For the last six years I have taken time out during December to deliver poinsettia plants to my past clients, to say hello, to see what they have done to their homes and catch up on their lives. It makes me grateful for my work. When I used to build furniture there was always a tangible product at the end, and when I traded in my equipment and tools for a briefcase and a pen twenty four years ago and went into sales, the tangible product at the end of a job was missing.
Selling residential real estate is a job that creates an intense relationship while people are selling or buying. Our home is at the center of our lives, the place we wake up, the place we return to, the place we eat, sleep and (frequently) work. It is the place we maintain and cultivate, the hub of our daily activity, the place where we become vested. Our homes become a part of us. Because of the strong emotional and psychological involvement with a home, the relationship between an agent and buyer/seller is special! And that is what I value.
After the job is done, the relationship dissipates like an affair now ended, and for the agent there is no tangible product at the end. My annual visits to past clients give me the satisfaction of seeing the “final product”: people living in the place they call home. And past clients now become friends.
This year several past clients had lost or changed jobs, several were now “upside down” in their home values, some had new babies, some had new grandchildren, some had children who had left and some had children who returned. Everyone had been affected by the economic events of the last year and everyone asked, “When will the real estate market recover?”
Key to answering that question is inventory. When the number of homes for sale comes down to a 2-3 month inventory instead of an 8-10 month inventory we will be poised for appreciation. In San Diego the inventory high-tide came in June of 2006 when there were 22,140 homes and condos for sale. By June of 2008 the inventory had shrunk to 18,878 and it has declined steadily since June to a mid-December count of 15,604. Clearly, the inventory is trending downward. (source: Sandicor MLS)
Meanwhile, the number of homes selling each month has been very steady. The monthly numbers since July have been 2306, 2451, 2375, 2628, and 2437. Buyers in a position to buy are doing so in large numbers. There are also significant numbers of buyers still waiting for what they anticipate will be a further drop in the market. Many of my colleagues report having buyers with this perception (and I have several myself) so it appears there is a substantial reserve of ready buyers waiting to act.
Time will tell if the buyers who are “waiting” will be better off. One thing is certain: If a buyer is waiting for the market to hit bottom before they act, they are guaranteed to miss it! By the time there is hard data confirming a bottom it will already be 3-4 months past. Meanwhile, will interest rates still be in the low 5% range? Will there be far fewer properties to choose from?
Predicting the exact bottom of the market is a tricky proposition. What we know is that we are probably close to it, and interest rates are great (forget jumbo rates!) and selection is still good. The best opportunity for finding just the right place…that will become “home” for the next four or more years…and buying it at a great price with a great loan… may well be right now!
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