Where were we? Oh yeah. That was the year that was. We were reviewing broad brushstrokes of the market’s trajectory in 2013. With the lofty assumption that having a good feel for our recent past might help us get a better handle on what’s coming in 2014.
On a side note – it always amazes me how many arm-chair Realtors there are out there. One’s who rely on national news stories to tell them what’s happening in their own backyards.
They read quotes from the Case Schiller Index, articles about consumer confidence and headlines regarding median prices in major metropolitan areas and try to graft the bold font directly onto our own little market in Santa Cruz County. Whether it’s a good fit or not.
Too much big data (including Zillow Zestimates) can lead to a host of small mistakes, bad choices and messy outcomes for individual Buyers and Sellers. We’re the 2nd smallest county in California and it’s hard to compare the market dynamic on the Westside to Watsonville’s. Or Aptos Hills’ to Scotts Valley’s. The numbers are all over the map!
Lesson? All real estate, like all politics, is local. Hyper-local and personal. Know your sources. Think global all you want – you still have to act local.
To recap the first six months of 2013… January started with a low inventory of homes. As most Januaries do. The collective sense was that the market had improved and would continue to improve. Interest rates were low. Spirits were high.
Near the end of February as a little inventory began to filter onto the MLS, pent-up demand rushed out of the gate. The market exploded. Multiple offers became the de rigueur m.o. du jour. Agents, Buyers and those who made the decision to Sell were certain that 2005 had resurrected itself from the grave.
The bulls were off and running. All kinds of apocryphal real estate stories made their way over the hill from Silicon Valley hot spots – adding fuel to the fire.
The year before – the much- anticipated Facebook IPO had done a face-plant. The speculative excitement and fervor that had begun to inflate the market in the early spring failed to materialize.
Come to think of it…we also had little mini-runs in March 2010 and March 2011. But each time they quickly played themselves out. Couldn’t quite find solid footing. Or momentum to sustain themselves.
But last year, it felt like the market was truly back. Ready to launch into another long boom cycle. We prepped for the tsunami of sales that was sure to follow.
But sometime in July, things began to wane. Almost imperceptively. Little things. Like instead of taking a week to receive offers, it might take two or three. Instead 5 or 10 offers maybe we’d only see 3 or 4. Or even just one. And that one wasn’t always at full price. Buyers were pushing back. Getting pickier.
Prices remained oblivious to the nuanced shift. Continuing to run on the exhaust fumes everyone was still inhaling. Seemed like each new listing raised the bar $25k over the last sale in the neighborhood.
But something else was happening too. Fewer new sellers were coming on board. The median price was going up, but the number of actual sales was going down. And it wasn’t because buyers didn’t want to buy.
Plenty of people wanted to buy. They just couldn’t figure out how to do it. Financing guidelines had changed. Those easy equity lines and no qual loans weren’t available anymore. And fat chance any Seller was going to take a contingency offer from a buyer needing to sell their own house.
Next week: How “Inventory, Inventory, Inventory” became the three most important words in real estate in 2013.