Low housing inventory is becoming old but persistent news. Today, we will snake along the Southern California coastal cities and show property from Palos Verdes to Manhattan Beach. Last night we disappointed clients by informing them the house they were scheduled to see today sold. Three days on the market and it’s in escrow. The husband was traveling or we would have looked at it day one. Timing is crucial in a tight market, and as he was boarding a plane the listing was hitting the Multiple Listing Service.
Price are edging upward and inventory levels continue to fall. Buyers are getting frustrated and agents are getting nervous. The market turned with the speed and determination of a Black Mamba, catching buyers by surprise. This strong seller’s market sailed into town unannounced, and once again buyers are sidelined, not because the market is falling but because there are so few homes to purchase.
Who is thriving in this market? Sellers, of course, and after years of falling or stagnant values the return of lost equity is long-awaited. Although many are still hesitant to rush to market unless life circumstances dictate they must. From their point of view, if a stagnant or falling asset begins to increase in value why not hold it a bit longer? I have several clients holding fast to this approach.
Although the majority of the local housing market is enjoying a seller’s market there are always pockets of opportunity for buyers. In my opinion, the luxury market still offers some excellent opportunities. Inventory of luxury homes is much higher, and the demand is lower, than in the lower price points. These buyers can be assured of a plentiful pool of buyer for their current home, and luxury home sellers will still consider accepting an offer contingent upon the sale of the buyer’s current residence. I see continued strong opportunities in the luxury market.
I recommended purchasing income property in my January 2012 letter to current and past clients. Last year was a great year to invest in multifamily units and 2013 will continue to offer opportunities with prices still lower than at the height of the market, coupled with low interest rates allowing income properties to show positive cash flow at a lower break even point.
“When will we catch a break?” One frustrated buyer lamented when his offer was rejected for one a hundred thousand dollars over asking price. It’s a question that deserves an answer, but one that can only be answered by the holders of the inventory. Sellers, it is up to you.