Spring is the busiest season for real estate. "Indeed, April through July outpace the balance of the year in sales, historic data at the National Association of Realtors indicates. So there'll surely be more home inventory and variety then. But you better move fast, because that's just what other home hunters are doing (Bankrate)."
Back in Janurary, David 'the Shill' Lereah, was predicting a spring bounce, warning buyers to buy now or have to deal with less inventory:
Faithful cheerleader, Blanche Evans, editor of Realty Times, wrote "home prices and sales expected to rise again in the spring. (Realty Times, Nov 3, 2006)" Alexis McGee, president of ForeclosureS.com said:
"Conditions for buyers have improved because sellers are flexible now and mortgage interest rates are near historic lows. The market promises to be more balanced between buyers and sellers by early spring, supporting future price growth"
“Although it’s impossible to know exactly when we hit the bottom on the price correction, I firmly believe that when the market heats up again this spring, we’ll look back at this winter season as our best buying opportunity in six years”Clearly some in the housing industry are hoping spring will reverse the current sales and price declines occurring in most bubble markets. They predict that with the spring season a large amount of buyers will swoop in, raise demand, and bid up prices. This will not happen.
Last year, some in the housing industry were promoting the spring boom. Realty Times Editor, Blanche Evans wrote:
"What about housing? There's a lot of positive news that suggests that housing may have had its "rest." Spring might catapult housing into another record year."As we now know, last spring's selling season was a bust and did not stem the tide of the housing decline. Mr. Lereah another housing cheerleader, who is predicting a strong spring season, has already called the bottom of the housing market four times.
This year we can expect a surge of inventory coming on the market as desperate sellers try again to sell housing units that have been delisted, foreclosures increase and recently built housing units are completed. In a research note titled: "Not So Fast" by Credit Suisse (hattip to Calculated Risk):
• Record new inventory could get worse: According to our channel checks, despite the soft markets, the pipeline for new communities remains full with an 11% median increase in community count expected for next year. In fact, 63% of respondents expect to increase the number of open projects. We are dubious that the increased supply won't heighten the need for incentives and aggressive pricing in the spring.Meanwhile, on the demand side the speculators will have a minimal impact as they have largely existed the market. The meltdown in the subprime mortgage industry has reduced the ability of marginal buyers to obtain mortgages. Thus lowering demand.
• Existing inventory could run up again in spring: With both real homeowners and forced investor sellers looking to the new year to test the market, we expect the pressure from resales to resurface in the first quarter.
"Lennar CEO Stuart Miller said the spring selling season, when homebuilders usually get the bulk of their orders, failed to materialize, just two months after telling investors this year would be as good or better than 2006 (Bloomberg, March 26)" There will be no spring bounce to rescue currently overpriced houses.
The spring will bring out more buyers but also more sellers (then winter months). Inventory will increase significantly in most bubble markets. In most bubble markets prices will remain flat or fall slightly during the spring months. This year's spring selling season will be very disappointing for sellers expecting a spring bounce.