Wouldn’t we all like to know when the perfect time to sell is? To know what exact time would result in the perfect buyer being ready, willing & able to pay us top dollar? The truth is that timing the market can be very difficult. It’s pretty obvious if you have a larger home selling in February-June when your buyer wants to move around the school year makes a lot of sense. I’ve sold Real Estate for 28 years and spring is almost always the best time in Santa Clarita because so many buyers are drawn here for schools and they want to move around the school year. Year after year the greatest number of new escrows is March-June. When I talk to my friends in second home markets like Florida, that isn’t the case. But this message today isn’t so much about what month but what YEAR to sell. This is for those who have been thinking of selling for a few years and maybe won’t do so for another 2, 3 or even 5 years. The homeowner trying to get the most out of their home but ideally not before they are ready to leave it. And a lot of you have called me.
For the last few years the average time that people have owned their home in California has gone way up. When I started selling in 1991, the statistic I was given was people moved every 5.5 years. Today that number is close to 11. This and so many other statistics about a lack of inventory for home buyers have kept people in their homes longer. That trend is expected to continue. Many attribute the lack of inventory problem with a “boomers don’t want to leave their home problem.” To some extent that has been happening in Santa Clarita. I have hundreds of clients that would move if they had something compelling to go to. Ideally smaller and ideally one level, but there isn’t much of that. So they stay until that changes and boy is that about to change here. Because of our unique situation of having a huge amount of new construction coming, what is about to happen to our Real Estate market makes Santa Clarita different from the rest of Southern California that doesn’t have a huge supply of new homes coming. For this reason, if you will be selling your home in the next 2-5 years, todays post is vital to understanding what that means to you.
Let’s start with a recap and where the market is at the midpoint of 2019. What is happening now can certainly give us clues to the next 5 years. First, it’s pretty clear the height of the market from 2011 to today was summer 2018. The highest prices in most areas in our valley were for homes that contracted in April-June 2018 and closed in May-August. The second half of 2018 was much slower than the first half. We now know that was mostly psychological. Buyers didn’t want to buy a home that might be worth 5 or even 10% less in 6-12 months. So new escrows fell dramatically in the second half of 2018 as buyers waited for the big price decreases…that never really happened. Inventory went up a little, new escrows went down a lot, but price reductions were from 2-5%. Nothing really major and nothing that stopped the best homes in the best neighborhoods (where there is always demand) from dropping much, if at all. When buyers realized there wasn’t a big “crash”, they came back this year and our market is fine. Prices aren’t really going up or down much. However, homes are clearly taking longer to sell, buyers are far more cautious and demanding than 15 months ago and condition is just critical. If you have redone your home more than the competition you likely sell much faster. If you are not, then the opposite is often true.
Most of us expect this to be the trend for the next few years. A normal market where homes take longer to sell, not everything does sell, price and condition become THE issues in what sells and what doesn’t. Interest rates have fallen back to historic lows and the market still isn’t jumping up measurably. Affordability is still a problem for over 70% of the American public that can’t afford the median priced home. Buyers don’t just buy anything because of an inventory shortage, and they don’t necessarily believe what they buy will go up in value substantially. I often tell people who try to understand why some homes in their neighborhood sell quickly still and at a strong price while others sit for months that we have a problem between what people want and what is available. Buyers know what is hard to find (remodeled, best yards, privacy, locations, popular floor plans) and what is plentiful. To know what type of home you have, call me even if you are months or years away. It makes no sense to put money into your home that won’t come back and it makes all the sense in the world to do it if it will. Especially because if you plan to sell between 2021-2026 you very likely will be competing to some extent against new construction and builders who have gorgeous models and the ability to throw in upgrades and concessions. Part of the reason the staging craze is so impactful in Real Estate today is because staged homes DO sell for a premium. I have seen the exact same home sit for months with one agent and it gets staged and sells immediately with a new one. That is real and it is happening everywhere. When all those new models open, your buyer will be comparing your home to those staged model homes and candidly, that’s stiff competition.
It is in this environment, then, that I am tackling the idea of not what month so much as what year might you target selling your home. There are 28,000 new homes planning to be built in Santa Clarita in the next 25 years. Today there are about 650 resale homes for sale, about 20% higher than a year ago. Think about doubling that amount for a buyer to choose from. What does that do to prices? The biggest development (it’s been called “Newhall Ranch” “Net Zero Newhall” and now looks like it will simply be called “Valencia”) is the project already graded by Magic Mountain. It goes all the way to the Ventura County line before build out. Many of us plan to move there, maybe. That is the largest development in the history of LA County, over 20,000 homes. That development will be developed by 5 Points (the old Newhall Land and Farm) and they will be selling dirt to individual builders over the next year. Expect models in 2020 and real live move ins by 2021. We don’t know what will be built yet because the home builders haven’t been identified but with that many homes its likely to be a lot of everything. The second phase of Tesoro is coming at about same time – over 800 homes. Over 3000 homes in Castaic. The huge Skyline project in Plum Canyon Saugus. Sand Canyon Ranch and Vista Canyon. Add it all up and you have a whole lot of homes competing for not that many buyers. Throw in the fact that many existing homeowners will then put their homes on the market to move to the new homes. More inventory. I’ve sold residential real estate for almost 30 years. I’ve seen every kind of market and at the end of the day supply and demand is all any of us need to know about what to expect. So what year should you sell? If it’s going to be in the next few years, you may want to consider sooner than later.