Wednesday, January 7th, 2009 at 11:40 PM
Any Flood Yet?
Last year we saw a slower start than expected, as far as new listings coming on the market.
How are we doing in 2009? These are the total listings of attached and detached homes for the first SIX days of the year:
| Year | All SD | NCC |
| 2003 | 965 | 138 |
| 2004 | 740 | 104 |
| 2005 | 1,133 | 103 |
| 2006 | 1,729 | 232 |
| 2007 | 1,616 | 166 |
| 2008 | 1,320 | 148 |
| 2009 | 798 | 95 |
NCC = Carlsbad, Cardiff, Encinitas, RSF, Solana Beach, Del Mar, and Carmel Valley.
The 2009 numbers will be slightly higher due to late-reporters, but it looks like the new-listing inventory will be well under recent years.
The elective sellers are in for a tough year, because you have to either price your home aggressively, or don’t bother. As a result, 2009 is going to be dominated by bank-related inventory – get used to short sales!
Posted on Wednesday, January 7th, 2009 at 11:40 PM in Thinking of Buying?, Thinking of Selling? | 25 Comments » | 
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I imagine one factor is that realtors are finally growing a pair and saying no to wishing price speculators who don’t stand a chance in this market with the prices they are asking. It’s probably easier when you can point and say “see that one and that one? Those REOs on your block are 30% under your target.” Either get real or get comfortable.
Rob Dawg | January 8th, 2009 at 4:00 amWhen do all the foreclosures that sb 1137 slowed down hit the market? That should be a “flood”.
Ryan | January 8th, 2009 at 7:44 amI don’t think it has anything to do with brokers. People know now is not the time to sell, especially in NCC.
Mozart | January 8th, 2009 at 8:10 amI don’t think it has anything to do with brokers. People know now is not the time to sell, especially in NCC.
I mildly disagree. I think realtors are performing a gate keeping role as a form of self preservation. Contrary to popular belief it isn’t free to list a house and see if there’s interest. Besides it just confuses buyers. Jim and I talked about my plan years ago. A tiered listing agreement. Free if you agree to the expert’s price, some nominal fee, $200 if you get your wishing price listed but agree to the suggested price after 30 days and $600 for a no strings listing at seller pricing.
Rob Dawg | January 8th, 2009 at 8:46 amI think a slowdown in listings means a recognition of the market by sellers. It has been a long time in coming and is a positive for the market.
Ling | January 8th, 2009 at 8:49 amSeriously Rob, who would sell right now? Only those who have to. I don’t know how well you know our area, (I think you are in Ventura), but NCC is not where you go for your first home and it isn’t subprime or even Alt-A territory.
Those who have to sell in 2009 are going to take a hit unless they’ve been homeowners for decades. Your typical person knows now is not the time to sell, better to wait it out. This crowd may not like it but things will get better.
Mozart | January 8th, 2009 at 11:13 amDid Mozart just say NCC is not Alt-A territory. Really? Perhaps you might want to do a deeper investigation into how all of your neighbors drive expensive European cars. I can assure you there is no shortage of stated income, neg am, and IO loans in NCC.
Jim didn’t you at one time have a chart on the neg ams in North County?
PS Maybe not typical, but there is certainly no shortage of people who believe once all of the foreclosures next door to me sell for $500K I will sell mine for $800K (made up numbers). It does not work like that cause the people who buy at $500K will be happy to sell at $600K after all the foreclosures are gone.
WAITING IT OUT IS NOT A SOLUTION, JUST A BAD IDEA
LV Renter | January 8th, 2009 at 11:28 am“I think realtors are performing a gate keeping role as a form of self preservation.”
Nailed it, Dawg.
What do people pay for? Information. Well, now that RE information is easy to get, what are the chump realtors going to do? I think they’re grasping at straws now.
As for the fewer amount of “wish list” prices, I bet it has more to do with the bad realtors getting washed out of the business.
I think the Real Estate business is getting a rude awakening. It needs a complete restructuring and new regulation. Realtors need to look in the mirror and ask themselves what value they’re truly bringing to the table. I won’t pay a realtor tens of thousands of dollars to show me a home or put a for sale sign on my yard, but I will pay for useful information and advice I can’t get on my own.
Jim has clearly grasped this idea, which is why he’s set himself apart. It’s sad that there’s so much incompetence in this business, but the cream still rises to the top. Thanks for the blog, Jim.
The Blur | January 8th, 2009 at 11:57 amAre there any “elective sellers?”
Maybe retirees with homes they bought in the 1970s.
If I was retiring now and had a home valued at $500k that I originally bought for $50k I’d be kicking myself for not electing to sell at $800k and renting for my last couple of working years, but pricing aggressively and taking the remaining equity now would still be more attractive than retiring in place for the next 10-15 years and risking further loss against the hope that prices might go up again.
GeneK | January 8th, 2009 at 12:27 pmGeneK
I think your post went to a deeper problem. Jim has done detailed analyses on how people who bought in NCC 2003 and earlier have equity. Why are they not elective sellers? I think we are in a lot of problems is people who bought in 2001 that should have plenty of equity cannot be an elective sellers cause they refi’d all their money out.
LV Renter | January 8th, 2009 at 12:30 pmMozart
Another thought on NCC being immune to current troubles. I know we would like to think that all of NCC residents are engineers, lawyers, medical professionals, trust fund children, or long term holders of major equities.
The reality is that nationwide 40% of new jobs created from 2001 to 2007 were related to real estate. I imagine it was even higher in NCC. When I drive around I see plenty of expensive cars with Realtor magnets on them. How long do you think they can hold on? I am thinking their income is a tad lower than it was in 2005.
LV Renter | January 8th, 2009 at 12:34 pmI disagree with the sentiment “People know now is not the time to sell, especially in NCC”.
By most reasonable measures (including Case-Shiller, buy-to-rent ratios, price-to-income ratios or construction costs) housing is still significantly overvalued.
Today, sellers have a great opportunity to sell housing well above its intrinsic value. Sadly, most of them aren’t very good at math and statistics, and instead whine and moan about how lousy the housing market it.
It’s still a sellers’ market, whether they recognize it or not.
greenlander | January 8th, 2009 at 1:35 pm“I think we are in a lot of problems is people who bought in 2001 that should have plenty of equity cannot be an elective sellers cause they refi’d all their money out.”
I’m sure there are people who fit this description. I wonder, though, whether their numbers come anywhere close to those who bought in 2001, still have plenty of equity and could be elective sellers, but just don’t want to sell their houses?
GeneK | January 8th, 2009 at 1:41 pm“When I drive around I see plenty of expensive cars with Realtor magnets on them. How long do you think they can hold on? I am thinking their income is a tad lower than it was in 2005.”
A few months back I saw someone driving down Palomar Airport Rd in a Nissan Z that had a Papa John’s Pizza sign on its roof, and imagined that it was a replacement for the realtor logo that had been there a year or two earlier.
GeneK | January 8th, 2009 at 1:45 pmFor historical perspective, the numbers in 2009 look alot like 2004. I wasnt here in 2004. What happened in January of 2004?
Damian | January 8th, 2009 at 1:46 pmI see this as a sign that sellers are waking up to reality. They have to get used to the idea that the party is over. Once they accept that fact they will start putting their homes back on the market, in my opinion.
The motivators that Jim mentioned in an earlier post are still there. Unless things have changed Californians typically move often. Except for my neighborhood that is. Tons of old folks with lots of equity here.
KC | January 8th, 2009 at 2:13 pmDamian
What numbers look the same?
LV Renter | January 8th, 2009 at 2:20 pmBack in the olden days when I was the only reader of JtR Jim was still a little hesitant to get on board my claim that anyone who needed to sell anytime 2006-2012 had best sell immediately. If anything that 2012 is being push back. Back then we were discussing the huge contingent of last kid through high school or college and full benefits in retirement programs. Every month a house bought in the boom of 1978 pays off their mortgage. Okay that isn’t really true but there exists in SD (like my VenCo) a huge base of mature owners with low cost basises getting near retirement age. There’s also an atypically large number of non-owner occupied but locally owned income/investment properties. The recent financial turmoil is going to bring more of these onto the market with an ability to undercut any price.
Short analysis; there’s a massive undertow of supply that won’t go away for many years at best.
Rob Dawg | January 8th, 2009 at 4:01 pm798 listings for SD County in 2009 vs 740 in 2004
98 listings for NCCin 2009 vs 104 in 2004
Supply looks like it is dwindling. What happened in early 2004 when supply was similar?
Damian | January 8th, 2009 at 4:12 pmWith regard to Post No. 12, I do agree it is a seller’s market provided that the seller is reasonable. Based on my limited experience, if something is listed at a reasonable price, there is a huge amount of activity. Unfortunately, a lot of the listings have unreasonable prices.
If I had owned a place for several years and had equity, I wouldn’t sell now either, even knowing that prices could fall some more, since I would be thinking about how high they used to be and thinking that in a couple years, things will be better.
Hoping to Buy | January 8th, 2009 at 4:56 pmIn isolation you make a good point but in 2004 four additional bits of information that were vastly different were:
Inventory at the end of previous year
NOD-foreclosures
Mortgage underwriting criteria
Unemployment rate
Are you expecting similar performance to 2004?
I think it is a “sellers market” now cause the market is in a surplus now. If the median was a market clearing price there would not be a surplus. If you sell at the current price even though a surplus exists you have captured more value than the buyer.
LV Renter | January 8th, 2009 at 5:32 pmRob Dawg
Isn’t it amazing how all of the analyses done with age demographics as the primary driver have proven to be remarkably wrong?
Just a list of some of the economic maladies currently affecting us that could not exist b/c of aging baby boomers:
*Unemployment (not possible as there were not enough young workers to replace the baby boomers)
*Low Stock prices (not possible cause baby boomers were savers)
*Falling home prices (not possible as boomers would be nuying multiple properties around the country with their inheritances)
Do not trust any analyses with age demographics as the primary driver. I am not sayign it could not be correct, just look really carefully.
LV Renter | January 8th, 2009 at 5:37 pmI wasnt here in 2004. What happened when numbers looked like that. I know it was bubble times in SD between 2002 and 2007 but those numbers stood out. Did they change anything or was activity and crazy appreciation even throughout the bubble times?
Damian | January 8th, 2009 at 5:50 pmRob said:
Short analysis; there’s a massive undertow of supply that won’t go away for many years at best.
You nailed it.
Also, WRT demographic influences, you have to look at the macro picture.
You can have massive unemployment when the Baby Boomers are still working, largely due to normal economic cycles within the larger Boomer cycle. The employment situation might actually improve once the Boomers begin to retire in larger numbers. So far, only the leading edge is just now entering retirement.
The stock market is NOT cheap (look at it over decades or centuries, not just a few years).
Housing is NOT cheap (see comment about the stock market)
Also, Boomers were in their peak buying years in the early 70s through the beginning of this decade. They will probably be net sellers from this point forward, and many of them have plenty of equity. They can easily sell and make enough money to relocate to a cheaper location and live fairly comfortably in retirement.
I’ve spent a lot of time studying demographic influences, and concur whole-heartedly with Rob Dawg. Personally, I think we are at the beginning of a multi-decade deflationary environment as Baby Boomers retire and try to sell off their assets (stocks, bonds, real estate) to pay for their retirement.
CA renter | January 9th, 2009 at 2:23 amNeed to add: I think the bond market — especially Treasuries, agencies, and high-grade debt — will see very low rates and increasing spreads as the Boomers shift from higher risk to low risk bonds…and they will likely put any gains from stocks or RE into the *safe* debt instruments.
CA renter | January 9th, 2009 at 2:27 am