We’ve been witnessing Zillow’s ascension to power over the last couple of years, and their CEO continues to get mainstream-media attention every week.
He’s not a realtor, his company doesn’t sell real estate, and frankly, he is just spewing guesses disguised as facts, just like the rest of the ivory-tower crowd.
In his latest installment – and the second time he has said this on national TV – he says that the low inventory is caused by homeowners being underwater.
But in San Diego, LA, and San Francisco where prices are back to peak or higher, the inventory shortage hasn’t changed. In NSDCC where average pricing has increased 34% over the last two years, the number of new listings is dropping!
NSDCC Detached-Home New Listings Jan 1 – Apr 15
| Year | ||
| 2009 | ||
| 2010 | ||
| 2011 | ||
| 2012 | ||
| 2013 | ||
| 2014 |
Thousands of homeowners are regaining equity every day around here, and yet they aren’t moving. Why are they not moving? Here’s what I see in the field:
1. Finding a decent home at a decent price is so hard that NOT moving is easier and more convenient.
2. Remodeling is a viable alternative.
3. You have to leave town to make it worth it – people don’t want to leave.
4. Self-employed people who cheat on their taxes don’t show enough income to qualify for a new mortgage, and get stuck in their old house.
5. Sellers waiting for higher prices because they don’t have to move.
It is sad commentary that N.A.R. and other organizations who are in a position to report the facts are remaining silent. Zillow is becoming the go-to company for real estate reports, solely because they are the only ones doing the talking.
Attention national media: I am willing to give honest and accurate quotes – call anytime! Or at least take what you see here and investigate for yourself – these ivory-tower guys don’t know what they are talking about.
My stats are always taken from our MLS run by Sandicor.
For some reason – probably memory storage – they delete withdrawn listings after a couple of years.
To keep these numbers comparable, I deleted the withdrawn listings that still remain on record for 2012 (2), 2013 (10), and 2014 (38).
NAR is going to get rolled over by Zillow and they don’t even see it coming.
The next step will be for Zillow to start selling NAR it’s data. Once Zillow is into NAR they’ll start taking it over form the inside by placing execs in key positions.
This is how things work in tech.
He could be right at the National level. San Diego and San Francisco seem to be the it’s different here markets for the time being. Lot’s of cash, back to peak pricing, etc. I wouldn’t expect national media to focus on the it’s different here markets. Granted people in San Diego may parrot this information as being true here, even though it’s not.
The bottom line is sales are down substantially YoY and everybody is looking for a reason why. I personally think it’s pretty simple. Prices are too high for many potential buyers. It isn’t necessary a lack of inventory, it’s a lack of inventory at prices the market will bear. It might stay this way for quite awhile.
But you are one of those people who only see the facts the way you want to see them, and ignore others. Go back to yesterday’s post here where it showed how hot the frenzy was last year, which makes the Y-O-Y comparisons ridiculous – the media forgot that 1H13 sales were an anomaly that will unlikely ever happen again (low prices combined with 3.5% mortgages)
The New Normal includes a different mindset on this topic. It doesn’t matter which market, there are fewer reasons to move that apply everywhere.
It isn’t necessary a lack of inventory, it’s a lack of inventory at prices the market will bear.
I’ll agree if you are talking about the OPTs that are 10% or more above comps. If they get in the game, they will sell.
But don’t think prices NEED to go down to increase sales. There are plenty of buyers willing to pay today’s prices if they could only find a decent house and not get out-bid.
P.S. Open house property had multiple offers and sold at LP+.
1H 2013 sales were good in the post bubble time frame but I think they were pretty average when compared to the bubble (2003-2006) and pre bubble eras (1998-2002). 2014 sales compare well with 2011 and 2012 but price movement in 2011-2012 was fairly choppy and flat.
I don’t necessarily think prices need to go down to increase sales but certainly it seems like there needs to be a lot more inventory coming in right around recent comps rather than 10% over recent comps. I’d also say that a decline in prices probably would increase sales. Those sitting and waiting because prices should move up might suddenly be inclined to take what the market will give them if prices falter a bit.
Quite the opposite!
Everybody has so much damn equity they can refinance and if they need to move they can rent it out cash flow positive!
While what you state is true that the Zillow CEO is “not a realtor,(and) his company doesn’t sell real estate”, doesn’t he have a vested interest in seeing more home sales rather than less?
His spin on what underlies the low volume of sales, whether right or wrong, is just one point of view among many.
And as far as spinners go, don’t you think NAR is guiltier than most?
After all, they attributed the recent low volume mainly to nasty winter weather. That’s even though sales were up in the Northeast, bad weather, and down in the West and South, where it was not so bad.
Inventory/no-inventory I guess the next 3 months are kind of key.
IMO without massive numbers of foreclosures I don’t think there will be a large price reduction regardless of inventory.
IMO we are not going back to 2009,
(absent of a major geopolitical event anyway).
And as far as spinners go, don’t you think NAR is guiltier than most?
Yes, and certainly lazier than most too. They don’t do anything to lead the industry in educating the public with complete and accurate data. And how hard is it? I do it every morning in 5-10 minutes, and I’m just a part-time blogger.
Not in San Diego area, but aren’t there a lot of people like me? I grabbed a 4% 30-year fixed (put down 20%) in November, 2010, and I doubt I’ll ever see that rate again. Others refinanced at ridiculously low rates (below 3.5%) even after that date.
If you didn’t pay cash, having a mortgage with a historically-low rate not only means you sleep better at night, it makes you realize that you’re fine right where you ended up. It has to be one amazing house for me to seriously consider getting another mortgage with a higher rate-especially because I’ve already made payments for 3 1/2 years. Who wants to start over w/ 30 years?
And haven’t a majority of people realized that their homes are homes to enjoy and not investments? Just my 2 cents…
“And haven’t a majority of people realized that their homes are homes to enjoy and not investments?”
I think they have.