Home prices will go up and down, but another bubble/crash event is unlikely to happen. We live in a world where artificial markets are supported by the government, and until that changes, the housing market should be relatively rangebound.
Under what conditions would these prices be sustainable?
After all, in most areas around NSDCC, we are back to peak prices, or higher. Many homeowners can sell today for their highest price ever – yet inventory remains relatively tight.
For pricing to sag or crash, it would take negative pressure. But most of that has been relieved, and there’s little threat of losing your house any more:
- The banks throttled way back on foreclosing.
- The government will modify your loan.
- Previously-underwater folks are regaining equity, and feeling better.
The housing crisis caused most people to gain a new appreciation for their house, and housing needs in general. As a result, we have low inventory because people don’t want to move – they don’t need to, it’s expensive to move, and for the most part, you have to leave town to make it worth it.
What could cause a sustainable market? Exactly what we have in place now – a content homeowner base with little need to sell/move.
The current inventory is stocked with elective sellers, who will only sell if they get their price. Rancho Santa Fe is a template.
Forget the higher price point and just look at the dynamics to test the theory. There have been very few distressed sales in the 92067, which is what we have today throughout NSDCC. With at least 90% of the sellers on the market by choice, they sit and wait for their price – or forget it, they aren’t moving. They’re not going to give it away, that’s for sure!
|Detached-Homes||Avg DOM of 2013 Solds||Months’ of Inventory|
In spite of what realtors want you to believe, it doesn’t take longer for higher-end properties to sell – it takes longer for the sellers to get their price right. This attitude is permeating throughout the marketplace, and with no external pressure to sell, you can see why.
Are the lower-priced sellers subject to more of the economic swings? Yes, definitely, but with Big Gov behind you, nobody will have to panic-sell again.
If you can’t make your payments, you can wander through the loan-mod process for months, and then test the market at your price for months or years before the bank gets around to foreclosing.
Expect bigger inventories of over-priced turkeys, waiting happily for as long as it takes for their jackpot to roll in!