“Severe Housing Drought”

March 23, 2017



0 Comments

We are used to headline porn, but this one sounds startling – are we having a Severe Housing Drought?

http://www.cnbc.com/2017/03/23/this-is-whats-behind-the-severe-housing-drought.html

In the article, she says that nationally we have the fewest homes for sale than at any time in the last 18 years. But are they just selling faster, which would give the appearance of low inventory? If we have a similar number of houses being listed and they are selling faster, I wouldn’t consider that a drought, let alone a severe drought.

First, let’s compare the total supply and number of closed sales in 2017 to previous years – these are the numbers from January 1st to March 15th:

NSDCC (La Jolla to Carlsbad)

Year	# of New Listings	Median LP	# of Solds	Median SP	Median DOM
2013	1,042	$1,149,000	518	$842,950	31
2014	1,029	$1,295,000	464	$981,500	30
2015	1,043	$1,345,000	459	$1,145,000	31
2016	1,145	$1,489,900	421	$1,105,584	26
2017	987	$1,499,000	431	$1,200,000	24

This year’s number of new listings is 7% below the average of the last four years, but I wouldn’t call that a drought. If I watered my grass 7% less, it wouldn’t die. Besides, 40% of all listings don’t sell, so maybe the fewer listings just means fewer OPTs? The number of closed sales is much lower than previous years, but better than 2016.

How about the rest of the county?

San Diego County

Year	# of New Listings	Median LP	# of Solds	Median SP	Median DOM
2013	6,749	$479,000	4,426	$402,000	30
2014	7,077	$539,000	3,544	$475,000	28
2015	7,129	$569,000	3,582	$500,000	30
2016	7,146	$559,925	3,634	$532,500	24
2017	6,347	$639,500	3,696	$560,000	20

There are 10% fewer listings this year, compared to the average of the previous four years, but sales are HIGHER than any of the last three years. There isn’t a perfect relationship between listings and sales, because some of the closed sales were listed before January 1st. But the trend looks fine.

I don’t keep a record of the number of houses that are pending, but a couple of months ago we were around 300 in NSDCC (between La Jolla and Carlsbad).

Here is today’s count:

Area	# of Active Listings	# of Pendings	Median DOM
NSDCC	795	413	22
San Diego County	3,485	3,070	15

The reason we have a record-low number of homes for sale is because they are selling so fast. Severe drought isn’t the right adjective – can we call it scorching hot? Half of the pendings found a buyer in 15 days!

With half of the upcoming closed sales finding their buyer that fast, it means they probably paid the seller’s price, or close. The other half are sellers who are willing to wait until they get their price! It means the pricing trend should continue upward.

I think we’re back in the frenzy zone!