For the past couple months I have been of the contrarian opinion that we don’t have a supply problem but rather a demand problem. That is, here in the Conejo Valley anyway, we are selling a comparable number of homes to many past Aprils; that supply therefore was historically consistent but demand was unusually high; that our inventory was starting to increase and that as prices rise, so would inventory and thus sales. So in an attempt to test my theory, I looked at older data collected from 2003 to today and what I found was concerning and suggests I may be mistaken.
In looking at data over the past decade, what I see is that sales begin rising in April and then boom into the summer months. In the bullish years of 2003-5, they explode, nearly doubling and in some months more than doubling April figures. I guess you could call my view as ‘the forest for the trees thing’. What I mean is, I’ve been looking so closely at monthly data that I didn’t see the wider picture of what a “hot spring” meant for the even hotter summer sales months. You often hear that month over month data is unreliable. I guess this is what they are talking about.
In terms of numbers in our area, the first week of July 2005 hit an all-time high of 104 closed sales. By contrast the last week of November 2007 hit a low of 9. This past week we closed 56 transactions. 56 is a very solid number, but with inventory running at a scant total of 334 total available units, one can see that 104 is a crazy high number and that getting much above low 50’s without significantly more homes to sell during the peak summer months, next to impossible. It doesn’t appear that even with the average price per foot rising by some 17% year over year for this week in April, it will be enough to prompt more property owners to sell.
Is the problem investors? Maybe. An agent from near by Simi Valley told me yesterday that he finally got a buyer of his into escrow after being out bid by Blackstone’s real estate LLC on 12 other properties. Is that really true? I don’t know for sure. Simi Valley is a much more affordable community in general than the Conejo Valley, so maybe it’s true there, but I don’t think investors are as big an influencing factor so much here in and around Westlake Village and the LA/Ventura County Line.
I guess if I am to leave you with a take away from all these numbers it’s this: prices still haven’t risen enough to get more people to list and ease the tight inventory environment we are in. And that can only mean one thing: prices are going to continue to rise for the foreseeable future. Is it time to panic if you are a buyer? No, but I recently wrote a jump blues/rockabilly song called “Stayin’ Ain’t An Option” (I used to be a professional musician in my previous life BRE – Before Real Estate) and the chorus goes like this:
You better get on board ‘cause the train is leaving the station. It’s pulling away, better grab your coat and hat You got little time to waste, better move and make haste ‘Cause stayin’ ain’t an option and this locomotive ain’t comin’ back
And to quote Forrest Gump, “That is all I have to say about that.”