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Posted by on Aug 22, 2012 in Sales and Price Check | 22 comments | Print Print

Fewer OPTs?

Rich uploaded his most recent set of 12 graphs here:

http://piggington.com/july_2012_resale_data_rodeo

Sales have been as strong this year as any of the last four years:

With having a smaller supply of active listings to consider – about half as many as last summer:

In total, there have been about 11% fewer homes listed this year, compared to last (42,500 vs 48,000), but we’ve closed about 10% more through August 15th. It is interesting that it only took that much of a swing to ratchet up the market to a frenzy-like feeling and talk of rising prices.

SD County Closed Sales, Jan 1 to Aug 15

Year # of Sales Avg. $/sf DOM
2011
20,388
$229/sf
79
2012
22,480
$229/sf
77

The pendings are solid too.  On other graphs Rich is showing about 7,000 in July, but on the MLS today there are 4,407 contingents, and 5,322 pendings, for a total of 9,729 (which should help the August and September closed sales look pretty good).

I think there have been fewer over-priced turkeys, which would cause the market to run leaner than usual, which I think is acceptable once we get used to it.  Pricing precision is available to everyone who is paying attention, so hopefully the lack of OPTs is due to the players utilizing their improved market knowledge.

It has been a rip-roaring summer!

http://piggington.com/july_2012_resale_data_rodeo

22 Comments

  1. At first glance it doesn’t look like the math adds up, but I think it’s because there has been a load in the pending file.

  2. Everybody’s been busy. Even properties in Ramona has multiple offers within the first few days.

    Toll Bros have sold over 30 ~$1 million dollar homes just in Stonebridge this year.

  3. The two questions I have are – why didn’t prices come up alot higher alot sooner and why did the price increase stop this Summer ?

    Since this time, two years ago, San Diego inventory has just about cut in half and sales have held steady, but prices (per sq. ft) were down about 10% in March 2012. Even after the rebound this Spring, prices are still down 2.5% from Aug 2012.

    It’s an economist’s nightmare. Lower supply and flat sales with dropping prices. Does … not … compute.

    In Carmel Valley, I’d say it was a rip-roaring Spring, but not so much of a Summer. The 92130 graph on Redfin shows prices have been flat since early June, even with the months of inventory signalling a seller’s market. The San Diego price-per-square foot chart has levelled-out as well. The bounce was little more than what one would expect from seasonal effects, even with minimal inventory.

    Again – nobody has an answer to the question – why didn’t prices come up alot higher alot sooner and why did the price increase stop this Summer?

    I agree that with inventory the way it is, we should expect to see these prices come up, but there is something going on in the housing market that isn’t obvious. There is weakness on the demand side, for whatever reason. It’s the only explanation.

    My answer is – it’s a sick market, not behaving the way it should, with weak demand and many indicators are showing recession this year.

  4. My answer is – it’s a sick market, not behaving the way it should, with weak demand and many indicators are showing recession this year.

    I’ll go along with that, except the weak demand.

    I think buyers are being very selective, and are willing to hold out unless they get what they want for a fair price.

    County sales are up 10% with fewer homes to consider, so demand has been there so far this year.

    If you want to pare it down to CV, 92130 summertime sales, here are the detached closings for June 1 to July 31:

    2011 – 73 sales, $333/sf, 71 DOM

    2012 – 117 sales, $329/sf, 54 DOM

    I don’t know what rip-roaring means, but I’d call that (+60% sales incease) a better summer than last year.

    But buyers will continue to be picky, and sellers who are willing to sell for a fair price won’t have trouble with rates in the 3′s.

    Do I have a shot at being your realtor in CV?

  5. To add, the market doesn’t look “sick” to me, it looks like it is behaving differently than it ever has, regarding pricing.

    The internet can take the credit, buyers are fully informed. They might use some professional advise carefully, but they know that they can reach a pricing comfort level on their own.

    I think it has changed real estate forever, and the genie ain’t going back in the bottle.

  6. Maybe not weak, but … odd.

    As if buyers’ eyes are bigger than their pocketbook. Many people want to buy, but most seem to be keeping to a budget, or a limit, or just being careful. Maybe they are worried about their income stream or something.

  7. You would have a shot, were it not for prior relationships with people I trust who can help me. You wouldn’t want me – I’m a pain in the ass.

    I think by “rip-roaring” I mean prices increasing.

    I understand that to you, rip-roaring probably means alot of activity, though, so I get what you are saying now.

    Still – why alot of activity with no price increase? That’s my whole point.

  8. By that I mean – my eyes are bigger than my pocketbook … :)

  9. I think that is the paradigm shift – that because we’ve experienced the biggest real estate bubble-burst in the history of the world, buyers aren’t willing to pay a lot more than the last guy.

    In 2003-2007, most buyers thought that they had to get on the train before they got priced out forever. That bluff got called, and buyers aren’t going for it again.

    Everyone who hasn’t bought (let me know if this sounds familiar…) is confident that another recession is coming and home prices will be going down. It would take an extremely good fit – both house and price – for those to jump in now.

    But it is impressive that people are willing to pay a fair price = same as last guy.

  10. Don’t forget the mortgage rate has declined about 8 tenths of a point in that same two years.

    That’s three strong tailwinds – lots of buyers, limited inventory, and declining rates (not to mention government cheese) – that still couldn’t push prices up.

  11. Buyers have been very disciplined.

    It is shocking, really, knowing that many have waited patiently for years, yet will keep waiting unless they get the right house at the right price.

    Have you considered this?

    Prices may NEVER go up.

    When all previous assumptions are off the table, who knows what is possible?

  12. Every market has a balance somewhere. There’s a decent number of people that think a recession will bring on lower prices while there’s also a contingent of people that thinks the bottom is in. The thing that probably concerns me the most is why is it so incredibly important to find the bottom in housing unless there’s a significant number of people speculating on it as an asset. If you’re buying a house to live in for a long period of time it shouldn’t really matter.

    However if you’re buying to beat inflation, or buying as a place to earn yield, or as a relatively short term speculation then you’re deeply concerned with where the bottom is. Just like the bubble produced a pent up demand to buy I think we’re building a pent up demand to sell. There’s an awful lot of speculators hoping to turn these residential real estate assets into profits down the road.

  13. Why is it important to “find a bottom” ie buy when the market is low?

    Because this market is still horrendously historically overpriced. with entry level homes requiring 2-3k/mo mortgages, it’s ridiculously overpriced for entry level buyers and the AVERAGE household in SD county. And with Rates at historic lows, theres no hope of payment relied via Refi over the course of the loan. With no support from the foundation, eventually this pyramid will topple.

    Why look for a bottom in the market?

    It’s simple. So families in SD can afford a home.

  14. Yep prices may never go up.

    But they are going to have to come down.

    At least to historical ratios. with income/salaries equal or less than 12 years ago, why should housing prices remain 50% higher?

    They can’t. And won’t.

  15. “Because this market is still horrendously historically overpriced. with entry level homes requiring 2-3k/mo mortgages, it’s ridiculously overpriced for entry level buyers and the AVERAGE household in SD county.

    Perhaps the problem is that entry level buyers are trying to buy homes in areas that are out of their league. There are plenty of affordable entry level areas in SD county but everyone wants the best locations, the best schools, the best views, the best lots, etc. etc. If everyone wants the same thing supply and demand kicks in and that elevates the price.

  16. Oh my bad, is this blog only for folks who bought houses for 180k in the 90s and now complaining that their housing “investments” aren’t compounding properly?

    Find me a safe neighborhood with decent schools and a 1500 sq ft home for a 2-3k mortgage, dare ya.

    And why you’re at it, why don’t you serve up a story about how young families today are so entitled – oooh and tell us all how life was so much harder for your generation.

  17. Hi I just want to clarify that “whybother” is not me :)

    that is it for me-back to Zeroo hedge now.

  18. “Perhaps the problem is that entry level buyers are trying to buy homes in areas that are out of their league.”

    Good theory. I have, for years, been wondering if there is a “school district bubble” that did not burst when the general real estate bubble burst.

    Maybe some analyst with time on their hands can compare a standard type of CV home vs. a standard Mira Mesa Home vs. a standard Clairemont home and see if the ratio has changed over time.

  19. whyBother,

    With no support from the foundation, eventually this pyramid will topple.

    You may want to change your metaphor. Pyramids traditionally have strong bases and rarely topple. They tend to last thousands of years and only weather over time.

    One important lesson I learned while waiting out the housing bubble, and I’m hoping we’re on the same page about; time heals all. Eventually you’ll have money to buy a house here; except of course, if you decide not to and leave. Life has a way of working itself out.

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