Here are the basics - the ARMLS numbers for January 1, 2021 compared with January 1, 2020 for all areas & types:
Active Listings (excluding UCB & CCBS): 6,055 versus 12,141 last year - down 50.1% - and down 18.0% from 7,388 last month
Active Listings (including UCB & CCBS): 9,788 versus 17,577 last year - down 44.3% - and down 21.6% compared with 12,481 last month
Pending Listings: 6,135 versus 4,662 last year - up 31.6% - but down 16.5% from 7,347 last month
Under Contract Listings (including Pending, CCBS & UCB): 9,868 versus 7,539 last year - up 30.9% - but down 20.7% from 12,440 last month
Monthly Sales: 9,989 versus 7,788 last year - up 28.3% - and up 8.9% from 9,175 last month
Monthly Average Sales Price per Sq. Ft.: $211.62 versus $179.97 last year - up 17.6% - and up 1.8% from $207.84 last month
Monthly Median Sales Price: $332,000 versus $289,500 last year - up 14.7% - and up 0.6% from $330,000 last month
Buyers cannot be blamed if they in despair about the lack of supply. We have less than half the number of active listings without a contract that we had a year ago. This time last year we described the lack of supply as shocking, so what do we call the current situation? We actually saw more new listings arrive during 2020 than we did during 2019, but only 1.4% more. The annual sales rate increased by 6% so the extra supply proved thoroughly inadequate in the face of the demand.
Prices have accelerated due to the huge imbalance between supply and demand, but as yet we have only seen part of that reaction. Sales prices are a trailing indicator and lag behind the leading indicators by up to 15 months. We can therefore expect to see prices move even higher during the next 12 to 15 months with appreciation rates possibly rising over 20%.
Those who think the increases in mortgage delinquency are going to to halt these rise are wishful thinking. The level of delinquency is nothing like as bad as it was during the 2006 to 2008 crisis and the level of delinquency has improved for the last 6 consecutive months. Any extra supply coming onto the market, due to home owner financial distress, is likely to be snatched up quickly by desperate buyers. Few of the homes with delinquent loans are likely to make it to foreclosure. They can be quickly sold prior to foreclosure to pay off any loans and the record levels of home equity will leave the vast majority of sellers in the black even if they can no longer afford their mortgage payment. It is the strong home equity levels that will motivate distressed buyers to sell up rather than walk away. In 2007 prices started to crumble due to huge excess supply, meaning many homes went underwater quickly and homeowners could see no advantage from avoiding foreclosure. The current situation is opposite, not similar.
January is usually the strongest month of the year for new listings - you can see this in our seasonal trend chart here. Therefore if we are going to see any relief for buyers, it should arrive during the next 4 weeks. If it does not, then the peak selling season of February through May is likely to be limited by what little is available. This may put a cap on any growth in unit sales, but it will not put much restraint on dollar volume as prices rise to compensate.
