The media will soon be touting the year-over-year drop in home sales.
Around here it is mostly due to the lack of decent homes for sale – and if you want a decent home for a decent price, good luck.
But the glass-half-full view notes how remarkable sales have been, given the dramatic rise in pricing:
Buyers are determined and resilient in their quest to purchase a home, which is causing prices to maintain upward momentum today, 18 months after the frenzy started:
In the past, escalating prices have caused a surge of new listings. But today sellers are happier to stay put, regardless of price.
The low inventory is disguising the drop in sales – it still feels frenzy-like because buyers out-number the sellers. The blue line is the number of homes for sale today in San Diego County, and the red line is the 90-day moving count of homes sold. It’s not a common metric, but it shows the sales trend well:
With sales dropping, prices would normally stall right about now.
But this is the new normal.
Buyers don’t see many houses for sale, and as a result, they still feel the frenzy vibe and desperation. With inventory so low, future sellers are going to be more optimistic about hitting the jackpot, and price accordingly (too high).
The graph above shows how sales took off in April, even though inventory wasn’t keeping up. We are in the prime selling season now – this is when buyers want to buy a house!
Any new listing with a decent price should get gobbled up in the next 30-60 days. But many, if not most, sellers will come out too high, and risk missing the opportunity – and potentially face a OPT glut by summer.
It’s a fancy dance between inventory and sales, but if we do get a surge of reasonably-priced listings, the sales momentum should take off again.