The problem with all of these questions is that they are asking for predictions into the future. All I can report, with accuracy is where we've been and make educated guess about where we are going.
So, last month I did a pretty through review of the concept of supply of inventory and how you can use it to make guesses about the near near future. As a short review- 0-4 months supply means a seller's market, 4-6 months supply is a neutral market and more than 6 months supply is a buyer's market.
I think everyone was a bit surprised to find that we are right in-between a seller's market and a neutral market- the buyers are NOT in control as the mass media would lead you to believe.
This month I will update you on the general trends in Glendale, but I am also going to take a little time to discuss the different price categories in our town. High end and low end sellers and buyers can experience very different markets within the same town.
First of all,a general picture of Glendale. inventory continues it's downward trend in number of homes on the market- this month saw nearly the lowest amount of inventory in the last 15 months. The number of homes sold also continues a gentle downward trend while the number of homes that enter escrow is experiencing a gentle UPWARD trend.
I believe the gap between homes entering escrow and homes successfully closing shows the complexities of obtaining loans as well as the skittish nature of today's buyer.
Months supply of inventory is holding steady at 4.3 months (neutral) and the average price per square foot has fallen 12% from a high point in July.
That is exactly what I want to talk about. Because the answer is, "Depends". It depends what end of the price spectrum you are interested in. The lower end, under $500,000 has a different dynamic than the mid range, $500,000- $750,000. And our upper end is- well, in a different world all together.
Inventory is super low -the lowest point of the year and nearly half of what is was a year a go. At the same time our rate of sales is more or less even. This results in the Months Supply of Inventory of 4- now, we all know that is a Neutral Market, right?
In fact, if you look at the average price per square foot and you smooth out the big sell off of May, 2011 and you see a mostly flat to slightly declining trend line.
However. Since March the number of homes entering escrow has been on a steep increase, but the number of closings has not. This means that closing a home in this price range is especially difficult.
Sellers, pick your buyers very carefully. All of the buyers I see look great on paper and should be able to get a loan. The problems are more complex and it takes tremendous people skill and technical skill to close a deal.
Buyers- you have serious competition from other buyers and very few homes to choose from.
Now, you might think that the under $500,000 would be the most active category, but you would be wrong. The most active category is the mid range, between $500,000 and $750,000.
The most number of closed escrows and active listings are in this range, and the percentage of short sales is the lowest. It appears that these homes have a much higher chance of closing.
The months supply of inventory (MSI) is currently at 2.8- solid Seller's Market and prices should be going up, right? In fact, since May, the average price per square foot has, indeed, been going in a mostly upward direction. However, that price has fallen 7% from last year.
The news is relatively rosy for sellers in this price range! Demand is strong, the transactions are closing (though not, sadly, drama free) and there are very few homes on the market to compete.
If you are a buyer, all is not lost. Focus on the historically low interest rates available to you right now. This, combined with the decline in value over the last two years, means this home is likely a super value that will serve your family for many years.
The rate of sales for the upper end ($750,000+) has been pretty steady all year- not a lot of sales, but steady. Inventory is similarly steady with a small trend upward in the last quarter.
Because the number of homes selling is fairly small (about 10 a month), The MSI shows huge fluctuation (too small of a sample). In general I read this chart as the high end of neutral trending toward a Buyer's Market.
If you are a seller in this price range I urge caution! There are roughly 50 homes competing for just 10 buyers. In order to be "The Guy" that sells, as opposed to the one who doesn't, it is extremely important that you are one of the top three values on the market!
Buyers- understand your leverage. This is the only segment where I think you have any real power with sellers. There are more homes to choose from and you have a better chance of finding a great home with a motivated seller
Kendyl Young blogs daily at www.KendylsOpenHouse.com. and she covers local real estate trends, hot properties and community happenings in Glendale, La Canada and La Crescenta. You call or text her at 818-396-7588 or email firstname.lastname@example.org. Amusing tweets; @kendyl