There's yet another market change a foot in North San Diego County and the Encinitas & Carlsbad area. After 12 months of getting use to 25,000 homes for sale in San Diego County the inventory has shrunk to the point where sales are rapid and buyers frequent. The inventory now sits at about 16,000 homes as we come into the prime selling season here in Southern California.
January 1st marked the start of the open flood gate for buyers. Agents all over are experiencing buyers coming into open houses and commenting that they think the market has gone about as low as it's going to go in this cycle. Interestingly, I couldn't agree more based on the decreased inventory and frequent multiple offers. I recently had a sale with 5 offers! I stood in front of our buyer sale posting board in our office tonight with several people gathered around, pointing out the many multiple offer sales that had occurred this month. The decreased inventory and increased number of buyers may be the cause of homes starting to move more briskly and with many offers.
Lag time on market conditions is an important thing to watch for buyers and sellers. Consumers in general live in the "8 month ago" mode. Home prices, on a per square foot basis, dropped almost 10% in North San Diego County in 2006. Today you can get a bigger house for the same price as what sold 12 months ago.
For the buyers lag time is important to understand too. I've got many buyers who tell me "Hey, things are moving slowly and I can take all the time in the world to make a decision and shop." In reality, market time has decreased dramatically. Things are selling faster and with multiple offers so be careful. I've had several buyers lately who failed to make decisions quickly and the home they had their eye on went into escrow before they had a chance to make an offer. The 8 month ago mode of 90 days + market time is a reversing trend.
As we approach the prime selling season I'm sure we're going to see some inventory changes. There's plenty of sellers who weren't realistic about their market price at the end of 2006 and they took their homes off the market toward year's end. I think we're going to see some of those return in addition to the usual increase in inventory that happens as we approach summer. If inventory remains steady and the number of buyers keep increasing (like has been happening) at least we'll see some stability come to what in 2006 was a falling market. Forecasters see 2007 as a year of stability and 2008 exhibiting signs of appreciation. Add the Fed into the mix with a possible rate decrease and we might be poised for an interesting and active market.



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