New Home Sales

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  1. A balanced market would have a housing supply between four and six months. A supply below five months of course affects sales. You can’t buy homes that are not available for sale. This does not necessarily mean that number of sales are truly down. If there were more inventory, I personally feel there would be more sales. I have to explain this same issue in my real estate appraisal form 1004 MC (Marketing Conditions) which is currently mandatory for all purchases and refinances. Here in Los Angeles, California where I’ve been a certified residential appraiser for over 28 years, we generally have less than a month’s supply. This makes it tough for real estate buyers and agents. It’s also tough for appraisers because we don’t have that many comparable sales or listings available to use in our reports. On top of this what is selling right now in my area are the less than prime homes. People with prime homes are holding on and refinancing, not selling. This makes it difficult to appraise their nicer homes for refinance when most of the sold comps are inferior. Because of government mandated USPAP guidelines, we are limited to which comps we may choose and how much we can deviate, i.e. +/- 15% size, within one mile radius, within six months… Hopefully as things improve the market will open up more.