Is it a buyer’s or seller’s market?
Contrary to what the general public believes, we are currently experiencing a “seller’s market”. You read that right, we are in a market that favors seller’s. I don’t expect this statement to be met without skepticism, the first time I heard it I dismissed it with a laugh. But according to recent inventory and sales statistics, these are unequivocally the most encouraging selling conditions that we have seen in 4 years.
It appears that finally, the pendulum is swinging back in favor of sellers. Before you get to excited, this is NOT a prediction that the market has bottomed out and we are going to see prices rise going forward. No one has the ability to predict the future, but for now suffice it to say there are more qualified buyers then there are homes for sale.
The way a seller’s market is determined is when buyer demand exceeds the inventory of homes offered for sale (think multiple offers) . To back up this assertion we simply need to look at the current inventory of homes for sale versus those under contract (in escrow).
In Q1 2009 there was a glut of homes for sale in Southern California, 138,483 to be exact. Today that number has shrunk to 97,097. In comparison, the number of homes under contract is swinging the other direction. As demonstrated by the chart, Q1 2009 showed 34,630 homes under contract where Q1 2012 it has rocketed up to 42,930. This is significant change of events.
So whats driving this demand? I’m no economist, but the fact that home prices have declined 25 – 40% on average and the historically low (and falling) interest rates certainly have something to do with it. Maybe all that chatter at the Fed about keeping interest rates low is finally starting to have an impact on the market.
A good example of this in our marketplace was the the home at 125 14th St which was listed April 2nd for $939,000. Because it was priced correctly, it was under contract 7 days after being listed with multiple offer and closed 10 days after that for $945,000. So if you are one of the many people I talk to on a weekly basis about when it will be the “right time to sell your home”, it’s time to get OFF the fence. This is a seller’s market.