Benchmarks with baggage.
(Note: Although this was written in early 2005, I believe it's just as relevant to today's market, if not more so.)
Not to be alarmist, but I see signs suggesting that if you're planning to sell your house sooner or later, sooner might be better.
I could be wrong—maybe this galloping seller's market still has plenty of life left in it—but headlines like "Million-dollar home sales skyrocket in California" bring back poignant memories. They're so 1999, as if some Internet guru had just proclaimed "this changes everything".
Sure, 1999 was a great year for home sellers, but 1999 was also the last full year of the dot-com seller's market. By early 2001 real estate would be punishing sellers just as hard as it had once punished buyers.
Also a bit sobering to anyone who knows local real estate's rap sheet is the news that January 2005 saw the biggest year-over-year median price increase of a San Francisco Bay Area home since January 2001. That's a significant milestone, because January 2001 was the last blast of the dot-com seller's market. Prices would plummet in March 2001, dragged down by a nose-diving stock market and severe local recession.
More real estate news that might raise a few knowing eyebrows is the announcement that January 2005 Bay Area home sales were the highest of any January since 1989. Early 1989 was the peak of yet another seller's market, and home prices began falling that spring. Contrary to what many think, the October 1989 Loma Prieta earthquake didn't end the seller's market, it was just the exclamation point punctuating the end of the seller's market.
You can probably see where I'm going with this: benchmarks like these suggest we're at or near a market peak. Unless the paradigm has shifted, to drag out another dot-com cliché, this is as plain as the writing on the wall can get. Some won't see it until it's too late. Others saw it when it wasn't there.
It's been a great ride, and my guess is that it's not quite over yet. We're not necessarily running on fumes, but we've probably switched over to auxiliary tanks.
We may be coming in for a landing. Let's hope it's a soft one.