Rich does a great job every month documenting our local market trends:
http://piggington.com/june_2014_housing_data_rodeo
Here is one of his 16 graphs for June, showing how the San Diego active inventory is 55% above last year’s pace:
He also noted that pricing increased but sales dropped, which is natural when every seller is asking more, but fewer get/deserve it.
Another interesting point is how the active inventory didn’t drop off the second half of last year, when normally it does. Will more sellers hang around longer this year hoping for the lucky sale? Probably.
It will look and feel like a stagnant or waning market, unless sellers and their agents reduce expectations. You may not be far off! Just keep lowering the price until showings and offers start happening!
See all of Rich’s great analysis here:
Or, unless the economy continues to improve which is likely to support modest appreciation.
I think it will still be cheaper to buy now than if you waited a year.
Agreed – I don’t think many sellers are motivated enough that there will be wholesale price drops of any amount.
There will be occasional deals where sellers have to get out, but you won’t know it until they close at 10% under list or more. Lowball season is coming!
If this trend continues we’re probably looking at close to peak pricing for this cycle. Maybe it’s just an anomaly and things start roaring back again but it certainly isn’t on the right trajectory. I think it’s far more likely that we’re headed back into a recession soon. Homes sales volume has been down, retail sales have been weak, we just printed a negative GDP quarter, and most of all everybody is ignoring these indicators and believing things are getting better. Exactly like the last time we hit a recession.
What’s been happening lately? Vague warnings about bubble conditions but hey there’s nothing to worry about in the same sentence. We’ll see what happens but if you’re concerned about trying to sell at peak pricing I’d be doing it now before everybody else tries to do the same thing.
This isn’t modest appreciation, it is greedy speculation from sellers.
A house sells for $500k down the street, they list theirs for $530-550k to “see if they can get that much”.
If inventory keeps climbing the buyers market appears and the sellers who have to sell will. Then we have low comps that appraisers must follow and we bring the prices down. Unrealistic sellers are assisting in bringing their own values down.
Agreed but only if sellers keep selling. Many if not most will balk at lowering their price just because the guy down the street got divorced and gave his house away.
It’s the next sale after tha first low one that matters. It creates the trend, and all neighbors can do is hope a buyer comes along who is willing to ignore a low sale.
This has been a logic-free environment for two years, with buyers paying prices that have little connection to comparables. Sellers everywhere expect that to continue.
The listing agents make the difference. In most cases they put a too-high price on their new listing and then get defensive and irate if you offer low.
The one thing to consider is how very tough underwriting is, and has been. I don’t see this as a bubble.
With speculators out of the market we’re back to fundamentals. A good thing.
The recent run-up in pricing is more a correction for just how undervalued the market was for years.
I welcome the return of seasonality.
“The listing agents make the difference. In most cases they put a too-high price on their new listing and then get defensive and irate if you offer low.” -JtR
Intriguing comment, Jim! Can you go into more detail in some of your conversations with listing agents? There must be a good (ie humorous) story or two…
“This has been a logic-free environment for two years, with buyers paying prices that have little connection to comparables.”
Or maybe the logic is simply not obvious. The last crash was brought about by systemic rot from top to bottom. The entire mortgage industry collapsed, regional and money center banks collapsed, wire houses collapsed, brokerages collapsed, the construction industry collapsed, hell even entire countries collapsed. Prices cratered 50 to 75%, and some of us took advantage of that. But most did not. Most sat and watched and waited for the mean reversion “over shoot” that was sure to come but never did.
Now, after 6 years people just want to get on with their lives in a home they can afford that ticks most of their boxes. And the comps be damned.
People who’ve waited years to buy, and sat through a 50% correction, are mostly not going to wait for the next 10% correction. They or their spouse could reasonably ask, “we didn’t pull the trigger at a 50% cut, but we will at 10%?”, or “how much more will prices rise before we get a pull back”.
As long as lending / borrowing is sober, the market will chug along within a normal range of insanity. Same as it ever was.
I am very curious what the Ask price vs. sales price is in the San Diego market. Every day I get 5-10 notifications on reductions in Oceanside alone. Perhaps in luxury markets the sellers can hold out, delist or continue to ignore basic economics but in most markets they need to sell and will eventually lower their price and they are. Greed has turned this into a buyers market.
Currently there are 5,789 houses for sale in SD County:
Average LP: $1,211,022
Median LP: $650,000
SD County houses sold in June
Average SP: $701,236
Median SP = $525,000
SP:LP
Average: 58%
Median: 81%
But yes the re-lists skew the stats.
The average list price for NSDCC houses for sale is $2,948,994, and the median LP is $1,825,000.
Jim,
Thanks for sharing.