Monday, March 23rd, 2009 at 2:49 PM
Spring Kick Fading?
Here’s more mis-direction on behalf of NAR and mainstream media:
March 23 (Bloomberg) — Sales of previously owned homes in the U.S. unexpectedly increased in February as record foreclosures pushed down prices and lured first-time buyers into the market.
Purchases rose 5.1 percent to an annual rate of 4.72 million from 4.49 million in January, the National Association of Realtors said today in Washington. The median price slumped 15.5 percent from a year ago, the second-biggest drop on record, and distressed properties accounted for 45 percent of all sales.
This is going to add more false hope for sellers of higher end homes – they’ll be prone to think that it’s their turn now, once the jumbo loans are funding again and the ObamaPlan has a chance to work.
Maybe the lower end is hot, for the time being, but each market segment is different. The odds of selling the higher-end homes are going to greatly increase each month from now on.
Look at this chart below – if it weren’t for the blip last July, the $600,000+ sales in North County Coastal have peaked in May or June in recent years. Those are sales that opened escrow in April and May (click on it for clarity):
For the 1,525 active listings in SD North County Coastal (La Jolla to Carlsbad) above $600,000, you need to lower your price now, and keep lowering it so you get into escrow by the end of May.
The March 2009 number on the chart is projected at 80 – there are only 50 closed so far this month, and 206 pending.
If 150 of those pendings close over the next two months, we’re still going to have only 100 or fewer closed sales in any month this year – and there are 1,525 PROPERTIES FOR SALE!
By the end of May, the higher-end buyers are going to be licking their chops.
Posted on Monday, March 23rd, 2009 at 2:49 PM in Spring Kick | 18 Comments » | 
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Jim, Will Geithner’s PPIP annouced today stabilize the housing price, or help create a steep step down by putting the shadow inventory to the market?
august | March 23rd, 2009 at 3:09 pmCall this the Summer Drought.
Jim, so many in so many neighborhoods are distressed I am having a hard time seeing how a regular sale can compete. It seems there will always be “comp” with a lower basis.
I think sellers are going to need every aspect lined up so they can close the deal. Perfect condition, perfect prep, superior representation. There’s a imit to how many you can close so that last may be a problem.
Rob Dawg | March 23rd, 2009 at 3:13 pmWent to some open homes up here in Nor Cal for fun yesterday. All in the $1.0 million plus club.
First, only one (yes one) other looker all day.
Second, learned from one of the agents that in this county in Nor Cal there is a second unpublished list of homes for sale. Unpublished folks — not on Redfin, Not on MLS, not on RE agent web site — a list of “pocket” listings. A list kept by the agents in a PDF format. I wonder how many other areas have such a list? How many banks?
When asked why this unofficial list, the agent said to help hide the “days on market” for the sellers on the pocket list.
I have yet to calculate the % impact on inventory — but the list is more than 10 pages long. I have a copy and will examine likely next week.
My question to you Jim is this common? Is this happening in San Diego? And for the other readers and possible sellers out there — if this is happening in your neighborhood and any indication of price stability kicks in — get ready for lots and lots of company of other sellers with unrealistic expectations of price.
Bob | March 23rd, 2009 at 3:14 pmWith jumbo loans now available sales will go up. Our base line in 2009 assumed basically all cash buyers.
Superior homes will sell, mediocre stuff will sit and be cancelled/withdrawn when they hit +120 days. The sellers at the high end, have not, and will not need to sell unless distressed or relocating.
Mozart | March 23rd, 2009 at 3:25 pmI think this glimer of hope will get the banks moving on the shadow inventory. I believe the issue is 2 things to moving this inventory:
1. Bank resources to get it listed
2. New, additional, 90 day hold on foreclosures
Once we get past this 90 day hold and the banks staff-up to process the foreclosures, we will see this stuff hit the market. Probably around mid-year (June, July), just in time to whack the prices till the end of the year, when the seasonal slowdown occurs.
Can’t wait to get my $1.5 million home for $600,000, which is where it should have been priced in the first place.
Can’t wait to get those investment, recently remodeled condos from the boom for $60,000.
The big un-known to all this is the unemployment numbers, which are skyrocketing. No job, no pay rent/mortgage, etc. It’s sad, but it is a reality that will be the nail in the financial coffin for many.
I already know many professionals, unemployed, living off of savings and unemployment. This won’t last long, unfortunately.
Blue Streak | March 23rd, 2009 at 3:57 pmexisting home sales are up folks.Time to buy a house now.
arizonadude | March 23rd, 2009 at 4:14 pmCheck out the hits Scripps Ranch is taking:
5/6, 5599 SF, 0.45 acres, $177 PSF, Built 2006, $990,000
http://www.sdlookup.com/MLS-090010877-11540_Edgewood_Pl_San_Diego_Ca_92131
5/6, 5390 SF, 0.55 acres, $181 PSF, Built 2008, $975,000
http://www.sdlookup.com/MLS-090004189-15066_Almond_Orchard_San_Diego_Ca_92131
5/5, 5120 SF, 0.32 acres, $195 PSF, Built 2007, $999,000
http://www.sdlookup.com/MLS-080072433-11433_Stonecroft_Terrace_San_Diego_Ca_92131
NE Chula Vista:
5/6, 4992 SF, 0.37 acres, $142 PSF, Built 2009, $707,034
http://www.sdlookup.com/MLS-090010418-621_Via_Porlezza_Chula_Vista_Ca_91914
5/5, 4912 SF, 0.30 acres, $145 PSF, Built 2006, $709,900
http://www.sdlookup.com/MLS-090010904-667_Coastal_Hills_Dr_Chula_Vista_Ca_91914
San Marcos:
4/5, 3755 SF, ? acres, $145 PSF, Built 2005, $544,900
http://www.sdlookup.com/MLS-090009767-1837_Shadetree_San_Marcos_Ca_92078
4/5, 3755 SF, ? acres, $146 PSF, Built 2005, $549,900
http://www.sdlookup.com/MLS-090013574-1870_Shadetree_Dr_San_Marcos_Ca_92078
Rancho Bernardo, West
5/4, 4550 SF, 0.21 acres, $184 PSF, Built 2003, $839,000
http://www.sdlookup.com/MLS-090004994-15168_Palomino_Valley_Pl_San_Diego_Ca_92127
5/4, 4550 SF, ? acres, $198 PSF, Built 2003, $899,000
http://www.sdlookup.com/MLS-090013563-16120_Palomino_Valley_Rd_San_Diego_Ca_92127
Encinitas:
4/4, 3464 SF, ? acres, $229 PSF, Built 1957 (remodeled), $794,900
http://www.sdlookup.com/MLS-090017516-905_Melba_Rd_Encinitas_Ca_92024
Carlsbad South:
4/5, 4913 SF, 0.36 acres, $173 PSF, Built 2005, $849,900
http://www.sdlookup.com/MLS-090016236-6836_Citrine_Dr_Carlsbad_Ca_92009
4/5, 4644 SF, ? acres, $194 PSF, Built 2005, $900,000
http://www.sdlookup.com/MLS-071076417-6209_Alverton_Dr_Carlsbad_Ca_92009
5/4, 3500 SF, 0.24 acres, $200 PSF, Built 2003, $699,900
http://www.sdlookup.com/MLS-090007329-2963_Levante_Carlsbad_Ca_92009
5/5, 4212 SF, ? acres, $207 PSF, Built 2008, $870,607
http://www.sdlookup.com/MLS-090016828-3207_Sitio_Oceano_Carlsbad_Ca_92009
I think some realtors/builders on the high-end understand where pricing needs to be, still others are living the 2005 dream.
Jim, the price declines in San Marcos, NE Chula Vista, & Carlsbad South are amazing! Plus, with more inventory to come, are we going to see $100-$125 PSF on the high end? I say this because most of these areas with newer developments have high HOA and Mello-Roos. Most buyers will need to take this into consideration. With unemployment rising and people not being able to trade up, since they will be locked into their homes with little or no equity, with option ARM / Alt-A loans recasting, and with shadow inventory lurking, I think the high-end will get hit hard over the next 1-2 years.
I’ve noticed that RB West in Del Sur and the Lakes are still living the 2005 dream on pricing. 4S Ranch Chanteclaire and Maybeck are lowing their prices, but probably still not where they need to be with all of the foreclosure and distressed inventory hitting 4S Ranch. I would say that by the end of the year RB West drops another $50-$75 PSF.
What is everyone else’s thoughts?
Also, what is the average PPSF to build the high end homes today?
Blue Streak | March 23rd, 2009 at 4:53 pmThe increase in existing home sales is very misleading.
1st a long term chart of existing home sales.
http://1.bp.blogspot.com/_pMscxxELHEg/SceXS4vcHWI/AAAAAAAAE2Y/4ifzfszrWVE/s1600-h/EHSfeb2009.jpg
Now new homes sales…
http://4.bp.blogspot.com/_pMscxxELHEg/Scef0tEow8I/AAAAAAAAE3Q/f_Yjt1YAjMQ/s1600-h/EHSFeb2009distressing.jpg
Off a cliff! And here is the inventory that has to be worked through
no bubble here | March 23rd, 2009 at 5:36 pmhttp://2.bp.blogspot.com/_pMscxxELHEg/SceXh2RF-kI/AAAAAAAAE2g/y763cKLuHcY/s1600-h/EHSFeb2009inventory.jpg
Arizonadude,what are you smoking??
m | March 23rd, 2009 at 5:50 pmIt’s always a great time to buy according to the NAR and lawrence yun.
arizonadude | March 23rd, 2009 at 6:27 pm“learned from one of the agents that in this county in Nor Cal there is a second unpublished list of homes for sale. Unpublished folks — not on Redfin, Not on MLS, not on RE agent web site — a list of “pocket” listings. A list kept by the agents in a PDF format. I wonder how many other areas have such a list? How many banks?”
My understanding is that this should not be happening in San Diego County as under SANDICOR MLS rules, listings have to be put on the MLS within 48 hours of seller’s signature, unless specifically instructed not to be put on the MLS by the seller.
Kingside | March 23rd, 2009 at 7:30 pmAh but I’ll bet a lot of the agents suggest to the sellers that perhapd they shouldn’t put their home on the MLS but have a pocket listing for a while. I suspect this is why this unpublished inventory exists up here and I would be surprised if this is the only county with that.
In terms of the comment on jumbos by Motzart — yes there is more avaiable but only if you can qualify under lending rules that existed well before 2000 and we all know that means home prices must be in line with income. 20% down, another 10% in CASH in the bank and verifiable income. So I disagree that sales will be up significantly because BofA is now doing jumbos.
Bob | March 23rd, 2009 at 8:06 pmBy the way Mozart — according to Socket Site the “new” bofa jumbo loan program is exactly the same as they have had since October, just 0.5% lower rates.
Don’t think that will make all that much of a change.
Expect the banks to take the stimulous, make very cautious loans, sit on cash, pay nothing to depositors and milk the interest spread until inflation kicks in and we are either faced with the Fed doing the right thing or a stagflation that makes the 70′s look fun.
Bob | March 23rd, 2009 at 8:09 pmSecond, learned from one of the agents that in this county in Nor Cal there is a second unpublished list of homes for sale. Unpublished folks — not on Redfin, Not on MLS, not on RE agent web site — a list of “pocket” listings. A list kept by the agents in a PDF format. I wonder how many other areas have such a list? How many banks?
One of the things we do to stay on top of things is drive around certain zips we’ve been watching for years. For some reason I can’t figure out, there seem to be some sellers who don’t mind having an “un-listed” listing and are willing to keep the property off the MLS. Oftentimes, these properties belong to agents/brokers, and they do not want to share commissions.
Not sure if that particular practice is growing or not, but there are plenty of empty homes that we are seeing that are not listed on the MLS. Don’t know if they are part of the backlog we keep hearing about, but this inventory could come on the market at any time.
Mozart, why would someone in an overpriced, high-end home want to be stuck if they don’t have to be? If their house is paid off, or if they owe less than it’s worth, they can list it at market price (a price for which it will actually sell), and be done with it. Anyone who’s owned for over ten years is very much in the black, and would have no reason to stay trapped when they want to sell/move. They are not obligated to stay there just so their over-encumbered, peak-buying neighbors can feel better about themselves.
CA renter | March 24th, 2009 at 12:38 amHi Bob,
I have run into this “pocket listing” situation in an upscale neighborhood I have been watching a long time in North San Diego county. After looking at an agent’s “pocket listings,” I realized that they were virtually all the “old” withdrawn listings–some from more than a year ago, and all still stuck in “what I want my price to be” mode, not “what the market says my home is worth.”
My hubby and I now call it the “poor-suckers-from-out-of-town” list.
I think the “sellers” do this on the wild hope that someone who doesn’t know the market will be swept away and buy without researching. (‘Wouldn’t be the first time.)
But the reality is that the only homes that have sold in the last 6 months in this neighborhood, are two REOs which went back to the bank (and one of those is theoretically pending to a “real” buyer as I type–and not at anywhere near the prices being listed in this neighborhood–on or off the MLS). And I think only one had sold before that in the entire last year.
I’m not sure about Bob’s NorCal neighborhood, but this one is full of retirees who don’t need to sell, but if the right sucker, er, buyer came along, they’d be glad to move on.
I have also encountered the “pocket listing” phenomena a long while ago in another upscale town in L.A. county. Similar situation–not asking market prices and hoping the market turns up before they have to sell.
I suspect it is more common than most think–especially when there are lots of folks not ready to accept market reality and they have resources to hold off for a while.
I can just imagine that RSF is FULL of such listings (but don’t know for a fact).
shoppingaround | March 24th, 2009 at 5:26 amMy understanding is that this should not be happening in San Diego County as under SANDICOR MLS rules, listings have to be put on the MLS within 48 hours of seller’s signature, unless specifically instructed not to be put on the MLS by the seller.
Kingside is right, this is the rule, but it is regularly abused. There are 50 pendings right now in North County that have their ‘days on market’ at zero, which means the listing agent had their buyer before inputting the listing.
Rather than the ‘within 48 hours’ rule, it should be that the seller has to sign saying they saw the listing in the MLS before accepting an offer.
Countrywide won’t consider an offer unless they see the MLS sheet first – that is good business for sellers.
Jim the Realtor | March 24th, 2009 at 8:54 amThe chart in this post may be slightly misleading.
As prices have dropped 25-40% in SD county, there are now many more homes in the $600K and under category than there were in the last few years. This means there are fewer homes in the $600K and over category. This would naturally lead to fewer sales each year in the $600K and up category.
I’m not saying this is the only reason $600K and up sales have been dropping, but it is likely a contributing factor.
the good life | March 24th, 2009 at 10:49 amI saw a $1.65 million (from builder in 2006) home in Falls Church, VA go for $695K at the trustee sale yesterday.
IRE | March 24th, 2009 at 12:51 pm