Obviously, buying a home depends greatly on whether there are homes to buy. In my little corner of the world, there would appear to be lots of homes for sale. There are also few homes sold each month which would suggest that there are fewer buyers looking for homes (the statistics show units sold were down 25.1% from the same time last year in my little corner of the world).
If we think back to the supply vs. demand metric that comes out of our Economics classes, we remember that the greater the supply and the lower the demand, then prices should decline. Right now, that does not seem to be working right. So, What's This All About?
- Home inventory is increasing - Supply
- According to the MLS stats, home unit sales are down 25.1% - Demand
- Prices are declining - WRONG !!! The price trend line is increasing.
Take a look at recent information gleened from my local MLS........
So what's this all about? Clearly it is MUCH more complex than the simple supply and demand.
The nature of the buyer has changed. Tighter loan qualifying requirements are in place. The economy, with it's unhealthy unemployment rates, has would be buyers standing to the side even though interest rates are still very close to some of the lowest in memory. Government incentives have passed. Things ARE different.
Include the character of the transactions themselves. In "Brad's 10 Cities" Bank owned properties" (also known as REOs) comprised 28.9% of the closed deals in August. "Short Sales" accounted for another 31.3% (yes, short sales can and do close). REOs are moving VERY fast. Not so for Short Sales.
Investors target some REOs and, armed with cash, make competing with a first time buyer a no contest deal. After upgrading, The flipped property comes back on the market as a standard sale, more salable than before, but at a higher price. There may be substantial number of buyers waiting for the bank's fanton inventory to shove prices down more.
Above, the line indicates the Months of Home Inventory. That is calculated by taking the total number of homes listed and dividing that by the number of homes sold in a month (the Absorption Rate). The above is for Brad's 10 Cities. The chart below gives you the Absorption Rate and Months of inventory in each of my communities.
Not yet addressed here is the effect of Short sale pricing and days on the market. Not yet addressed is the effect that the increase in the FHA Mortgage Insurance Rate will have. Not addressed here is the differences in the statistics for different price tier properties. Not addressed here is what sellers are thinking about when they want to downsize, relocate for promotion, have health problems or financial stresses.
With all of this and more going on, whatever you do, enlist the help of a Realtor(R) when you have questions about homes in Rancho Cucamonga. Upland, Claremont, or any of Brad's 10 Cities.
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It's All About YOU! Brad Rachielles, REALTOR, Upland, CA
Brad Rachielles, REALTOR. Helping Inland Empire Buyers and Sellers with their Real Estate needs in the Communities of: Upland, Rancho Cucamonga, Fontana, Claremont, Ontario, Chino, Chino Hills, Pomona and La Verne, CA.
Web Page: http://www.BradRachielles.com