The Buyer's Market in the SCV

The real data on our local real estate market is pretty interesting, and I invite you to click on the links to the data that I always have in the column to the right. I've had a chance to do a brief analysis of the Santa Clarita and San Fernando Valley sales data for the month of September, and there are a couple of things that are just as apparent to me as they would be to you if you take a look.

We are in a buyer's market.

With the ratio of inventory to new sales now at 11 months this is definitely a buyer's market. Historical sales data indicates that a 6 to 8 month supply of inventory indicates a balanced market. Less than a 5 month supply of inventory would be a seller's market. At 11 months, there can be no doubt that we have gone through the transition to a buyer's market.

Home prices are holding steady.

Yes, despite media reports to the contrary, our local market remains generally steady, with neither rising prices nor falling prices in the aggregate. However, while appreciation is near zero from year to year, there has been a general downward trend which may tip into depreciation as we enter the fall and winter seasons. While the median price of closed sales has slipped modestly month-to-month, the average price has risen. In addition, the data indicates the percent of sales price to list price for the past month is at 100%, while the percent of sold price to original list price has risen to 96%. While a mixed bag of data shows change in the market, it does show a steadiness and normalization compared to past years. The next few months will be interesting.

What does this mean for buyers?

Buy. In a buyer's market with a lot of inventory and relatively low interest rates, start making offers. If you aren't that choosey about what you buy, try to pick off a weak seller. You never know what kind of deal you can get. Depending on seller motivation, what you get just might surprise you. Stay on the sidelines and you will never know. If you are real choosey, there is a lot of inventory to choose from and the home of your dreams is out there, and on the market. Take action. Call me.

What does this mean for sellers?

Price your home to sell. Be at the bottom price of comparable homes, not comfortably in the middle and definitely don't use the losing strategy of pricing high at the beginning. If you are a seller and aren't working with a buyer who comes in with an offer close to the sales comparable data for your home type, you are a fool. But you aren't a seller. If this describes you, do yourself and the rest of the market a favor. Take your home off the market. If you don't need to sell in this market and if you don't price your home to sell, you aren't really a seller. Stop fooling yourself. You aren't fooling the market.

What will the market look like in six months or a year?

Depends on interest rates and the supply of inventory and the rate of sales. People make projections which are sometimes right and sometimes wrong. Overall, the demographic pressures of demand for our area remain strong, and there are many who want to buy but a psychology of fear has entered the market. Instead of irrational exuberance of the past few years there is now an irrational pessimism that is unsupported by broader economic indicators. These swings in market psychology do have an effect on housing, just as any student of economics understands their affect on stock markets. The fear of loss among some potential buyers has put a significant brake on housing market activity. So I suppose the short answer to the above question is: I don't know. There are a lot of factors involved, and there certainly is not agreement among analysts.

The current data is always at The Real Blog

I stay on top of the current market data for our immediate market area. You can take a look at the Santa Clarita and San Fernando Valley data by clicking on the link in the right hand column under Best Real Estate Links.

Give me a call whether you are a prospective Buyer or Seller in this market, and let's get together.