Existing home sales slowed- market downturn or low supply?
According to the news release published by the National Association of Realtors, total existing home sales nationwide declined in September as compared to August. The decline was approximately 1.7% nationwide, 16.8% in San Diego County. However, September 2012 figures for existing home sales were up 11% nationwide and 5% in San Diego County above the reported figures for September 2011.
So what has caused the slow down in home sales? Is the downturn in the economy, the dreaded double dip that we have all been hearing about?
If you ask Lawrence Yun, the chief economist for the National Association of Realtors, the answer is no.
“Despite occasional month-to-month setbacks, we’re experiencing a genuine recovery,” he said. “More people are attempting to buy homes than are able to qualify for mortgages, and recent price increases are not deterring buyer interest. Rather, inventory shortages are limiting sales, notably in parts of the West.” –
“The shrinkage in housing supply is supporting ongoing price growth, a pattern that could accelerate unless home builders robustly ramp up production,” Yun said.
Inventory in San Diego County of active listings on the Multiple Listing Service (MLS) continued to fall for the 15th consecutive week. As of figures published Oct 12, the total listing available in San Diego County was approximately 5,300, the lowest in over 3 years. The current supply of homes for sale in San Diego County is half of what was available a year ago.
The lack of inventory has prompted bidding wars and more competitive offers which has aided in keeping home prices at a 4 year high in San Diego county. Another factor affecting the upward trend is that foreclosures made up the lowest percentage of total sales since July 2007.
The idea that one should wait until the market hit bottom was what kept many potential buyers on the fence. As prices increased, buyers got off the sidelines and began to take advantage of the low mortgage rates in the previous months, further depleting the supply of homes for sale in San Diego County.
The lower than normal inventory is a positive for sellers aiming to get the higher price possible for their home but also creates a challenge to those buyers who have finally decided to step into the arena.
The figures might seem modest, however, they are encouraging.