It’s been a month since my last post. If I were working as a reporter, I would have been fired by now. So why the long silence? Simply put, I didn’t have anything I wanted to say. This market is so confusing that I was reluctant to say anything. So what changed? Frankly, not much, but the trend seems to be gaining enough traction for me to discuss it. The trend? Low inventory and rising prices. I have been waiting for some sign that this market was going to move one way or the other. That move seems to be toward a tighter market or seller’s market, rather than a looser or buyer’s market. The LA Times reported statistics today from the National Association of Realtors, online broker Redfin, valuation website Zillow and foreclosure tracker Core Logic, that inventory has been declining in every market especially the hardest hit like Phoenix and Miami. In fact the article says that price appreciation, that’s right, appreciation, has hit as high as 14% in some areas this year. Good luck with those appraisals… Locally I have seen properties along the Los Angeles/Ventura County Line are up about 3-5%. In fact taking buyers out today is a bit like searching for a needle in a haystack. Sure there are some multiple offers, but at least in multiple offers, a buyer is finding a property that they at least like enough to write on. The problem I’m finding is that we’re not even seeing that. Some of my clients are just waiting by the computer for a new listing to come out within their criteria… they’re waiting and waiting and waiting. Rates are great and they want in, but there is nothing to buy. Inventory, both locally and nationally, is down more than 50% from a year ago, while sales are up 15%. Moreover the inventory that’s out there isn’t really the great stuff, more the middle of the road, mediocre and uninteresting sort. Harsh yes, but honestly, that’s how it looks to me. Where are the great properties? The killer homes? The equivalent of the “sweet ride” if it were a car? Nowhere to be seen, that’s where. Why? I suppose one could argue many would be sellers are under water thus can’t sell. Others might say, it’s because seller’s with equity don’t have enough equity to move so they are staying put. Still others might say, there isn’t anywhere for a seller to move to so they have no motivation. All are likely true. It’s not that I’m saying that there are no nice properties out there, but I can say that there are no really nice properties out there or certainly none at the market price; there are always over priced homes in any market. Even the investors and flippers are having a hard time buying at foreclosure auctions or getting distressed properties cheaply enough to fix and flip. And like the third week of a sweltering summer in New York City, there appears no end in sight.
Change is always hard. The market we are currently in is, like much of the market we are just coming out of, unique to our collective history. We have never come out of a 30% decline in market value before and so we have no experience in knowing what to expect, how to prepare for it or how to deal with it. All we can do is muddle through until something happens to give us a sense of direction and in this case, to motivate sellers to sell. Whether that be need or desire, something has to give. As prices increase, hopefully it will be the latter, but by all indications it’s going to be slow in coming. Even then we’ll have to hope we can get the banks and appraisers on board.
Published on 2012-07-29 08:30:01