When the housing inventory drops, prices tend to rise, and of course the opposite is usually true also. If we look at the real estate inventory of homes for sale in San Jose over the last decade, it looks like this:
We can see that the inventory now is the lowest it’s been in a decade. And for those who remember what the market was like in 2005, the conditions are pretty similar: a frenzied seller’s market with price increases that felt unsustainable.
If we focus more closely on just the last year, here’s the view and a memory jog, for those who were paying attention to the real estate market here:
Here we are again, just like 2005. We know that real estate is cyclical. Where are we today?
We are seeing a very tiny, very small shift – an actual uptick in inventory. Right now there are so many buyers who are house-hunting that this is all getting absorbed, at least in San Jose. That tiny change is overdue, as normally we see it start earlier in the year (sometime in February, most years). We do not know if it will be sustained, but the market is tilting so strongly in sellers’ favor that it’s a little scary. An increase of inventory would cool the market a bit, but it’s in need of tempering right now.
Prices have come up tremendously from “the trough”. In some areas, prices are still off from the peak 5-10%, but in others, we are at a new peak now. Some areas, such as San Jose’s Cambrian Park with Union Schools, are getting multiple offers (half a dozen to a dozen or more) with wild overbids, sometimes in the 10-20% range.
Having a little equity, and hearing these kinds of sellers-market-stories, many Silicon Valley home owners are now asking themselves, “is now the right time to sell?”
I’m seeing anecdotal evidence, in addition to the slight inventory shift noted above, that the answer that a lot of them are coming to is “yes”.
More properties which are not really market ready are sporting either for sale or open house signs or both – but they aren’t yet on the multiple listing service. Some of them are simply testing the market. Others will be on the mls soon (so why they are open without being on the mls is another discussion).
One termite inspector I spoke with about 10 days ago told me that recently he had 28 requests for pest inspections in one day. The vast majority of those are going to be people planning to sell (or at least considering it seriously).
It is seasonally normal to see more houses, condos, townhomes etc. coming on the market now. What we don’t know is if we’ll get a big surge or a slow drip. A big surge would be a game changer. A lot of home owners have been waiting to have equity to move, and for conditions to be good for selling. Some of them may have been holding off because of the fear that if they sold the current home, they would be unable to buy another. If the market calms a bit, though, with more inventory but not an avalanche of it, then move-up buyers will be much more able to both sell and purchase the next property.
For those leaving the area, or moving from the family home to a retirement community, or for those who just want to sell and rent, it might be best to get your property on the market now, before that pent up housing inventory hits the market. It’s a simple matter of supply and demand. We know that rising supply is long overdue, and it’s just a matter of time before there’s a whole lot of competition. Real estate is cyclical. When was the last time we saw a market like this one? Almost 10 years ago… It’s a good time to sell!