So Where Are the Homes For Sale 
by Jim Scott

Most everyone interested in real estate seems to be asking the same questions.  First, given the rise in prices and in demand for homes, why is the inventory of houses for sale so low?  Second, if I own a property, is it a good time to sell?

The Inventory Problem
     
Many buyers are frustrated by the fact that there are so few homes on the market.  There are two reasons; greed and the time of the year.
     
I am not using greed in the pejorative sense. Many potential sellers are simply waiting for prices to increase, which is rational economic behavior.[Remember that many people own property that is still worth less, adjusted for inflation, than what they paid.] So far this year I have received five calls from clients wanting my opinion as to whether or not this is a good time to sell. After reviewing my market data, all five have opted to wait and sell at a later date.  Although this is not a scientific poll, I think it is a fair representation of the market and a prime reason that inventories are low.
     
People who hold rental houses are even more attuned to the potential of the future market.  Rents are moving upwards rapidly after years of stagnation.  The owners of a rentals see nothing but rising rents and prices in the short term and are electing not to sell. These homes represent a substantial portion of the total 92103 housing stock.
     
The second reason is seasonal.  At this exact time last year inventory levels were the same as today.  By June, the number of homes had doubled.  Last year all of the price appreciation occurred in the first quarter at exactly the period inventory levels were are their lowest.  If last year’s pattern holds, we should see many more choices on the market by this summer.  If inventories remain low, prices could accelerate upwards of twenty percent from today.

Advice for Sellers
     
Deciding when to sell is always difficult. Most of the readers of this column probably participate in the equity markets grapple with the question of when to take profits.  My advice to sellers is simple.  If you want to do a transaction in 1999, do it immediately while inventories are low.  This is particularly important if you have a property with problems.  For example, a property with an unpermitted addition is a prime candidate for selling in this market.  Buyers will be far more willing to forgive  problems in a tight market.  The same with rough fixers.  It is time to bring them out!
    
If you are a true discretionary seller and can wait, I would suggest doing so.  Prices are going to improve over the next twenty-four to thirty-six months, albeit moderately.
     
None of the above applies if you are a trade-up buyer.  Next month in this column I will discuss strategies that have served my trade-up buyers well in the past as well as other market issues.  
 

You can reach Jim Scott by email or at his office at 1111 Fort Stockton Drive. Jim's direct line is 885-9511. Jim has been a homeowner in Mission Hills since 1976. Scott & Quinn is the oldest full service real estate company in Mission Hills. There is also a professional property management team on staff.