By Tyson Lund

The holidays are here. Throngs of shoppers congregate outside store windows to peer in and imagine life with a shiny new dream, only to shake their head and move on to the next wondrous attraction.   Once reserved for retail stores, the consumerist sport of 'window shopping' has made its way into the Carlsbad's finest residential neighborhoods.  But as homebuyers continue to browse, motivated homeowners sit frustrated wondering: What happened to this real estate market? 

In every winter quarter during the last decade, 2005 aside, Carlsbad has seen the number of home sales drop and prices decrease when comparing the numbers to the summer selling months of the same year.   Distracted by the hustle of the holiday season, Buyers many times will wait until the next year to consider purchasing.  Seasonality aside, this winter quarter is shaping up to be the slowest in many years.

Why?  

The frenzy to purchase real estate over the last three years drove Carlsbad home prices upwards as competing Buyers raced to outbid each other on the few available homes.   The rush to purchase was fueled by low interest rates and the idea of a guaranteed profit from an appreciating real estate market.  Buyers were more inclined sell and 'move-up' into a more expensive home; ignoring higher property taxes, mello-roos payments and/or a higher mortgage payment.    

The Buyer's mentality has changed.   

The absence of guaranteed appreciation has caused many to rethink selling their home to move up, thus reducing the number of buyers involved in the move-up market.   Overall demand is still strong, however the slower market pace of 2006 caused inventory to build up during the summer and the average time to sell a Carlsbad home increased.   As of November, the average days-on-market for available homes is around 84 days, up 12 days from the previous month.  

In order to counter the higher market time, Sellers that want to sell during the winter have cut their asking price and position their home as a great value.  Many of the recent sales can attribute their price reduction as the reason a buyer became interested in their home.  There are many Buyers looking to purchase as deal and want a 10%-15% cushion from any future market correction.    A bargain sale is possible during the winter market a first in recent years.  Many Sellers are unwilling to mark their home at a discount, thus removing their home from the market.  

If you are waiting to see continued correction during 2007, you may have to wait until next winter. In years where Carlsbad sales and prices decline during the winter months, the follow first half of the year prices and sales rebound.   The decline in available homes and any reductions by desperate sellers motivates people to purchase.  Today's buyers are finding the remaining new home developments are throwing an enormous amount of incentives and credits to close by the end of the year, and, for the first time all year, homeowners are willing to negotiate on their list prices.