Man, does the market ever turn FAST! The supply numbers are now on above the historical averages across CA and AZ – in excess of 5.5mo. At the current stunning rate of inventory increase where new listings are outstripping supply by wide margins we should see a 1+ year supply by spring.
Prices drop quickly in response to supply when owners with a low basis need to sell. Foreclosures will follow price declines as those in under David Copperfield financing models fall behind, with no way out. That is a snowball running downhill.
Momentum is building. A soft landing, the wet dream of the RE complex, will be over before it ever started.
Impossible to say. Depends on the level of inventory and the rate at which it climbs. Take a look at Phoenix numbers – ALARMING RATE OF INVENTORY INCREASES!
I know of 2 buyers who sold at 10% below listing in Poway, but the asking prices in their neighborhoods have not been lowered to keep up with that reduction. Inventory is just sitting, more and more sellers are reducing their list price by tiny amounts, but the big reductions are nowhere in sight, and I don’t see a domino effect either. I sold my house for 5% below list in January, and the 2 houses near me, who were my competition between Oct – Dec as we competed for showings, have not reduced their price at all, despite being on the market several months before I was. I just checked yesterday, and they are listing at the same price as October 2005, no reduction at all.
Again, what is the lag between rising inventory and falling prices? I just see inventory rising, and small reductions, such as $5K – $20K. I just wonder how long it will take for sellers as a group to accept that they must lower prices significantly to make a sale.
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