We all read the reports about our local housing market. It’s up! It’s down! Yep, all that. And mostly, we have been talking about the numbers of sales lately, since few are arguing that prices are actually climbing, at least to the extent that they might suggest a trend.
We just survived a forty-eight hour period in which we closed five escrows. As agents, and buyers and sellers know, the final days of the real estate transaction are like the final minutes of a basketball game – that’s when all the action takes place. Loan document signings, utility transfers, wire transfers, and, in our case, ten moving trucks, give or take, all poised in various states of readiness. We have final walk-throughs, last minute signatures, and last minute attempts to find the remotes to the ceiling fans which, invariably, have been packed in the box marked “Chelsea’s Room” never to be seen again.
It’s glamorous, I confess. And when we wake up to find that we have more or less survived one of these classic spurts – ours is always a business of ebbs and flows – we have some catching up to do.
I made a quick trip to the “Market Stats” pages of our web site to take a peek at the active listing inventory trends for San Diego County and the I-15 corridor this morning, and was irritated to find that no one updated the numbers for May. Heads are going to roll! Then I remembered. I’m the one who updates those numbers. Dang. I had better get cracking. Just as soon as I find a home for our newly relocated clients who are growing weary of life at the Residence Inn. Unfortunately, this is proving more easily said than done.
While I was busy having a little Spring escrow fling, something happened to the market. Our inventory went on sabbatical. I wrote recently about how so much of our active inventory wasn’t really so active at all, a lot of short-sales “pending lender approval,” and how these homes were rightly swooped into the netherworld of a new MLS “contingent” status. Contingent, of course, means “Not really for sale, so too bad for you.” Consequently, we saw the active numbers take an overnight nose dive, but that’s only part of the story. Our real inventory is really shrinking.
Would someone please move? We are finding that we have nothing to show our buyers, and buyers are out there. Granted, they aren’t your 2005 buyers, the ones hurling blank checks at the poor homeowner who, on his way to take out the trash, simply looked like he might be moving because he was carrying big bags of stuff. Buyers still want value and, for many, value is defined as 1947 pricing, but there are as many more realistic buyers who finally see value in this market.
So what happened to the inventory? Well, people aren’t selling in the same numbers now that they were during the peak; that much is true. 2005 is still too vivid in the homeowner’s memory, and the want-to-move crowd is less inclined to bite the price bullet just yet, so we are left with the need-to-move folks. But we also saw much of the well-priced inventory get gobbled up seemingly overnight. The question is how much of this is seasonal?
I have no statistics to point to this morning (since “somebody” forgot to update them), so I’m going to rely on my feelings. It’s a girl thing. When the June numbers come out, we are going to see a surge in the number of closed sales, at least locally. And when the July numbers hit, we are going to see a decline in sales again, which will result in a lot of analysts assuming the freak-out, crash position. But you can’t close escrows when there are no homes for sale, so July sales numbers will not be indicators of anything.
I believe it is September and even October which will be key. Interest rates have been creeping, which has inspired many buyers to do their thing sooner rather than later. The first-time homebuyer tax credit will sunset this November (well, maybe). And, this Fall, it won’t be Spring anymore (duh). It is then that we will see what consumer confidence is made of.
My prediction for San Diego housing? We have another year of volatility and continued downward pricing pressure, although the rate of decline will continue to wane. Next Spring will bring our base, at which point we will enjoy an extended stay in the land of normalcy – normal market times (measured in months, not hours), normal annual price appreciation (measured in single-digit percentages, not in numbers that sound like test scores), and normal expectations on the parts of both buyers and sellers. This is called equilibrium, and it will take one more Spring until we stop playing around.