Buyers and Sellers alike have seemed to be waiting on Spring, the perceived Holy Grail of real estate opportunity. I have been hearing consistently in open houses that Buyers expect a continued downward trend in pricing and more inventory as we approach summer, making the market more favorable. I hear consistently in listing appointments, on the other hand, that sellers expect increased buyer activity and interest as we near the summer months; they believe this will benefit them in terms of both market time and price.
Unfortunately, both buyers and sellers may be mistaken. This morning, there were 122 active listings (detached homes) in Scripps Ranch, for instance, which is consistent with the daily inventory total we have seen since August, 2005. Homes sold don’t tell much of a different story. Our sales in February were down significantly from February of last year, and while March sales were approximately unchanged from March of 2005, April is starting out to be a slow sales month indeed (with 2 closed escrows reported in the MLS in Scripps as of this morning). Prices seem to be stable for the moment, but if interest rates continue to inch up (as we all expect they will), sellers will have increasing pricing pressure, as more buyers become priced out of our market.
This isn’t a Chicken Little scenario, in my opinion. The sky is not falling. What I do believe is happening (and needs to happen) is that we are moving toward an equilibrium. Buyers, while more patient than in the recent past, will be under some pressure to make their purchases while interest rates are most attractive. Sellers, on the other hand, will be well-advised to take a realistic approach to pricing their properties, understanding that the dramatic price increases of the past are… in the past. For the foreseeable future, very moderate increases are likely the best we should hope for; price stability or even a short-term continued downtrend is more likely.