I know you are clamoring for market trends — specifically, market trends presented in pretty bar chart format and embedded here for ease of study. Not to worry. They are coming in a few paragraphs. First, however, there is something I need to get off my chest.
It cannot simultaneously be both a buyer’s market and a seller’s market, at least not from a big picture perspective.
There. I said it.
Why do I continue to see agent ads professing that it is both? It smacks of the stockbroker telling one client to buy Company A while telling another that it’s time to sell the sucker short. And that’s the problem, isn’t it? Agents make money only when people buy in, trade up or sell out. But, unless you are a real estate investor perhaps, homes are not trading cards.
Somewhere on our way from 2005 to here, with sales down, the trend has become a tendency on the part of agents to redirect marketing away from promoting value of service and toward attempting to influence actual demand for the service. It takes two to tango their way through a real estate transaction – both a buyer and a seller — and agents can make a living by representing either.
That being the case, why pick sides? No more tired call to action for us. “Call me for all of your real estate needs” has been replaced. “It’s a great time to move!”
But is it? As you consider the answer, here is what we can say with certainty, if we are in the mood to be honest:
- Both Case and Shiller look at things from a macro perspective. They have neither visited your neighborhood nor previewed any of the homes for sale. They do not concern themselves with micro-markets, as that would be an enormous undertaking for dudes with day jobs. Their housing indices, therefore, should only be considered in the very broadest of metro area contexts.
- The center ring, at least in San Diego, is in the lower-priced category today. Blame it on a log jam of first-time buyers who have been waiting on the sidelines, the thousand-pound first-time home buyer tax credit gorilla, or a little modern-day matter of having to have a down payment and documented income to purchase a home; in San Diego, if you want to find the buyers, look in the under-$600,000 segment. The corollary? If you enjoy multiple offers, make offers on homes in this category.
- The market remains volatile, and different price points are behaving differently, a sign that we haven’t reached Stabilization Station yet. Higher priced segments are still feeling downward pressure, and we are far from being able to predict when the higher-priced properties will be out of the woods. However, San Diego prices today are about 50% less overall than they were in 2000. The bubble is now a red rubber ball, and we are going to be bouncing around the bottom for a while longer. The bully on the playground, however, may be the next wave of foreclosures, and whether these will represent a trickle or a tsunami is the subject of much debate.
- If your move is discretionary, you should move when it makes sense – when you need to, want to, and can afford to. On the other hand, if you are looking at your move like a penny stock play (and unless you are a well-capitalized, savvy investor who understands the risks/rewards), either plan on enjoying your new home for many, many years, or add that crown molding and stay put.
- You have too much information, and at some point, too much information gets in the way of decision-making. “Experts” are telling you that the market has both bottomed and is still in a tailspin. They say prices are going up and down. It’s a great time to buy or sell, you hear, and then you read that you should be institutionalized if you do either. Researching your market is a good thing; freezing in the headlights is not.
- Inventory is low. This only means that someone may buy your home within a reasonable range of market value sooner rather than later; it does not mean that a buyer will pay more than what your home is worth today.
- Prices are down from the peak. This only means that you have an opportunity to purchase a home for much less than you would have paid in 2003 or 2005. It does not mean that you will pay less than what the home is worth today.
Now that we have that out of the way, on to the much-anticipated bar charts.
Is it a buyer’s market or a seller’s market? I considered sales of all property types in six zip codes in the I-15 corridor (Tierrasanta, Mira Mesa, Scripps Ranch, Rancho Penasquitos, 4S Ranch/Del Sur, and Rancho Bernardo) just to be sure that I had a reasonable sample size. Then, because I had a hunch that price matters (duh), I looked at three price segments. Here is how the two-year trend lines stack up.
$601,000 – $900,000:
San Diego I-15 Corridor Housing Trends (Over $900k)
Looks to me like the little guys are picking up steam, the mid-range homes are pretty darn flat, and the line on the big boys’ chart is going in the wrong direction. But then, it could be just me.