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Posted by on Jan 3, 2013 in Inventory, North County Coastal | 2 comments | Print Print

Month’s Worth of Inventory

The talking heads have considered six months’ worth of inventory to be ‘normal’.

This is the ‘new normal’.

To soften the seasonal impact, the “Months’ of Inventory” below was calculated by dividing the active listings by the 3-month average of the 4Q12 sales:

Town or Area Active Listings LP Avg $/sf 4Q12 Sales SP Avg $/sf Months’ of Inventory
Carlsbad
105
$370/sf
317
$274/sf
1.0
Cardiff
9
$643/sf
24
$473/sf
1.1
Carmel Vly
58
$455/sf
110
$329/sf
1.6
Encinitas
78
$590/sf
125
$362/sf
1.9
Solana Bch
25
$750/sf
25
$488/sf
3.0
La Jolla
111
$926/sf
101
$718/sf
3.3
Del Mar
51
$1,495/sf
46
$700/sf
3.4
RSF
179
$696/sf
58
$437/sf
9.4
NSDCC
616
$714/sf
806
$399/sf
2.3
Others
RP
23
$278/sf
92
$262/sf
0.7
San Marcos
58
$276/sf
225
$207/sf
0.8
East RB
37
$286/sf
132
$267/sf
0.8
Oceanside
106
$275/sf
360
$206/sf
0.9
Scripps Rch
27
$273/sf
85
$272/sf
1.0
West RB
48
$370/sf
137
$261/sf
1.0
Vista
80
$253/sf
214
$195/sf
1.1
Poway
62
$433/sf
132
$265/sf
1.4
All SD Co.
2,820
$399/sf
6,076
$254/sf
1.4

Thoughts:

1. The NSDCC 4Q number of sales were +38% higher than in 2011, even though the number of homes for sale were lower.  Have we become better at getting the price right?  Or has it been easier to bridge the gap between seller and buyers due to the lower rates helping to ease the pain?

2. Buyers made up most of the LP:SP gap.  The average cost-per-sf for NSDCC detached-homes in the fourth quarter of 2012 was +9% higher, year-over-year.

3. Those who aren’t selling must be 15% to 20% higher than comparable sales from a year ago if they can’t find a buyer, because those who were within 10% made a deal.

4. The minute that mortgage rates start rising, look for the Big Freeze-Up. Buyers feel like they have already given on price, they are getting squeezed by higher taxes/lower deductions, and other goods seem to cost more every day.  If/when the higher rates cause payments to go up, buyers will expect sellers to compensate with lower prices. But sellers will be very reluctant to admit that they blew another opportunity to get out.

5. Though the Grand-Canyon-like gap between LP and SP averages would be a quick excuse, it’s not always the solution. Look at Scripps Ranch, another tract neighborhood like CV where pricing is uniform, and easier to get right. Yet those not selling don’t look far off on price; they must be inferior in location and quality.

6. The average days-on-market for active listings in RSF is 177 days. The laws of supply and demand are rarely considered in the Ranch – list it, and they will come….some year.

7. The idea that six months of inventory is “normal” will probably be reconsidered, as will many of our assumptions about the real estate market, hopefully.

2 Comments

  1. Typo in post title – I hate that!

    It looks like the Carmel Valley trend (92130 graph in right-hand column) is careening in opposite directions.

  2. Thornberg was just on a CNBC octobox sounding more bullish than I’ve ever heard him.

    Re: rates – they’ve been going down for 30 years and are officially frozen for at least another couple.

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