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Here’s the update on the contest to guess the total number of November and December sales.

Today’s sales total is 3,592, and just seven business days left! It will be incredible if it comes in around the 4,726 from two years ago when subprime was still hot and heavy.

Here’s the summary of the contestants, and their guesses, of the total combined sales for November and December, 2008:

3,011 Coconuts
3,707 Downturn
3,776 Neil Stone
3,840 Skeptical Buyer
3,871 JamesDean
3,900 AC
3,911 Wes
4,000 Doughboy
4,050 Smithers
4,100 FreedomCM
4,129 Chris
4,200 CA renter
4,242 Neil Diamond
4,321 Kwaping
4,350 mybleachhouse
4,409 Kingside
4,538 JbirdFunk
4,550 OCVulture
4,609 Just a Broker
4,737 Lisa in OC
4,872 Stephen Waits
4,874 FirstTimeRenter
4,949 Erica Douglass
5,000 CVman
5,021 Rob Dawg
5,150 Angela
5,259 Turnack
5,271 Westparker
5,555 Mojo
5,683 Keith rettig
5,684 sdduuuude
5,777 FSD
5,800 Jakob
5,950 Dwalla
6,138 Mozart
6,500 Simone
6,666 Damian

Here is a link to the original contest post:
Link to contest

Here are the last few Nov & Dec combos:

2007 = 3,254
2006 = 4,726
2005 = 5,603
2004 = 6,464
2003 = 6,988

from the U-T:

SAN DIEGO — Spurred by San Diego County’s falling home prices, more people are moving into San Diego than leaving for other counties and states for the first time in five years.

According to population estimates from the state Department of Finance for the 12 months ending July 1, net domestic migration rose 3,032, compared with a decline of 3,373 the year before.

Adding the natural increase of births minus deaths and continued influx of international migrants, the county population rose 46,634, or 1.5 percent to 3,161,477, the highest one-year boost since 2002.

“That’s quite an accomplishment,” state demographer Linda Gage said. “The state certainly had a (sustained) level of out-migration last year. San Diego is more unusual in having that (domestic migration) turnaround.”

The state lost 135,173 residents to other states and nations in 2007-8, about the same as the year before. But because of a net increase of international migration and more births than deaths, the overall state population rose 435,905 to top the 38 million mark for the first time.

San Diego State University geography professor John Weeks said the shift in San Diego’s migration pattern could be an early sign of a bottoming out of San Diego’s housing slide and a signal that the economy might pick up here earlier than elsewhere.

“If times are good relative to other places, even if they are not as good as five years ago, then we’ll see some returned migration to San Diego,” he said, “and that will be indicative of better times here than elsewhere.”

Full story here:

http://www3.signonsandiego.com/stories/2008/dec/19/1n19migrate062949-sd-county-bucks-trend-15-populat/?zIndex=25038

2009 is two weeks away!

What is the momentum going in?

We’ve used the ratio of active listings to pendings as an indicator of the relative ‘health’ of the market.  During the frenzy in 2003-2004 there were areas that had a 1:1 ratio of active and pending listings – these were as many in escrow as there were for sale.

We’ve been following the same stat over the last three years, and there have been areas and segments of the market (higher-end) hit double digits.  In December 2007 we saw the million-dollar market get as high as 15:1.

Today the total number of active listings is about 20% lower than last year – there are 15,945 detached and attached homes for sale in SD County, compared to just over 20,000 in December 2007.

Here are the active/pending breakdowns for different price segments – and included in the pending listings’ counts are the 1,632 active listings that are also marked as short sales that have an accepted offer, awaiting lender approval:

ACTIVE / PENDING LISTINGS

Under $600,000

10,114 / 6,643 = 1.52

$600,000 TO $1,000,000

2,062 / 485 = 4.25

$1,000,000+

2,137 / 212 = 10.08

With conforming rates at 5.0% or under, it looks like the lower-end market will be cooking after the holidays, while a couple of thousand sellers of $1 million-plus properties will be wondering what the Obama Administration is going to do for them.

A follow-up tour of Barratt’s project in Leucadia, decribed in detail in Kelly’s article:

Link to VOSD’s ‘In Leucadia, a Subdivision Half-Built’

(1:30 min YouTube video)

Harry Markopolos first had suspicions about Bernard Madoff’s work back in 1999, and pursued the case ever since.  Here is the Wall Street Journal’s story.

In early 2000, Mr. Markopolos shared his explosive concerns with Edward Manion, a staff examiner at the SEC’s Boston office.  In his documents, Mr. Markopolos said that there’s a chance “I’m an idiot for wasting your time.” But he argued forcefully that “I believe an SEC visit is warranted” to look into Mr. Madoff’s practices.

“This sounds serious,” Mr. Manion told him, inviting Mr. Markopolos in for a meeting.

In May 2000, Mr. Markopolos says he sat down with Mr. Manion and an SEC attorney.

Mr. Markopolos argued his case: A key part of Mr. Madoff’s strategy relied on buying and selling options on the Standard & Poor’s 100-stock index. But Mr. Markopolos said his research showed there weren’t enough S&P-100 options in existence at the time to support Mr. Madoff’s stated strategy, given all the money he seemed to be managing. So something else must be going on.

Mr. Markopolos, a native of Erie, Pa., who had trained in “unconventional warfare,” including intelligence gathering, as a reservist in the Army, says he came to “consider Madoff a domestic enemy.”

What a story – it should be a movie!

http://online.wsj.com/article/SB122956182184616625.html?mod=mktw

N.A.R. is touting their plan to stimulate the housing market:

• Make the $7500 first-time homebuyer tax credit available to all buyers and eliminate repayment requirements. The credit’s limited availability and repayment requirement severely limit the credit’s use and effectiveness.
• Make the 2008 FHA, Fannie Mae and Freddie Mac loan limits permanent. New rules for 2009 will reduce them. Now is not the time to limit mortgage affordability.
• Get the Treasury relief program back on track and target more funds to mortgage relief. Create a federal mortgage interest buy-down program to make below-market rates available and stabilize home prices.
• Permanently bar banks from engaging in real estate brokerage and management. The banks have proved they have enough to do to simply manage the loan process. Banks should not manage home sales and purchases.

The first and fourth ideas are a joke, but #2 and #3 could help the market without an unfair bailout.

What can the Obama administration do to help?  There are two caveats; we know the government will want to throw money at the problem, and we know tax revenues will probably need to be increased.  What policies can they implement to achieve the best results?

Here’s my list:

1. Leave the Fannie/Freddie limits where they are, and have FHA/VA match ($546,250 in SD).
2. Commit to ‘mortgage rates in the 4.5% to 5.5% range’.  The market has miraculously achieved this on its own, but to hear that the government will provide support to keep rates that low will keep buyers from making hasty decisions to buy.  Re-evaluate every six months.
3. Feds adopts California’s CC2923.5, giving delinquent homeowners three notices in 30 days to provide loan modification help and credit counseling. If no resolution after 30 days, foreclosure proceedings begin.  No “foreclosure freeze”.
4. No short sales of federally-insured mortgages.  Make your payments or get foreclosed.
5. Waive or suspend ARM resets or recasts. Neg-am loans will take care of themselves, I/Os to streamline refinance without an appraisal if well qualified.  Avoids major meltdown without costing taxpayers a bundle.
6. Raise long-term capital gains tax back to 20% (from 15% now)
7. Change the two-out-of-five-year tax benefit to $150,000 for singles, and $300,000 for couples.  The market has knocked down equity positions, so this shouldn’t bother too many folks.  We have to identify tax-generating possibilities somewhere, and the original bill sparked too much speculation, let’s reduce that in the future.
8. New restrictions: Minimum five-year teaser rate periods for ARMs, and mortgage originators to have a fiduciary duty to their borrowers.

These would hopefully spend the least amount of taxpayers money, yet provide some  general stimulus to the housing market. 

When President Obama steps up to the podium on January 20th, what do you want to hear him say?  I’ll send him the package tomorrow.

from sddt.com

With public opinion going sour on purchasing foreclosures, the housing market will hit bottom in 2009 and begin a slow resurgence in 2010, predict real estate Web site spokesmen from RealtyTrac.com and Trulia.com after releasing new survey data.

JtR: Buyers would have to love foreclosures for the market to bottom out, wouldn’t they?

Pete Flint, CEO and co-founder of Trulia.com, and Rick Sharga, senior vice president of RealtyTrac, spoke during a conference call with media Tuesday morning to reflect on this year’s wave of foreclosure activity across the country and how individuals are responding to it.

The two Web sites’ results from a recent survey show that 80 percent of U.S. adults feel there are negative aspects to purchasing a foreclosed property including fears of hidden costs and the property value decreasing after purchase.

“In terms of the concerns people have, I think they’re well founded,” Sharga said. “It is a little more complicated to buy a property particularly in foreclosure or in short sale than it is to buy a traditional piece of real estate.” 

Only 47 percent of U.S. adults said they would buy a foreclosed home compared to 54 percent six months ago, according to the survey.  “What’s significant about our findings is that just as the market is being flooded with more foreclosures, homebuyers are more hesitant to buy them. Misinformation around foreclosures abounds and that’s dangerous for the market and for homebuyers,” Flint said.

JtR: This statement is unfounded - misinformation abounds? What? Where?  There’s no misinformation with REOs, the only difference is that you don’t get a disclosure statement from the sellers.  Big deal, you shouldn’t trust the sellers’ disclosure anyway.

The result of the perceived risk is three out of four consumers think they should pay at least 25 percent less for a foreclosed home while 30 percent of those surveyed said they should get a 50 percent discount.

In San Diego, one in 244 homes is in foreclosure, according to RealtyTrac, and both Flint and Sharga said that number is likely to increase in 2009.

JtR: Foreclosures equal 0.4% of total?  OK, I’ll live with that.

According to Credit Suisse (NYSE: CS), a wave of Alt-A loans is scheduled to reset in 2010. However, Sharga said some may reset as early as 2009.  In a report Monday, Fitch Ratings downgraded Alt-A loans and Option ARMs in their Alt-A classification.  It expects average cumulative losses of 2.72, 6.78 and 9.58 percent on vintage Alt-A transactions in 2005, 2006 and 2007, respectively.

As prices continue to slide downward, sales of attached and detached homes in San Diego have been up more than 100 percent as of October, according to statistics from the San Diego Association of Realtors.

However, the increase in sales could cause the market to flatten rather than improve due to an increased number of foreclosures from defaulting Alt-A loans flooding the inventory.

JtR: Huh?  How can increased sales be a bad thing?

Sharga said government actions, foreclosure moratoriums and banks slowing down the foreclosure process have all likely led to a pent up supply of housing resulting in a “horrific” January. 

Though Sharga and Flint’s outlooks were self-described as “gloomy,” Sharga said some areas around the country may have already bottomed out.  “The market situation is going to be very, very much a local one there are parts of the country that have probably more or less bottomed out at this point because they didn’t have the explosive appreciation rates some years back,” he said. “I think the continuing falloff is going to be felt in those harder hit states (like California)… and the recovery there will be a little more problematic.”

Rob said,

You can smell the desperation. Why can’t we see the desperation prices?

Most listing agents think their job is to protect the sellers, and prevent them from giving their house away.  It’s only after a few months of trying to sell, and prodding usually from the sellers themselves, that you’ll see any big price drops.

More and more short sales are being listed at below-market prices, trying to appear desperate.  But they’re not desperate – if anything, the sellers are the opposite of desperate – they are milking the free rent and have no motivation to cooperate with the sale. 

It’s a racket that’ll catch up with sellers and their short-sale listing agents in the next few months, because buyers, and the buyer-agents, are going to avoid them.

We’ve already seen and heard the disgust from buyers about their attempts to purchase a short sale; long delays, much uncertainty, other offers submitted late in the game, etc.  When they include an ultra-low list price and get several offers right away, it’s a turn off to buyers.

If there were more desperate-looking prices, would you trust them?  I already don’t trust the low list prices on short sales, and if a regular seller went way low, it would look fishy.

Just do what the REOs do - list your house a little under market, and call it a bank deal!

Here’s an example of how a low-priced short sale that backfired.

Remember the psuedo-auction in San Elijo Hills?  They listed this house for $399,000 as a starting bid, and gathered around the interested parties on a Saturday to find the winner.

But the highest bid was only $455,000, and guess what happened – the short sale failed and Wachovia foreclosed on the house.  They listed it for $559,900 on December 1st.

Don’t be surprised if we see more short sales looking like bull!

from sddt.com

The status of the economy, banking, residential and commercial real estate were discussed during an Institute of Real Estate Management Forecast at the Hyatt Aventine La Jolla last Friday.

Hans Ganz, president and CEO, Pacific Trust Bank, said the dilemma for the lender is that while a home might have been purchased for $1 million, it is going to be valued by the current comparables in the area. Values have almost universally declined. Add to that a couple of foreclosures in the area and that $1 million home may be suddenly worth $600,000 — more than eliminating any equity. “Now where is the incentive for the lender to refinance that home?” Ganz asked.

Save for refinancing, Ganz does believe mortgage lending will soon be assuming a more normal pattern, however. “We’ll start seeing upturns by the middle of next year. The money isn’t going to stay on the sidelines very long,” he predicted. Ganz said this is an excellent time for real estate investors, and made a prediction. “More millionaires will be made in 2009 than we’ve seen in many years.”

Although it has been said before, UCLA Anderson School of Management professor and economist Stephen Cauley also said with home prices low and interest rates low, there has never been a better time to buy a home.

“This may be a once in a lifetime opportunity,” he said.

Stath Karras, a Cushman & Wakefield executive managing director, meanwhile said the multifamily market is being strengthened on numerous fronts. Karras said he is already noticing that more people are doubling up in apartments than before this latest downturn. “You have demand from echo-boomers, defaulting homeowners entering the rental market, and people who can’t qualify for a home having to stay in the rental market. What’s not so good for apartment investors is we still have a lot of vacant condos out there,” he added.

If he is uncertain about anything, Karras said it is what the impact will be “of all those empty houses” that are being foreclosed upon. “A lot are being purchased for rental purposes,” he said.  While rents have managed to hold their own thus far, Karras predicted there will be some softening both due the houses being rented and the overhang of the condominium market. Karras said the good news is he expects the capital markets to come back mid- to late 2009.

Cauley, while conceding that he doesn’t know what will happen next year, said there is a 60 percent chance the recession will be short-lived and commercial real estate markets will be all right.  “Another possibility (about 20 percent) is there will be little or no economic growth. This would mean a series of recessions _ a kind of slow death,” he said.

“And there is a 20 percent chance we could have a long-term recession or depression _ yuk,” Cauley continued. All that said, Cauley, believes that Sen. John McCain was right when he said ‘the fundamentals of the economy are strong.”

“To be sure those fundamentals have been submerged, and there has been an implosion in the credit markets, but the strength is still there,” he said.

Mark Read, a CB Richard Ellis (NYSE: CBG) senior managing director, who quipped that people’s 401 Ks are now 201 Ks, noted that the commercial real estate had an unprecedented five-year run and it’s only natural that it would taper off anyway. Still, he admitted times may be tough for a while.  “If you want to know what’s going to happen with commercial real estate, just look at job growth,” Read said.

Unemployment, plus or minus 6.5 percent here with some predictions it may reach 7 percent, seems to be going in the wrong direction. Other realities may impact the commercial market. 

“You have owners who bought in ‘05 or ‘06 or ‘07 who have buildings worth 15 to 20 percent less than they paid for them,” Read said. He predicts this unsettled market will last at least through the first half of the year, and there may be further company consolidations and mergers along the way.

Read added the strong commercial real estate brokerages will survive the downturn, but to do so some may have to outsource many of their real estate functions along the way to keep the costs down. For commercial property investors, as is the case in residential, he said “there are some incredible deals out there.”

“And on the other side, this is a great time to be a tenant,” Read said adding that incentives such as free rent and generous tenant improvement allowances may be particularly attractive right now.

We’ve had particular interest in the short sale on Grivetta in Aviara.

The listing agent inputted the listing onto the MLS at an ultra-low price, but he already had his own deal put together.  He told me that the buyer saw him pounding the sign in the front yard, and bought it on the spot.  In the remarks he noted that “back up offer only” and that offers submitted would have to be “site unseen only”.

But with a short sale, anything can happen.  Either the bank can hold out for more money, and/or enough offers get sent in that the listing agent finally submits them all.  Not sure which happened here, but the buyer’s agent was also added as the second listing agent:

934 Grivetta, Carlsbad 92011

5 br/4 ba, 3,492sf

YB: 1999

$550,000  LP 10/15/08

$682,000  SP  12/11/08 

$195/sf

HOA = $79/mo.

Whatever caused the price to go that much higher – it’s good to see that the market prevailed.

How is the rest of Carlsbad doing this month? Are sellers drastically discounting their LPs to get out, or is it more leisurely? Are other sellers opting to go low with their list price, and try to bid up (in bold below)?

There have been 19 detached homes close escrow in December so far:

* REOs (3)
** Short Sales (2)

Difference between avg list price and avg sales price: -12%

Of the four sellers who bought in 2003, two sold for more, two for less.

Of the six sellers who purchased since 2004, one sold for more, five for less.

************************************************************

If you can get the list price right, and find a buyer within 30 days, you get fairly close to what you’re asking. If you price higher, it takes longer, and the drop is typically bigger.

My rule-of-thumb is that you’ll get within 5% of your LP if you sell in the first 30 days, and then at least 10% off for longer than 30 days – how does it apply here?
(DOM from previous recent listings included)

Properties that went pending in 30 days or less, and the difference between LP & SP:
+24%, +14%, -1%, -3%, -5%, -6%, -8%, -14%

median = -5% off list price

Properties that went pending after 30 days on market, and the difference between LP & SP:
-11%, -11%, -13%,-16%,-17%,-18%, -19%, -20% -20%,-20%, -23%
(bold are those at 100+ days on market)

median -18% off

************************************************************
Another rule-of-thumb for medium-priced homes is that – in the buyers’ eyes – they are going down about $1,000 per day once they’re on the open market.

Sellers are bold and optimistic the first 30 days. But after that, they start looking around for what else, or who else, to blame besides their price. If you are looking for a big discount off the list price, your chances are better, later.