Measuring the Stagnation
Will there be a big squishdown from above?
It was noted yesterday that 35% of the active detached SD listings in SD, but only 20% of the sales in the last 30 days are over $700,000. Are the higher-end sellers who have been on the market for over 90 days motivated enough to dump on price, causing a ripple effect below?
Or will higher-end sellers hold out, either due to high loan balances or high equity positions/low motivations?
Here is a review of the 100 active $1M+ listings in 92009 (23), 92024 (43), and 92130 (34).
(There just happens to be exactly 100 houses listed today at, or above $1,000,000 that have been on the market for more than 90 days in those three zips.)
The calculations were based on the original loan amounts, unless they looked like a neg-am which then 10% or more was added. Using the ranges as categories should give us a general feel for the equity positions, and potential for dumping on price. The first category describes the ratio of mortgage balance-to-list price, and if they were on a value range, the low end of the range was used:
|Loan-to-LP||# of $1M+ listings|
1. Thirty have had no price reductions during their listing.
2. Another 17 have reduced their price less than $100,000.
3. Eight were marked as short sales (some with high balances were not marked)
4. One was an REO listing.
5. At least two were on the foreclosure list.
6. Twenty have been on the market more than 300 days on this listing.
What can we deduce? Only 30% to 40% of the current listings are in immediate trouble (those with less than 20% equity), and that’s only if they need to move for whatever reason. We can guess that the 47 who have loads of equity are likely to cancel unless they really need to move. The in-betweeners will make the difference between more sales at lower prices, or more stagnation. My guess is that less than half of these sellers are motivated enough to lower their price enough to sell.