How is the real estate market in Glendale?
First, let’s take a look at the story on everyone’s lips- the lack of homes for sale.
Starting in the third quarter of last year our inventory plummeted down from already low levels of inventory. Our inventory fell all the way through February of this year.
Why weren’t people selling their homes?
Many took advantage of government programs that allowed them to refinance or modify their loans. I think the largest reason was that homeowners, sensing a shift in the market, froze while trying to decide if the rise in prices was temporary and whether the interest rates would get any lower. Most were waiting for the crazy confluence of a second dip in prices and a continued dip in interest rates.
In February, prices started to take off and homeowners started the spring home buying season in earnest. Homes started trickling back onto the market and then June saw a huge increase. Interestingly, the rate of homes that entered escrow nearly always followed the rate of homes for sale, except for February where demand severely outpaced supply, and June… where inventory went way up…. and escrows opened went way down.
Our months supply of inventory nearly doubled from the low point in March. We are at 2.1 months supply- this means if no new homes come on the market it will take us just over 2 months to sell everything. In March it would only take a little over 1 month to sell everything.
Is the bubble about to burst?
Don’t be ridiculous
2.1 month’s inventory is still considered a seller controlled market- there are still not enough homes for all the people who want to buy. However, both asking prices and interest rates have risen, sharply, in the last few months. The buyers are flinching. They are thinking a little harder. They are evaluating. Many of these buyers lost their shirts in the last downturn and no one wants to be holding that hot potato.
Speaking of prices…
Prices are up!
I finally have proof. In the last 15 months prices went up nearly 21%. As you can see from the chart, most of that increase closed in May and June and entered contract in March and April.
This makes sense- March and April were INSANE! For a little while it felt like 2007 all over again, with bidding wars and offers that bore no connection with recent comparable sales.
OMG- really- the bubble is about to burst?!
Again, don’t be ridiculous.
It is true our prices are a bit higher than underlying economic forces would dictate. But, at the 2007 peak our prices were nearly 72% overvalued. Currently, in Los Angeles county, we are about 8% overvalued. This is more like a healthy, rising, market.
Ok, brass tacks- is it time to move?
Many would see this as the best possible time to sell. Prices are up and, demand is very high. If you wait, it is nearly inevitable that interest rates will rise and the market momentum might shift. However, I see no reason to panic. We are well on the road to recovery, though it is a long and slow road.
If you need to make a life change in the near term, now is as good a time as any. But, if you aren’t ready to make that transition, I would wait. Barring unforeseen catastrophe, conditions for selling should be just as favorable in the near future. Of course, predictions about the future are difficult…
My advice for buyers is unequivocal. Buy the best house you can afford now. I do not see any upside to waiting. Interest rates and prices are rising and everyday you wait, you lose.