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When you hear the term ‘perfect storm’, you think of major calamities and people dying. The C.A.R. used the term to describe why pending sales dropped in December:

Pending home sales in California plummeted in December, falling 25.2 percent because of what the California Association of Realtors® (C.A.R.) called “a perfect storm” of circumstances.  The Realtor group said a shortage of homes for sale, rising interest rates and higher home prices sidelined many prospective buyers and drove pending sales down for the second straight month.

Theirs is a lazy analysis of the general market conditions.

The market is hot, and is being fueled by improved internet tools being deployed by homebuyers enabling them to act quickly when new listings hit the market.

As a result, the inventory of active (unsold) listings doesn’t grow.  It won’t grow until more sellers over-price their homes – and the supply of unsold homes increases.

We’ve been hearing about low inventory for the last couple of years – but it hasn’t stopped sales from growing.  Here are the annual NSDCC detached-home sales:

Year
# of Sales
Avg. $/sf
2009
2,223
$393/sf
2010
2,461
$380/sf
2011
2,562
$375/sf
2012
3,154
$378/sf
2013
3,211
$437/sf

‘Shortage of homes for sale’ is not an accurate reason for why pendings are dropping.  Buyers may not like the selection or pricing, but there are 726 NSDCC homes for sale.

The reason for pendings/sales to drop is because the prices are increasingly not right.  The December decline might be a precursor to buyers digging in about price, or about the holidays.

We’ll see in the next two months!

From their article: (click here to read)

CA months of inventory

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