Tag Archives: real estate inventory

All Filler – No Killer?

CrunchyTacoWhat was that tag line we used to see on posters promoting Rasta bands at the Catalyst in the old days?   All Killer – No Filler?

Wouldn’t it be nice if we could channel more of that sentiment (and mojo) into the real estate inventory right now?  Seems like no matter how many times a day you and I (and I ) go onto the MLS to check for new listings or download our search engine results…nothing much new “of value” comes on. Just the same old same old.

Tired inventory.  Picked-over inventory.  Stale-inventory.  A warmed-over re-hash of stuff that didn’t sell last year.  A strange menagerie of distress properties.  Dubious short sales you can never be sure of.  A smattering of REOs the banks are still pinching out of their systems…starting with the worst first.

The sum total?  An uninspiring catalogue of choices.  Most of which aren’t qualified enough to move anyone anywhere.  As in: Move buyers in. And move sellers out.

I guess we could say it’s mostly Filler…Very Little Killer in real estate right now.  Not many killer views, killer yards, killer locations.  Lowering our expectations even more… there aren’t even many plain old, modest, middle of the road, houses packaged in nice presentations at reasonable price points.  Specially right in the sweet spot zone between $600k and $800k.

I don’t know about you…but it’s killin’ me.

Most Agents out there understand.  They’ve got clients calling. Buyers ready to buy.  Buyers becoming increasingly frustrated with a market that doesn’t seem to offer anything that fits their needs or price range.

And by extension, Buyers frustrated with their own Agents, who become more and more suspect each week they fail to uncover that special hidden gem that’s waiting out there. Somewhere.

It isn’t a Perfect Buyers Market anymore.  But it still could be a good one.  Interest rates are still remarkably low.  And prices are still well below the peak (remember – the Median Price almost hit $800k back in the boom days).  The median is in the low $600,000s now.

What’s missing?   Great places that people actually want to buy.  I think some people call it supply.  Or maybe “effective” supply would be a better term.

I keep having the same deja-vu experience.  Clients who’ve been looking forever, pouring over on-line pictures of homes for sale, who keep calling and asking to see places they forgot they already saw a year ago.

Houses that didn’t work then and aren’t going to work after another 365 days on market and a minimal price reduction.   I call this  “Deja Viewing”. Stare at the MLS long enough and homes start repeating themselves over and over.

So when’s this slow tortuous drip of new properties coming on going to end?  When do the floodgates open? I feel like a kid staring at the classroom clock.  Waiting for recess from a hard lesson. The minute hand isn’t moving. The fabric of time is frozen.

Groundhog Day comes tomorrow – February 2nd.  Will another shadow appear?  Will we have another six weeks of wintry inventory?   Will there be a foreshadowing of a huge shadow inventory we’ll see relatively soon?  Or will there be the shadowy logic of would-be sellers still planning to hold back putting their places on the market, for as long as they can?

Either way, looks like the winter of our buyers’ discontent (vis-à-vis the market’s lack of content)  might run through to the spring.  Hopefully not the summer and fall too – like it did for all of 2013.

Hopefully the shadow will be banished for good by February 2015.  We can’t keep kicking the groundhog down the road forever.

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Head Scratching About the Market

head-scratchingLet’s just plunge in, shall we?  Last week’s column ended with a rather plaintive question directed at no one in particular. Just a head-scratcher tossed out in the general direction of the Universe-at-Large:  “What’s wrong with this picture?”
 
We were talking about a growing conundrum. One of those riddles wrapped in a mystery, tucked inside an enigma. The enigma that is the real estate market right now. A market increasingly defined by its sheer lack of available inventory – a.k.a – options, choices, supply. 
 
Inventory. The thing most regular people simply refer to as “homes to buy”.
 
Make the rounds through the open houses this weekend. Become a fly on the wall. Eavesdrop on random conversations coming from different rooms. You’ll hear a lot of similar refrains. A litany of recognizable leitmotifs echoing through the various halls.
 
Things like: “When are more places coming on? There’s nothing to look at. Nothing worth buying. Too dated. Too small. Too much work. Good ones are gone too quickly. Too much competition.  Prices bid up too high. We’ve been looking too long.  Interest rates are going up too far.”
 
Sounds all too “too” familiar to us Agents.  Just to offer a frame of reference grounded in actual data rather than buyer chatter  – let’s repeat a few stats from last week.
 
The inventory of homes in SC County this October was the lowest for any October stretching back 17 years!  For the last 32 months in a row, the number of active listings each month has decreased from the same month the previous year.
 
In other words  – this shrinking inventory thing isn’t new.  It’s been ongoing for two and a half years.  Where it stops? Nobody knows. 
 
Basic supply and demand suggests that as buying increases, the supply of homes shrinks.  People pay more. As prices rise more Sellers put their homes on the market. The supply of homes rises to meet demand until some kind of equilibrium is achieved or tipping point reached.
 
We know supply is shrinking. We know prices have gone up. The median has risen this year from $485,000 to $647,000. The overwhelming impression is it’s a Sellers market.  Which begs the question.
 
Why aren’t more Sellers Selling in a Seller’s Market?  If more Sellers don’t sell, more Buyers won’t buy. If more Buyers don’t buy, prices won’t go up and convince more Sellers to Sell.  Things get stuck!! A logjam ensues. The market doesn’t function.
 
Here are a few reasons more Sellers aren’t Selling.
 
       Sellers aren’t just Sellers. They are Buyers too.  They need a roof over their heads when they sell.
 
There’s not enough new construction locally to create significant new supply.
 
       The same low inventory that makes prices go up for Sellers makes it harder for them to buy. Their choices are limited.
 
       As prices go up for Sellers, the prices of the things they want to buy go up to.
 
       Today’s prices haven’t risen to their previous highs. Many Sellers still don’t have enough equity to go anywhere. Many are still underwater or just treading the surface.
 
       Loan regulations have changed. No or easy qual loan options have disappeared. Many Sellers can’t qualify to move without selling first.
 
       It’s very difficult to Sell and Buy at the same time in a market with such low inventory.
 
        The inventory of rental options is even worse than the number of homes for sale. And tougher to navigate.  It’s difficult to sell a house, rent one, then buy another afterwards.
 
 
Anyone recognize themselves in any of the above?  Let’s continue this next week.

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The Shadow Knows

What was that tag line  we used to see on posters promoting Rasta bands at the Catalyst way back when?   All Killer – No Filler?

Wouldn’t it be nice if we could channel a little more of that sentiment (and mojo) into the real estate inventory these days.  Seems like no matter how many times a day you and I and I go onto the MLS to check for new listings or download search engine e mails…nothing much new “of value” comes on. Just the same old same old.

Tired inventory.  Picked-over inventory.  Stale-inventory.  A warmed-over re-hash of all the stuff that didn’t sell last year.  Including a strange menagerie of distress properties.  Dubious short sales you can never be sure of and a smattering of REOs banks are pinching out of their systems…starting with the worst first.

The sum total?  An uninspiring catalogue of places.  Most of which aren’t qualified enough to move anyone anywhere.  As in: Move buyers in. And move sellers out.

(Quick disclaimer:  Individual Sellers, don’t get bent out of shape here. I’m talking about everyone else’s listing except yours.)

I guess we could say it’s All Filler…Very Little Killer in real estate land right now.  Not many killer views, killer yards, killer locations.   Or to lower our epxectations just a little… not many plain old, modest, middle of the road killer houses packaged up in nice presentations at reasonable price points. Specially right there in the sweet spot between $600k and $800k.  I don’t know about you…but it’s killin’ me.

Most Agents understand.  They’ve got clients calling too. Buyers ready to buy.  Or who think they are.  Buyers becoming increasingly frustrated with a market that doesn’t seem to offer anything up that fits their needs or price range.  And by extension, Buyers frustrated with their own Agents, who become more suspect each week when they fail to turn over enough rocks or the “right” rocks to uncover that special hidden gem waiting out there. Somewhere.

The same Buyers who don’t understand why it is so hard to buy in  (what keeps getting sledge-hammered into our heads as) the Perfect Buyers Market.  Is it safe to say this isn’t a Perfect Buyers Market?

There are certainly incredible interest rates. Prices have certainly come down a long way.  Those are two of the defining characteristics of a Buyers Market.  What’s missing?   Great places that people actually want to buy.  I think some people call it supply.  Or maybe “effective supply” would be a better term.

I keep having the same deja-vu experience.  Clients who’ve been looking forever, pouring over the on-line pictures of homes for sale, who keep calling and asking to see places they forgot they already saw a year ago.  Houses that didn’t work then and aren’t going to work after another 365 days on market and a minimal price change.   I call this  “Deja Viewing”. Stare at the MLS long enough and homes start repeating themselves over and over.

So when’s this slow tortuous drip of new properties coming on going to end?  When do the floodgates open? I feel like a kid staring at the classroom clock.  Waiting for recess from a hard lesson. The minute hand isn’t moving. The fabric of time is frozen.

Thursday was Groundhog Day and another shadow appeared again this year.  Was it just the shadow of a huge shadow inventory?  Or was it also the shadowy logic of would-be sellers planning to hold out putting their places on the market for as long as they can.

Either way, looks like the winter of our buyers’ discontent is going to last at least another six weeks.  If we don’t shoot ourselves in the foot that is – by kicking the groundhog down the road even further…

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