As of January, there was a big divergence between pending and closed
sales: closed sales were very weak (even considering the
seasonality), but pendings were strong. This gap narrowed
substantially in February as closed sales made a big catch up
move. Check it out in the graph below… closed sales were
unusually low in January, but a lot closer to recent years (albeit
still somewhat low) in February.
Pending sales on the other hand were not at all weak in January, a
fact which augered the rebound in closed sales. And they were
similarly strong in February — so we should expect further catch-up
in closed sales.
Now this is all relevant to ye olde supply and demand thing.
The strength in pendings implies fairly strong demand, somewhat
higher than last year. Where does supply stand? Very
similar to this time last year, it turns out:
Flat supply and increased demand translates to a lower
months-of-inventory reading:
Now, the current months of inventory is quite low on an absolute
scale:
…but that’s the norm for this time of year. You can see that
we were at the same level in the beginning of 2014, but as the year
progressed, supply and demand got back into a better balance.
And as we know, this key metric of supply vs. demand is generally a
great indicator of near term price pressure:
The graph above implies that the current level of inventory should
put upward pressure on prices. And they did indeed rise in
February…
But these are still the somewhat dead winter months, and months of
inventory could change pretty dramatically as the market gets going,
as happened last year.
If months of inventory stays at these levels, we are looking at some
potentially signicant upward price pressure. But, please note
the “if.” We will get a better idea over the next couple of
months as the spring season kicks in.
Graph dumping ground below:
March 24, 2015 @ 11:24 AM
Historically low inventory.
Historically low inventory. This is really odd considering prices are pretty high.
March 29, 2015 @ 9:40 AM
Age-old question – Is this a
Age-old question – Is this a good time to buy? I’m currently renting and quite happy doing so, but would also like a place to call my own. Just would like something to build a bit of equity and not sure if the timing is right in Temecula right now.
Thoughts??
March 31, 2015 @ 10:03 PM
If you go on Redfin and
If you go on Redfin and filter, >1300 sf, 3BR, less than 1M, built after 2000, there are about 600 properties on the market.
Sure the 6,000 number looks reassuring but there is basically no inventory in a meaningful sense. With population increases an and longevity, supply will stay tight.
April 24, 2015 @ 5:51 AM
Esocoguy there is no <1300 sf
Esocoguy there is no <1300 sf filter on Redfin, it's 1250 or 1500. But I did do a similar search for a newish (>2000) house and in all of san diego county if one wanted a 3/2 house with no HOA for under 500K then one would have to want to live in Julian or Borrego. There are no new SFH in San Diego county with no HOA that are affordable.
April 25, 2015 @ 8:39 AM
No shame in buying an oldish
No shame in buying an oldish house. > 2000 la-de-freakin-dah!
Mira Mesa: http://www.realtor.com/realestateandhomes-detail/10044-Kaufman-Way_San-Diego_CA_92126_M16441-47233?row=3
January 14, 2016 @ 4:01 PM
Great article. Yes, low
Great article. Yes, low housing inventory is one thing but really do not think it will offset rising interest rates at falling disposable income in San Diego as well as in California.
Nobody is taking into account the diminishing disposable income of potential buyers in California.
Here is a link, to what I consider my own more realistic outlook for the San Diego housing market as well as California in general for 2016:
http://www.brokerforyou.com/brokerforyou/2016-san-diego-housing-forecast.html