If the real estate market were on a fiscal year instead of a calendar year, the New Year would begin in March. With the onset of spring, the housing market has typically kicked into gear. We have recovered from the holidays, prioritized and set goals convincing ourselves that this year will be different. With the warmer weather approaching and the end of the school year, people are once again ready to shop for houses.

Or at least they used to be.

The Springtime Effect

I recently posted a graph depicting monthly sales in the Pasadena real estate market. It showed the seasonality in the market with sales peaking in the spring and summer months. Go as far back as 2002 and you get the same results. Set your watch. It was going to happen. Like clockwork.

Then came the spring of 2006 and interest slowly began to fade. The bull housing market began to loose its steam. It just wasn’t recognized as such. Maybe the market was just taking a breather. Housing slowed as the spread between adjustable rate loans and fixed rates began to move closer, eliminating affordability for many would be homeowners. No one expected such a swift and sudden stop. At this point, the housing market only had one strike against it. We weren’t prepared for the next two 95mph fastballs, known as the sub-prime crisis and the increasing rate of foreclosures. Both of which came in high and inside. Strike two, strike three.

Inventory Levels to Be Key

As you can see, people will take their property off the market at the end of they year as evidenced by the two dips in January. Listing inventory began to increase late January 2007. It is beginning to rise again and apparently earlier this year than last.
current Pasadena inventory levels (single family) as of 2/25/08

The rate of homes sold to current inventory will be a critical calculation and will determine the course of the market for the remainder of 2008.

If inventories begin to rise and we do not see a proportional rise in the number of homes sold, Sellers will be forced to take a more aggressive approach, putting more pressure on listng prices.

Currently in Pasadena we have approximately a 9 to 10 month supply of houses on the market for sale. If you are a home seller and that number continues to grow, be patient. The prospects for this year are not likely to be any better than 2007.

Tags: pasadena california real estate, pasadena housing market, Pasadena real estate