The question I get most often when I am introduced as a REALTOR is "How is the market?" It is natural for anyolne who owns real estate to have a vested interest in the topic. And the same is true for those who hope they will soon become home owners. The answer depends on where you are sitting. It may look better to buyers than to sellers, but it is definitely not bad news to either group. The most important key to the answer lies in the micro-market that you discussing. When National Association of REA:LTORS says that all real estate markets are local, they are saying that national, state or even county sales numbers may be of limited value to you. You want your REALTOR to drill down to the city, and even the neighborhood to tell you what is going on.
Take for example Manhattan Beach. Every area has been rocked by unemployment and the lack of financing, especially jumbo loan financing and construction loan financing. As a result we have very few homes that are "new" construction since builders have left the market. The Tree Section had a large number of new homes, but most of them were sold last year at discounted prices. Only six homes were reported sold in the Tree Section in 2009 for $2 million or more. It should come as good news to many that six Tree Section homes are already sold or reported to be in escrow above $2 million so far this year. (And if you count a couple of sales that have not yet been reported, we have at least eight in this price range.) Most of these sales are resale homes.
January and February sales figures may appear to be low in Manhattan Beach, but bear in mind that those closed sales represent contracts that were initiated in December and January. February and March are showing strong activity in pending sales (those in escrow and not yet closed. 2007 transactions were down approimately 10% from the previous year. In 2008 the number of transactions fell off another 31%. But the turn around in the number of transactions was underway in 2009 with an increase of 12.6%. Early sales this year indicated we are on track to increase again this year.
The bad news for home sellers is that pricing seems to lag behind the trend in transactions. That is the good news for buyers. And there is also more good news in the increase in transactions. While it means that as a buyer you will have more competition this year, it also means that you are investing your hard earned money in a market that is not continuing to fall off the cliff.
The important thing for both buyers and sellers is to do your homework. Ask your REALTOR for detailed information about the market in your city, your neighborhood, even in the narrow band of homes in your specific price range. All real estate is local, and locally we are doing pretty well.
All sales numbers are from the MLS or Trendgraphix.