Home Sales Decline - What will happen next?

If you didn't get a chance to take a look at the business section of the la times on Wednesday the 26th of September the article "Home Sales Take Sharp Tumble" gives several reasons why the housing numbers are down and what is happening nationally and locally.

So let's get the good news out there so it doesn't look like all bad news. Despite the fact that the median home price is down in most areas of the country Los Angeles County had a 2.6% increase in the median home value. That's right, despite everything that is going on the median value of homes in Los Angeles County rose. So why is that? Well Los Angeles County continues to have job growth and the Southern California climate and job market tend to be desirable places to be. This is good if you are in Los Angeles County. Let's be clear though that there are some areas of the county that are seeing pricing pressure and it doesn't mean that sellers can ask 2.6% more for their home than their neighbor got last year. It does mean that homes are still selling though. In fact homes continue to sell nation wide.

So the bad news. The amount of inventory of unsold homes continues to grow. The inventory amount is called months of inventory and means how long it would take to sell all the existing homes on the market if no new homes came on. Currently according to the article there is 11.8 months nation wide. At 12 months or more of inventory it is considered a buyers market. This means that at least there is favor to buyers being able to negotiate better terms for themselves. Now this is a nationwide number. In Long Beach there are areas of the city that have 12 months of inventory such as downtown long beach and there are areas of the city such as Belmont Shore that have less than 8 months so it depends on what area you are looking in.

Now the article points out that most groups predict it will more than likely continue to get worse before it gets better. So what does that mean if you are thinking of selling. I believe it means you should consider selling your home sooner rather than later or at least know that when you do sell you may be competing against more properties on the market and there may be pricing pressure on your home as well as it may take longer to sell.

So if you are a buyer should you wait? Well that is where you have to look at where the interest rates are now and where they are likely to be next year. More than likely next year the rates will be up from where they are today. That means even if prices adjust down you will be paying more per month for the same home. Homes or condos with loans at or under $417,000 in southern California can be purchased with conforming loans and will not be affected to a great degree. Right now as a buyer you have the ability to get a great interest rate near a 40 year low as well as nice property. Check out the post on "Getting the Price You Want" to see how you can start negotiating now.

So all of this means that the market will continue to adjust but there is still a great opportunity out there for first time home buyers and sellers who need to move up.