OC for-sale home inventory up 45%, sales down 3.6%
Rumors of a surging real estate market are greatly exaggerated.
I recently asked, Did the OC housing market come alive in February 2015? Anecdotal reports of surging buyer demand looks similar to the frenzy at the beginning of 2012 — or so local agents would like everyone to believe. The fact is the market was very weak in January, and the anecdotal reports of a resurgence in February may be more wishful thinking than market reality.
If the market is so hot right now, why is for-sale inventory up 45% while sales are down 3.6%? Wouldn’t the opposite be the case if demand were surging and days on the market were declining?
Many of these new listings will be cloud inventory owners that can’t lower their price, plus each year we always get a fair number of owners that put their houses on the market at wishing prices just to see what happens. Rising inventory and declining sales is not a sign of a raging bull market — that’s a sign of a market top.
After two years of slim pickings for Southern California home buyers, the supply of houses for sale may be starting to open up, at least a bit. And that could power the region’s housing market to a stronger spring.
Market watchers and real estate agents say they’re starting to see more sellers as prices remain relatively high, interest rates stay low and fewer borrowers owe more on their houses than they’re worth. The number of homes listed for sale in February climbed 9% in Los Angeles County from a year earlier, according to data from the California Assn. of Realtors, and the time it would take to sell every house on the market was at its highest level in three years.
According to Mr. Thomas, only 5,443 homes were available for sale in February. Redfin pegs the current number at 6,994. Either the February numbers were wrong, or 1,551 people listed their homes for sale over the last three weeks — and if you plug the current inventory number into the months-of-supply calculation, and rather than showing a brisk market, it looks like a buyer’s market with a glut of supply.
“Supply is not an issue right now, not like it was,” said Rich Simonin, chief executive of Westcoe Realtors in Riverside. “It’s not a problem.”
Did you notice this is the exact opposite of the story in the OC Register a couple of weeks ago?
Supply will become an issue if it keeps building up — an issue in a bad way.
That’s a shift from the last few years, when many sellers held their homes off the market and bidding wars were common for the rare well-priced listing. More supply should help keep prices in check, economists say, and coupled with an improving economy could help fuel a broad recovery in the region’s housing market over the next few months.
That’s the dream. Realtors have relied on the lack of inventory as an excuse for poor sales. When sales fail to materialize over the next few months, they will have to rely on the “tight lending standards” meme as their standard inaccurate spin.
But so far the housing market has been in a slump.
Home sales in the six-county Southland fell 2.7% in February from a year earlier, according to figures out Tuesday from CoreLogic DataQuick; it was the 15th time in 17 months that sales have fallen.
Consistently falling sales is not a sign of a robust recovery. It’s a classic sign of low affordability creating a problem.
Although the region’s median sale price of $415,000 was up 8.4% compared with February 2013, it has been basically flat since last summer, when it plateaued as many buyers hit a ceiling for what they could afford.
Selma Hepp, senior economist at C.A.R., … said. “But affordability is going to stare us right in the face again.”
For many buyers looking at the bottom half of Southern California’s high-cost housing market, affordability never stopped being an issue. The supply of homes for sale remains far tighter at prices below $500,000 than above it, according to C.A.R.’s data. And good homes in that price range tend to sell fast.
Aviva Lomeli, an agent with Redfin … said. “It feels like in the last few weeks the market has taken off.”
Once, just once, I would like to see a realtor say “the market really sucks right now.”
Realistically, even if they said it, it would never make the newspaper…
If it has, prices will rise quickly unless still more sellers step in, said Andrew LePage, …”If we don’t see a meaningful jump in inventory, we’ll be right back up against affordability constraints.”
So far, we are seeing a meaningful jump in inventory. As we get closer to the peak, fewer and fewer sellers are trapped underwater, so fewer homes will be trapped in cloud inventory.
But right now, said Simonin, the housing market is as stable as he can remember it being in a long time, balanced between buyers and sellers, appreciating but still somewhat affordable.
“It won’t stay this way very long,” he said. “We should enjoy it while it does.”
Surprisingly, I agree with him.
Even though prices are high, I have to rely on my analysis that shows current pricing is still relatively affordable — at least on a monthly-payment basis.
So is this spring a buying opportunity, or is it the top of the market?