Remember when Rob Dawg said “Forget all previous assumptions”?
Everyone has been assuming that once prices went back up, more inventory would appear. Those previously underwater would finally be free to sell, and other more-elective sellers who had been waiting patiently since the last peak would try again.
Well, here we are – prices are back to the previous peak. Except the number of new listings is going in the opposite direction – and compared to 2013, it’s getting worse.
Here are the NSDCC detached-home new listings:
Last year it happened as expected – pricing was up 10%, and the number of new listings picked up. The total was 7% higher than in 2012.
Pricing went up another 10% this year, but the number of listings dropped 6%.
When you trim down the time period further, it gets worse. Here are the new listings that hit the market between March 1 and April 15th:
Today, most people can sell for more money than ever. Yet heading into the prime selling season, there were 14% fewer new listings that hit the market this year, than in 2013 – even though pricing is up 13%!
Last year, the all-out frenzy was spurred by record-low mortgage rates, but also benefitted greatly from the sales momentum. More homes hitting the market meant more to gobble up, which caused prices to rise at a faster pace, causing other buyers to panic.
But now the move-up-or-down market must be particularly paralyzed by the lack of better choices. Those sellers who are leaving town feel like they’ve hit the jackpot. But for those wanting to stay in town, the tightening of inventory is frustrating, and they don’t want to list theirs unless they like their chances of buying a decent replacement.
It will probably feed on itself too, causing sellers to push prices higher – in spite of what Leslie said!
The fewer new listings could mask the actual buyer enthusiasm. A low inventory of active listings makes it appear that demand is high, but the lower counts could just be from fewer new listings overall.
With less to pick from this year, there will be fewer comps and more-scattered pricing results too. Get good help!
two words
New homes,
Need more new homes going up.
Interest Rates probably hurt the move up market too. Do you really want to trade in that 3.5% interest rate you refinanced a year or two ago for 4.25-4.5%?
Great info as usual. What will happen next?
It does seem more large lots with tiny houses are coming to market, (and selling quickly). Also, multiple new home projects are in design or underway in Encinitas on former green house sites.
I don’t see this stagnation going away anytime soon, unless mortgage rates drop again. After the lesson of the last bubble, people are just comfortable paying their refinanced, low-interest mortgages and staying put. Whoever had to sell due to financial hardship, already sold. Moving into a more expensive, possibly overpriced home, with higher interest rates? NO WAY, not after the lesson of the last bubble. The perception of the real-estate has changed and it’s not going to change for some time.
For the buyers, things are just stacking up against them – sellers’ market.
Remember when Rob Dawg said “Forget all previous assumptions”?
I don’t even remember what I had for breakfast!
Seriously, I’ll stick with the claim. Things have changed and they will again. Thankfully there are those who keep in front of the market. Look to them. New rules does not imply no rules.
And for a pleasant distraction look at my blog for a set of pics I took in the backyard.
I think this is reasonable: the cost of “trading up” just doesn’t make sense. Your interest rate goes up 1%, the transaction cost of selling your old house is 8%, and so why bother? Who is this move-up buyer? Someone who bought a house for $550k in 2009 that’s now worth $800k, and the “move up” house is 1.2mn? So great, you now have 275k in the bank after selling, but still need to qualify for a loan on 900k. Or multiply all the numbers by 2.
Everyone else is staying put, unless they absolutely need to sell. There’s nothing “affordable” under 1mn (short of a trailer in San Marcos). Why bother moving – remodeling is a lot easier.
Come on now – everyone should move every 6-12 months!
5 years
reminds me of that bowie five years song.
Keep saying I am going to stay put, but then something comes along and Bam, were moving again.
maybe not this time.
Say what you want, but the ladder actually worked for us.
To each their own.