The September Surprise
by Jim Scott

The September Surprise      
     
In the past, September and October have been very active months for the local real estate market. The Fall selling season has been robust with an above average number of sales.  However, the inventory remains at historically low levels.  Considering the increase in sales and the fact that prices are slowly increasing, why are there so few listings available?  
  
Maybe it's the Heat Wave                          
     
There are several answers to why an expected rush of new listings never materialized this Fall.
    
First, many discretionary sellers are aware of the modest upward movement in prices and are waiting for more increases.  Many potential discretionary sellers are also heavily invested in the stock market and do not want to consider liquidating their assets until there is a prolonged market correction.
     
Second, prices are still below 1989 levels. If you adjust for inflation, prices are below those of 1987.  This fact discourages many discretionary sellers.
    
Third, many potential move-up buyers are reluctant to sell their homes.  They are afraid they will not be able to find suitable replacement housing at a reasonable price in the neighborhood they desire.          
Inventory and Markets
     
Non-discretionary sellers are motivated by factors such as divorce, job related transfers, a change in family size, retirement or other factors. These sellers list homes in spite of the market, not because of it.  
     
This is the exact opposite of discretionary sellers.  They tend to list and sell as a response to  market conditions.  The type of market that encourages discretionary owners to sell their properties is not here yet.  It could be argued that such a market is several years away.  San Diego needs two or three more years of solid job and wage increases in order to support a bull market in homes.  Probably we will not see a repeat of the 1980s’ and 1970s’ because of several fundamental changes in the local and national economies.  Owners who are waiting for annual double-digit percentage increases in prices may be in for a long wait.
   
For Discouraged Buyers
     
Finding a home anywhere in the 92103 zipcode ordinarily can be a trying process. Buyers should remember that market conditions are never permanent and the current frustrating situation will not last forever.  Sooner or later the bulk of the discretionary sellers will bring product to market and restore the inventory to normal levels. Once inventory levels increase, more move-up buyers will be willing to list their homes.   

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.