Sunday, June 18, 2006

LA Times: Sellers' New Math

An upbeat article in the June 18 LA Times describes how the southern California market has changed and how homes are staying on the market longer now than a year ago.

Although the article mentions that DOM (days on market) numbers have increased substantially, it does not mention how days on market statistics can be skewed when homes are re-re-re-listed at progressively lower prices. So DOM by this time could be significantly more than what the realtor groups are "officially" reporting. (As a side note: the realtor on whom I depend for DOM stats in the South Bay area did not issue a report for May, which makes me go - hmmmmm.)

There is still no sign of concern or panic. "The market is normalizing", one realtor says, which is "quite refreshing". Buyers are no longer panicking, chirps this same realtor. Many sellers are still refusing to lower their asking prices because they "must" get a certain return. One seller complained that he almost had a deal closed, but the buyer felt, "We're coming into summer, let's hold out." Still another buyer says he "doesn't feel insulted" that it took more than 120 days to sell his home "there are several houses that have been on the market quite a bit longer than ours."

Folks, do you still sense just a touch of arrogance here? The tone of the article makes it sound like sellers still in most cases think they are in the driver's seat, they just have to expect to wait longer to get their properties sold. Shaving 5% or 10% off their asking prices is tolerable, while knocking more off is unthinkable. Unlike San Diego, median prices have not gone flat or declined YOY.

However, whatever hits the newspaper is a rear-view mirror look at current market conditions. How many buyers out there right now are thinking "Well gee, what's the hurry, let's hold out!" ???

4 Comments:

Blogger LARenter said...

I think there will be some version of cheeriness in these articles all the way to the bottom. As I pointed out on the previous thread at least the context of the article is that people can't sale their homes in LA. And you are right, we are at that moment where Joe Sixpack is thinking wait a minute lets see how this thing unfolds.

I literally could not believe the number of Open House signs I saw in Redondo this weekend, it was almost shocking. They were on every street corner. It will be interesting to see the June numbers. It just seems like from what I am reading and seeing this thing has come to a screeching Halt. But the truth lies in the numbers so we will see.

4:38 PM, June 18, 2006  
Blogger tomcarbon said...

"quite refreshing"? heh. gotta love that optomism.

We can try to second guess what the R.E. tag lines will be for the forseeable future.

"we're at the bottom, it's a great time to buy."
"we're at the bottom, it's a great time to buy."
"we're at the bottom, it's a great time to buy."
etc, etc

11:23 AM, June 19, 2006  
Blogger judicious1 said...

Look at what's beginning to happen in other parts of the country. Soon it will be happening here as inventory continues to build, interest rates continue to rise, ARMs continue to reset and the realization that real estate prices do, in fact, drop begins to take hold. Nothing will hold up LA prices long term...nothing.

1:53 PM, June 19, 2006  
Blogger no.torrance boy said...

I believe that we have seen the commencement of the "down" market with regards to South Bay Real Estate. The first indication is the rising volume which naturally indicates an inherent weakness on the buying public. Thus ratifying their unwillingness to purchase homes at the current price levels.

My question, what is the level of activity in regards to Engineering-Planning/Design Firms? That is the true indicator of what is occuring in the market. Hence, are they busy with new constrcutions and designs? If not that is definite symptom of a changing market.

Just a thought and an observation.

6:27 PM, June 21, 2006  

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