:
https://www.youtube.com/watch?v=-CIGe57toss
If my arithmetic is correct, that’s a 25.7% increase in price in two years. Yes, substantial but not as extreme as 40%. I’m intrigued to look at the video, Jim…
Go on Redfin and check the number of houses listed for sale by county. I haven’t found one that isn’t 50% off YOY. This is playing out across the country. How can this not be a systemic move to control prices? Don’t fight the Fed.
How much did that house sell for back in the day when it was new? Is 1.4m peak pricing on it? If not how far off peak is it? I though Encinitas Ranch was still 20% off. Shocked to learn its not?