Scott & Quinn Residential and Investment Real Estate Services

As the number of homes on the market increases, I have fielded many nervous inquires over the past month. Has the market slowed? Is the bull market in homes over? Are we about to repeat the crash of 1990 again? Can higher interest rates sink this market? These questions can be partially explained by the past, but a new set of factors are now influencing the market, elements that were absent in 1989 at the peak of the last market cycle. There is little to worry about.

The Stock Market

The wealth effect has been the major driving force behind our home market over the past two years. People feel richer because of gains in the stock market, realized or not. This coupled with the general belief that real estate prices are going up has provided the major impetus for this market. I wrote in this column earlier this year that the Dow would drive prices this year. Keep an eye on Alan Greenspan.

Interest Rates

The chairman of the Federal Reserve Board recently made it clear the inflation is about to be a problem and that the Fed is ready to raise rates. This will reverse the wealth effect, as potential buyers will feel poorer due to losses in the stock market. Will rates move up this summer? I do not know but if they do, the upper end of the housing market(defined at homes price above $400,000) will suffer immediately as demand falls off.

Are Higher Inventory Levels a Signal?

Over the past two summers the number of homes for sale moved sharply upwards. Yes, there are more homes for sale and yes they are sitting longer. But it is strictly seasonal, subject to the two paragraphs above. Sellers should price realistically and if they do so, they will be rewarded with a relatively quick sale. I do not believe the change in inventory is indicative of a meaningful change in the market.

So it is not 1989 again. Prices will continue to improve but not like the 1970s’ or 1980s’. They are just barely above 1990 prices, adjusted for inflation. Homes in the 92103 market are still a bargain. As the unchecked development along the two northern interstates continues, close-in property will appreciate faster than the county average.

For Buyers

Buyers should begin to aggressively seek property. As the inventory levels continue to rise, this summer may well represent a good buying opportunity. Prices are not going down.

For Sellers

There will be more competition over the next six months. Be patient and listen to your agent. If your house does not sell within two or three weeks the villain is the price. No amount of marketing will overcome poor pricing.

The Concerts

The Mission Hills Association and Scott & Quinn will be sponsoring the Summer Concerts at Pioneer Park. The first concert is June 18th. This will be my third year as the major underwriter, it is my way of saying thank you to this community which has been so good to my family and my business. Enjoy and I hope to see you there.

You can reach Jim Scott 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. The 13 associates serve the beach and metro areas. There is also a professional property management team on staff.