The holidays are here. Throngs of shoppers congregate outside store windows to peer in and imagine life with a shiny new dream, only to shake their head and move on to the next wondrous attraction. Once reserved for retail stores, the consumerist sport of window shopping has made its way into Carlsbad’s finest residential neighborhoods. But as homebuyers continue to browse, motivated homeowners sit frustrated wondering, "What happened to this real estate market?"
Every winter quarter during the last decade, 2005 aside, Carlsbad has seen the number of home sales drop and prices decrease, compared to the numbers sold during the summer months of the same year. Distracted by the hustle of the holiday season, Buyers will wait until the next year to consider purchasing. Seasonality aside, this winter quarter is shaping up to be the slowest in many years.
Why?
The frenzy to purchase real estate over the last three years has driven Carlsbad home prices upwards as competing buyers raced to outbid each other on the few available homes. The rush to purchase was fueled by low interest rates and the idea of a guaranteed profit from an appreciating real estate market. Buyers were more inclined to sell and into a more expensive home, ignoring higher property taxes, Mello-roos payments and a higher mortgage payment.
The buyer’s mentality has changed.
The absence of guaranteed appreciation has caused many to rethink selling their home to move up, thus reducing the number of buyers involved in the move-up market. Overall demand is still strong, however the slower market pace of 2006 caused inventory to build up during the summer and the average time to sell a Carlsbad home increased. As of November, the average days-on-market for available homes is around 84 days, up 12 days from the previous month.
In order to counter the higher market time, sellers that want to sell during the winter have cut their asking price and position their home as a great value. Many of the recent sales attribute a buyer's interest to the reduction in price. There are many buyers looking to purchase a deal and want a 10 to 15 percent cushion from any future market correction. Many sellers are unwilling to mark their home at a discount, thus removing their home from the market.
If you are waiting to see continued correction during 2007, you may wait until next winter. In years when Carlsbad sales and prices decline during the winter months, prices and sales rebound during the first half of the next year. The decline in available homes and any reductions by desperate sellers motivates people to purchase. Today’s buyers are finding that the remaining new home developments throw an enormous amount of incentives and credits to close by the end of the year and, for the first time all year, homeowners are willing to negotiate on their list prices.
In summary,sellers unwilling to reduce their prices to counter a slower market will take the home off the market. Those that continue to sell through the winter should see reduced competition and benefit as there is a better chance a buyer will purchase their home. Buyers should consider purchasing during the winter market because it is a desperate time for some and many motivated sellers and builders want their home sold and will offer it at a tremendous value. Expectations are that sales and prices will pick up by March, as it appears interest rates will remain low and many buyers wait on the sidelines for the new year to purchase.
Every winter quarter during the last decade, 2005 aside, Carlsbad has seen the number of home sales drop and prices decrease, compared to the numbers sold during the summer months of the same year. Distracted by the hustle of the holiday season, Buyers will wait until the next year to consider purchasing. Seasonality aside, this winter quarter is shaping up to be the slowest in many years.
Why?
The frenzy to purchase real estate over the last three years has driven Carlsbad home prices upwards as competing buyers raced to outbid each other on the few available homes. The rush to purchase was fueled by low interest rates and the idea of a guaranteed profit from an appreciating real estate market. Buyers were more inclined to sell and into a more expensive home, ignoring higher property taxes, Mello-roos payments and a higher mortgage payment.
The buyer’s mentality has changed.
The absence of guaranteed appreciation has caused many to rethink selling their home to move up, thus reducing the number of buyers involved in the move-up market. Overall demand is still strong, however the slower market pace of 2006 caused inventory to build up during the summer and the average time to sell a Carlsbad home increased. As of November, the average days-on-market for available homes is around 84 days, up 12 days from the previous month.
In order to counter the higher market time, sellers that want to sell during the winter have cut their asking price and position their home as a great value. Many of the recent sales attribute a buyer's interest to the reduction in price. There are many buyers looking to purchase a deal and want a 10 to 15 percent cushion from any future market correction. Many sellers are unwilling to mark their home at a discount, thus removing their home from the market.
If you are waiting to see continued correction during 2007, you may wait until next winter. In years when Carlsbad sales and prices decline during the winter months, prices and sales rebound during the first half of the next year. The decline in available homes and any reductions by desperate sellers motivates people to purchase. Today’s buyers are finding that the remaining new home developments throw an enormous amount of incentives and credits to close by the end of the year and, for the first time all year, homeowners are willing to negotiate on their list prices.
In summary,sellers unwilling to reduce their prices to counter a slower market will take the home off the market. Those that continue to sell through the winter should see reduced competition and benefit as there is a better chance a buyer will purchase their home. Buyers should consider purchasing during the winter market because it is a desperate time for some and many motivated sellers and builders want their home sold and will offer it at a tremendous value. Expectations are that sales and prices will pick up by March, as it appears interest rates will remain low and many buyers wait on the sidelines for the new year to purchase.