Wow, month's inventory is still shrinking! We are now down below 4 months for the Sac Metro area. And while some of the pricey zips still appear to have a high month's inventory, in reality, lower priced homes are in short supply, while the expensive ones sit for what seems like an eternity.
This is good news, and proof that the market is working its way towards equilibrium. It also proves that buyers are out there, so its merely a matter of the market finding price levels that buyers can afford. If they price it right...the buyers will come.
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I don't agree that inventory stats show that we are moving to equilibrium.
Too many new foreclosures each month. As many homes as the banks sell, I don't think they are gaining any ground. Too much inventory in the pipeline, but not listed.
Also 50% or more of the sales are to "investors". So those are either going to start to crush the rental market, or are going to end right back on the market, after the "investor" puts on some new paint and adds new carpet and tacks on $100k...
I do agree that the lower end is pretty hot right now. Not that that is good for the banks since they are taking a huge haircut on each sale just to get rid of the property.
I have spoken to a few realtors who confirm this and a couple have had clients lose a deal due to all the bidding that goes on right now.
The $300k-$500k range is in fear stage. Hoping to get a price that just wont happen. When do they start to capitulate?
Above that I dunno what is going on. I see some homes for $850 and one block over there is a similar home, maybe even larger for $600. A huge gap. The owners of the higher one are probably MEW'ed up to their eyeballs...
When those homes start to go for $500 and the ones I want start to go for $300 it might be time to buy (for me).
By moving to equilibrium....I mean, lower prices brings more buyers.....I was trying to say the housing market isn't as broke, as some have suggested.
However, for reasons you pointed out, it is REALLY messed up....but not broke.
I'm increasingly of the opinion that we are on the cusp of forming a price bottom. By this, I mean several years of continued REO inventory coming, but to a lesser extent than the past 3 years. Several years of actual "bottoming" with declining (5--7 years like the early 90's?) to relatively flat median pricing (compared to past 36 months of cliff-diving). But I think the bottom price range has been found as investors and first time buyers have poured into the market to absorb inventory under $200k about as fast as it comes on the market. And yes, this is just my current "guess," only time will tell.
Just keep in mind Peter Viles' recent post at LA Land. During the 90's downturn in LA, prices didn't bottom until 4 years after sales had started to rise again, and long after inventory had shrunk back to normal.
PR- I don't dispute any of that ... I just think that we are starting the process of forming a bottom (as to lower priced homes) and that we won't see much more in the way of price declines in that segment bottom of the market. Median will continue to decline (probably for many years) as higher end sellers are forced to reduce prices to reflect a reality that I haven't seen yet. And as always, this is just my guess based on several pieces of recent local evidence.
Traveling this week I ran into two people who left CA to move to an area with less expensive real estate. Both of them knew exactly what the market was doing in California and are thinking about moving back ... they miss all the good things about California. One is in Dallas, the other Nashville.
I was amazed at how well they knew the prices and the market. Now if a few thousand would just move here....
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