2017 is here. Hopefully, the new year will be more optimistic than 2016 was. As for real estate and the housing market, people in the industry, home buyers and sellers, and economic experts will all weigh in on what real estate will do.
And this article here will do the same. But we brought some proof along to prove our forecast. Below is a couple of graphs of Active Listings, Pending Sales, and Closed Sales in Southern California’s largest MLS, the CRMLS.
Active Home Listings Compared to Pending & Closed Sales in Southern California’s MLS
- As Of January 2, 2017
The first graph below documents all Active Listings in the MLS from January 2015 through January 2, 2017. The first thing that pops out when examining the graph is the difference of listings and the seasonal rise and drop over the past two years. January 2015 saw approximately 55,000 active listings MLS-wide. The active listing count rose from the beginning of that year to around 63,000 or so, then drops below 49,000 before the start of 2016. The active listing count then follows the same pattern of climbing until the middle of the year. But as the inventory sold off at the end of 2016 the active listing levels fell well below the previous year’s low of below 49,000 all the way to 40,000. More time and data is needed to know how far the listing count could fall, but what the graphic highlights is the lack of inventory buyers have to choose from right now.
ACTIVE LISTINGS – AS OF 1/2/2017
The next graph follows the same pattern but documents the fluctuations of Pending Sales instead of active listings. Comparing the graphs the two could almost be layered and follow the each other.
PENDING SALES – AS OF 1/2/2017
The last graph shows the Closed Sales throughout the MLS. The pattern on that graph again follows the same pattern starting low in early 2015 and rising through the middle of the year, dropping at the end of the year and rising again until mid-2016 and dropping once again. Many will point out that these three graphs only highlight the seasonal ebb and flow of each year’s listings and sales. But as you compare the end of the Close Sales graph to the Active Listings and Pending Sales graphs, you may notice that Closed Sales didn’t fall as much as active and pending listings.
CLOSED SALES – AS OF 1/2/2017
So what does this mean? We feel there is a void of available homes for buyers to purchase. Many are scrambling to buy before interest rates get out of hand. We believe sellers that list now will have an advantage over sellers that choose to wait through or past 2017 to list their homes for sale. We believe 2017 will be a hot year in real estate sales and buyers and sellers that realize this and don’t screw around will benefit from getting off the fence.
Bottom line: If you are considering selling, NOW is our advice for when to list. If you’re buying, again NOW is our answer to beat possible rising interest rates.