It's interesting to look at the Santa Clarita housing inventory numbers (if you like that sort of thing), and get a glimpse at what's really going on. We can focus on a variety of stats, but for right now, I'm just focusing on the sales absorption, of this increasing inventory of homes for sale.
While the number of homes for sale as of today in the Santa Clarita Valley, 1,094, is by no means staggeringly high, it could become a problem if home sales continue to slow down. And trust me, things have cooled off a bit since the first-time homebuyer tax credit went away that the Federal Government was offering.
Let's take a look at the journey the inventory of homes for sale has taken from late 2009 into 2010:
Oct 2009: 729
Nov 2009: 818
Dec 2009: 738
Jan 2010: 795
Feb 2010: 891
Mrch 2010: 887
Aprl 2010: 909
May 2010: 977
June 2010: 1021
Skip to Aug 2010 (so far): 1094 Santa Clarita homes actively for sale.
The inventory had seen extreme lows in late 2009, and early 2010. Homebuyers in large numbers, felt prices had dropped to favorable low levels, interest rates were super low (still are), and tax credits were enticing many to act before they expire.
Things appear to have slowed down since the tax credits expired on April 30, 2010. And with that slow down in home sales, comes the rising inventory. And with a higher inventory, a potential for home values to lower again in measurable amounts, becomes a real possibility.
The increase in inventory of Santa Clarita homes for sale from October 2009 to June 2010, is about 40%. The increase in Santa Clarita homes going under contract in June 2010 versus October 2009, is just 23% approx. That increase of homes going under contract (absorption rate) is not enough to make up for all the new listings hitting the Santa Clarita real estate market. So each month after the other (as of late) there is a surplus, and the inventory keeps creepin' up.
Eventually, as it even appears to be the case now, multiple offers won't be as common place as they have been over the last year. Buyers will have more options of homes to choose from. And we will see homeowners who are sitting on the market, for sale, longer than they would like, start to consider price reductions more frequently. Price reductions not only have an effect on a neighborhoods home values, but if too many sellers start lowering their sale price, it could start to affect the psyche of homebuyers. Perhaps homebuyers will start to wait? Wait for what? Well, more price reductions of course! They may wait for a better time to buy? If you feel prices are coming down, you may do the same thing, if you were buying. Right?
My opinion is that things are still pretty stable. The flood of bank owned homes, hasn't happened, yet. But we do have a rising inventory, and a slow down in sales. As far as my perspective "here on the ground," and that of many of the agents I speak with on a daily basis, there is a slow down in buyer inquiries right now. This is real. Perhaps the tax credits did more for the real estate market than I gave them credit for? Will it continue? Not sure. Could it pick back up easily? Absolutely. At any moment! Real estate is weird like that.
Despite the threat of a rising inventory of homes for sale in Santa Clarita, and a potential decline in home values here and there….it's still an amazing time to buy (go figure, a Realtor saying that). But here's why…Interest rates have never been lower, and prices are still, super reasonable and low compared to their lofty highs of only a few years ago. Sure, values could come down more, but who's to say how much? And when? Isn't it likely that when financing, interest rates may not stay this low forever either? Could there be a wash in savings? Could you be losing money by NOT having a tax write-off? All things to consider. And only you, not some pushy agent, should decide if buying now, or in the future, is the right choice.
UPDATE: After posting the above blog post, I saw this news story from Inman.com regarding a slowdown in home sales. Check it out. This is great news for homebuyers! It potentially puts you in a power position, when negotiating a deal.
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