Why Wait? High Number of Homes for Sale Slowly Dropping

Many say it's a buyer's market
RISMedia
For many months, Tracy resident Kevin Moser watched the slow housing market, with its high number of homes for sale, and concluded that now is a poor time to sell but a good time to buy.

So he kept his current Tracy home and recently bought a better Tracy home - almost twice as big - with a pool and a large, quarter-acre lot. He plans to rent out his first house and wait for the sales market to improve, as he expects it to.

"The timing right now is good for people to buy," he said. "I'm very confident in the market. I think it's going to go back up. And I got a very good deal on the house I got."
Natalie Shishido, owner of the Preferred Real Estate Group office in Tracy that handled Moser's purchase, said it's still very much a buyer's market these days. With low interest rates and flattening prices because of competition among the many sellers, more people are getting off the fence, she said.

"A lot of people were waiting to see, but I've noticed in my office that at end of last month and so far this month, we got sort of a surge," she said.

That hasn't manifested yet throughout San Joaquin County.

Pending sales slipped from 474 in October to 448 last month, according to figures from the latest Coldwell Banker Grupe-TrendGraphix monthly sales report, based on Multiple Listing Service data. Closed sales fell from 426 to 401 in the same span.

In one striking respect, though, the market environment is changing: Instead of the number of homes on the market rising by several hundred per month, the stock of houses for sale has been dropping by as much each month.

Much of the housing-market slowdown has been attributed to a spiraling of the number of homes for sale, pressuring sellers to lower prices to compete. For example, in February of last year, 777 houses were listed for sale throughout the county. That rose steadily, typically by several hundred new listings per month, to a high of 4,738 in August.

Since then, the number of homes for sale countywide has fallen by about 500. Many homeowners put their houses on the market thinking of the earlier big run-up in sales prices, she said.

"They missed the boat, so they wanted to catch the last of the rise," Shishido said.
Also, the median sales price in the county fell from $400,000 in October to $386,000 last month, the TrendGraphix report said. That's down from a high of $425,000 in July.
Meanwhile, in a new forecast by the National Association of Realtors, existing home sales are expected to rise gradually in 2007, with annual totals comparable to 2006, but new home sales are expected to fall.

About three-fourths of the country will experience a sluggish expansion in 2007, while other areas should continue to contract for at least part of the year, said David Lereah, the association's chief economist.

"Most of the correction in home prices is behind us, but general gains in value next year will be modest by historical standards," he said. "Buyers, especially first-time buyers, with the combined benefits of seller flexibility and an unexpected drop in mortgage interest rates, have a window of opportunity. These conditions will persist in many areas until early spring when inventory supplies are likely to become more balanced."

Existing-home sales for 2006 are projected to fall 8.6%, to 6.47 million units. Sales are expected to rise steadily next year to a total of 6.4 million, or 1% lower than this year's total.