I already guessed that the runaway frenzy will start to temper in June. Here are reasons:
- Some of the craziest demand has been satisfied.
- Other buyers will take a break and go on vacation.
- Overly-optimistic pricing by some sellers.
- It’s been red-hot for 10-12 months.
- Newsom says the state will be 100% open by June 15.
Covid-19 has been blamed for why many potential sellers have delayed their plans to sell. But now that the pandemic is wrapping up and sellers have had a +20% gift of appeciation dropped in their lap, you’d think they would be flooding the streets with inventory.
But there’s no flood yet. In May, 2019 we had 502 NSDCC homes come to market, but so far this month we’ve only had 119 new listings.
Could more inventory be coming?
Prop 19 was heralded as the solution to get seniors moving again – but we’re still waiting. They should stop discriminating against younger people and let everyone take their old property-tax basis with them to their next home.
Owners of investment properties should be expediting their plans to trade for newer/better homes before they change the 1031 rules. This article says that investors will still be able to defer taxes on the first $500,000 profit, but Uncle Joe wants to tax the rest. Americans hate the idea of paying taxes, so they will just keep their old property, rather than selling – which means less inventory.
Any potential seller who wants to stay local doesn’t see many homes that would make it worth the hassle of moving. Sure, selling their home sounds great, but we’re to the point where you need to leave town to really cash in – but who wants to do that?
Sellers have the most ideal market conditions of all-time to sell their home, yet they are holding back.
If we do see a slowdown this summer, it won’t be because of a flood of inventory. It will be due to prices having gone completely bonkers – price will fix anything!