In a normal market, the perfect amount of supply is what the demand is looking for. Unfortunately, our market has too much supply and little demand comparatively.
I was looking at the statistics for the last three years. I chose the 1st of 2005 through the 21st of July 2005 and the same for 2006 and 2007. What came out was that homes sold easier in 2005, as predicted and became harder and harder as we get to this year.
The numbers are taken from the MLS Realtors use. All the numbers are part of what was entered and might fully reflect the market, however, it gives us a pretty good clue as to what is happening.
The first 7 months of 2005 looked like this for Long Beach, all regions included:
Out of 5936 listed homes, 2672 sold, 281 were canceled and 524 expired.
The first 7 months of 2006 were:
6229 listed homes, 2021 sold, 693 canceled and 999 expired.
The first 7 months of this year, 2007 are:
6040 homes listed on the MLS, 1638 sold, 867 canceled and 966 expired.
What this tells us is pretty obvious, less homes are selling as the inventory is climbing. This creates an offset of too many homes on the market, a glut estimated at years of constant selling until we return to a balanced market. What this means for buyers is more choice. What this means to sellers is finding the right current price is crucial.
Unfortunately, how does one find the “normal” price in a market where there are too many homes and not enough buyers? Obviously, this makes comparables harder to trust since little is selling compared to the number that gets on the market, and stays there.
It’s hard to predict the future, it’s really a question of guessing it right. There are a few constants we can look for, such as a relative balance between demand and supply. Too much supply means buyers have too much to chose from and will drive and even harder bargain. Too little supply and we are back to three years ago. Trends can be spotted if you keep on top of a specific market and area. Right now, I have noticed more sellers interested in finding the right price. We have witnessed in our office multiple biddings on homes. They were all priced low and achieved more. But remember, no two homes are ever the same. What sold in your street might not reflect what you have, for better or for worse. The affordability ratio is also important to calculate and keeping a eye on the general economy, unemployment, gas price, food prices, etc, will tell you how much buyers will afford.
I couldn’t find an easy way to figure out what happened to the homes that are left after taking all traffic and sold homes. Some were rented, some withdrawn, etc. The key words were how many were listed, how many sold and how many canceled or expired. Obviously, homes stay longer on the market and we are coming back to a more balanced market.
