PT 11 Where are the Listings?
Part I of this report we looked at our Sonoma County Statistics and saw home sales meager at besta nd this with interest rates at “historic lows”. I heard a lender friend of mine, a longtime member of our real estate community, state, “rates are o.k. at 3.75% but FHA is super low at 3.25%”. This is a guy who went through the Jimmy Carter years at 18.5%! Now he is saying 3.75% is just O.K. My, how we get acclimated to low rates! But with low sales come LOW inventory which is our main subject of this three part series. Let's look at more numbers and then get into some of the causes for Sonoma County being low of homes for sale.
Those “Under Contract” buyers are not setting the world on fire with +2% increase over last year at this time. This category is indicative of future sales. And as you can see—New and For Sale properties are all off. This is NOT seasonal as you’d expect. Our inventory just never got any lift this year. And with the tight inventory our Days on the Market and MSI are very low. Remember, 4-6 months is considered “normal” so we are in a Seller’s market right?
However, breaking it down by price point tells a different story with homes over $1,000,000 (remember 41% of our “Active or Showable” listings are over 1 Million) showing longer DOM and MSI. The $1Mil+ market has seen the days on the market increase to 104 days or up 24% while the month’s supply of inventory has dropped from a high last year of 9.8 months to 5.4 months today. A big drop but still close to a neutral market at 4-6 months’ supply. Inventory in this category is increasing. What do these folks know that we don’t?
Below are some reason compiled by the California Association of Realtors and myself as to WHY new listings are not hitting the market in any sustainable quantity.
Investor renting their “flip” ready properties instead of selling them. A smart flipper can achieve a fabulous return on their investment by using escalating rents to give them a great return. This is good for the existing rental inventory but doesn’t help buyers looking for fresh, new homes.
The “mortgage lock-in” effect. How many of you locked in those fabulous rates in the sub 4% range. How do we get you out of that rate into a new home and a higher rate? 4.25% is not that high but letting go of mid 3% is tough.
Where will I go? The current conundrum of our real estate market. “Sure, I’d love to buy a move up or move down home but nothings out there” We hear this constantly. “Find me a home and I’ll list.” Then you have to sell their house to complete the sale of the new property. Not an easy chore. We’ve had to do some creative thinking to accomplish the always trick sale then buy scenario. In Part III of “Where’s the Listings” my further take on WHY we will have diminished listings for some years to come.
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