Sunday, April 26, 2009
Local real estate: has the worm turned? Hoping (and praying) for a rebound
Was out in Southwest Bakersfield today and spotted a tour bus with a sign reading "home tours" turning into a newer subdivision. Yes, foreclosures are still high and many folks simply can't get credit, but 30-year fixed rates are in the 4.5 percent range and housing prices are a bargain now. So I dropped an email to Mary Christenson, one of Bakersfield's premier residential Realtors to take her pulse of the local market. Mary has been one of the top performing Realtors at Watson (now WatsonTouchstone) for years, and though she is primarily known for dealing in the high end market now, she works the entire town and knows this market as well as anyone.
Old pros like Mary ignore the headlines and study the metrics behind what makes a market move. Just like a stock broker knows the market goes up when future earnings look bright, Mary realizes that home prices and sales will begin to perk up once inventory tightens. And Mary believes that's exactly where we are. In her words:
"Buyers are responding to these record low interest rates!
"According to our MLS as of last Friday, there were only 2,020 single family home listings on the market. Last April we had 4,110 listings. There have been 2,621 solds year to date. Buyers are responding to these record low interest rates."
"Look at our absorption rate: Take the number of solds, divide by the number of months (4); (that) averages about 655 houses a month. Then take the current listing count (2020): divide by 655, you get three months of supply. So if not one more home came on the market, we would only have enough inventory for three months. The typical dividing line between a buyer's market and a seller's market is six months. Less than six and we are in a seller's market. The tide is turning.
"Pricing is still key issue: we are still dealing with many foreclosure comps. But if we get this word out to the appraisers and lenders to instill some confidence in the market, maybe they will take us off the 'declining market' status. We are so tired of being known as the highest foreclosure market in the nation. That's old news."
We'll check back with Mary to see how things develop.