How’s the market?
The market is looking good for sellers- but don’t get cocky!
Inventory is UP!
Inventory is up nearly 20%- this is the first significant gain in inventory in 2 years.
But, at the same time, the number of sales is marching lockstep with the inventory, rising and falling in exactly the same manner.
This means buyer demand still outstrips supply and there is room for even more homes to come on the market.
But, what about prices?
Average price and median price took a large dip in March, decreasing 14% and 11%, respectively, from February. This has more to do with the appallingly low number of homes sold under $500,000. And, this low number of sales is due to lack of inventory, not lack of demand.
A better number to consider is the average dollar per square foot. Average $/sf is up over the last three months, BUT- we had a huge decrease in Jan. When you compare the average over the last two quarters, our average price/sf has not really changed.
Now, how is this possible?
Every listing seems to have multiple offers and stories of spectacular sales prices are stock in trade at every dinner party. I, myself, have been astonished at the prices my homes have sold for, recently.
However, statistics are 30 days, or more, behind the market. These numbers reflect what was happening 30 and 60 days in the past. This means the most spectacular sales have yet to close escrow and be reflected in the statistics.
It might be helpful to remember, an open sale is not the same thing as a closed one. At the end of the day this means our actual sales prices might not match the tales told over wine and cocktails.
If I had to guess I would say that next months statistics will show a healthy rise in all indicators and, perhaps, we’ll see a rise in the next months numbers, as well. If I had to guess.
Like I said, don’t get cocky!
But I have a small note of caution. March saw a large decrease in the number of homes that entered escrow. This is probably due to the large decrease in listings (fewer homes to buy leads to fewer contracts), but it is a number worth watching. This, coupled with the fact that we have not solved for unemployment, budget woes or credit issues mean that we can not sustain a long term rise in prices.
I am not predicting any sort of bubble burst. I am merely urging caution to potential sellers banking on long term rises in sales prices.