bubbleinfo.com

This is the Redfin graph of sold $/sf vs list $/sf for San Diego. For some reason the two lines are no longer tracking. Can anyone help me figure this out? [Click for a clearer picture.]

Is the ‘spring selling season’ getting started?

It depends where you look. The areas that have been hard hit by foreclosures and have seen rapid depreciation have been selling like hot cakes (San Marcos, Oceanside and Vista), and the higher-end areas are loaded with sellers that “aren’t going to give them away”.

Here are the areas ranked by the lowest ratio of actives to pendings, plus their number of new active listings since February 1st/number of new pendings since February 1st:

Detached Actives/Pendings

In the 2000-2004 time frame, the ratio was around 2:1, with the hottest times as low as 1:1.

Score Guide

0-3 Hot market

3-4 Regular market

4-5 Market in trouble

5-7 Too many choices

7+ Freefall

Comparing the number of active and pending listings gives a good read on the relative health of the market. When the ratio is around 2:1, the market is relatively good.

Here’s how things have changed since January, 2008:

Actives/Pendings Ratio of Detached Homes

The higher-end areas sure are sticky on price – how much longer can they hold out?

We have measured the relative “health” of the marketplace by tracking the relationship of active and pending listings. In the past when there has been one pending for every 2-3 active listings, the market has been fairly healthy. When it gets above 4:1 the bulging inventory normally inhibits sales, and there have been times in the last two years when areas have had 7:1 ratios and higher.

There is the seasonality too – here is how the current active/pending ratios compare to those taken on April 4, 2008. Note those in bold that have exceedingly high ratios:

Active/Pending Listings Ratio of Detached Homes

It’s surprising that, in spite of no subprime loans, tougher qualifying, and negative news all around, the majority of the county is doing pretty well – currently. Seventeen of 27 areas have better numbers than they did in April, probably as a result of quicker price adjustment. I accidentally left out RSF in April’s count, but it’s been about the same all year – can ‘the Ranch’ and other higher-end areas continue to beat the odds?

When looking at some of the hardest-hit zip codes (Oceanside and North Vista), there is quite a difference between this year and last:

Detached Actives/Pendings in the First Week of August

The number of active listings are down, and there is a remarkable improvement in the number of pendings in every zip code. The REO market has been on fire too, with virually every listing getting multiple offers, selling quickly, and most going over list price.

As you’ll see below, those areas are approaching 2002 pricing on average. If we are reverting to 2002 pricing, how do other areas compare to their July ’02 stats?:

July Detached Closings

It’s not be a perfect comparison, but if Oceanside and N. Vista can show improvement in spite of the odds (no subprime/EZ qual loans, etc.) it would be reasonable to expect other areas could firm up around their 2002 stats. Judge your favorite area based on the differences in both pricing and number of sales.

Notes: N. Carlsbad is 92008 and 92010 and S. Carlsbad is 92009 and 92011 (they split into four zips after 2002). Carlsbad, West RB, and Carmel Valley have had a lot of homes built since 2002 as well, try to factor that into the equation.

The middle of May is prime time – the graduation season is right around the corner, and then the vacations start. Those buyers actively in the hunt have either bought something, or are getting tired of the search. Sellers – don’t be surprised if you see these numbers get worse between now and July/August. If you have been trying to sell for more than 30 days and haven’t, it’s time to lower your price!

Here is a chart showing how the actives-to-pendings ratio has changed since April 4th, plus a comparison of closed sales from April 2007 to April 2008.

Ratio of Active/Pending Listings of Detached Homes, and YOY April Closings

In bold are the best of category. Generally if your favorite zip code is under a 4.00, it’s doing OK, and under 3.00 is “healthy” (the foreclosures are running under 2.0). But if closed sales are substantially less this year than last, then you can probably figure that the additional ‘correction’ coming is probably as severe as the difference between the YOY sales.

While it seems like there has been an upsurge in activity lately, is it extraordinary, or ordinary? How does the active/pending ratio compare to last year?

Here is a look at the actual counts, and the actives-divided-by-pendings number from May 22, 2007 compared to April 27, 2008:

The 506 pendings from 2007 were the actual pendings, not sure how many closed – but it’s likely that the 2008 fall-out ratio will be higher than last year. Buyers are more confident than ever, and if the house doesn’t check out perfectly, or if the sellers don’t compensate for repairs, it’s not going to close – unless the price is very attractive. That said, it looks like a slight improvement over last year – we’ll see how it looks around the third week of May.

The hype machines will be running rampant over the next few months, examine the details very carefully!

The Spring Selling Season is underway, so it’s natural to expect that the numbers should be improving. Conversely, if your area of interest hasn’t seen marked improvement since January, you have to wonder what it’ll be like in another couple of months. In the last couple of years the market has bogged down after June – so if you are selling, now is your best opportunity. Give it everything you got!

The chart below shows the last three readings of active listings divided by pending listings, measuring the ‘health’ of the market. Those under 4.00 (in bold) are relatively healthy for this environment. In areas higher than that, the active listings are overwhelming the pendings – there are too many choices for buyes to consider, and they are hesitating.

Active/Pending Listings of Detached Homes

Today’s count includes those marked pending since January 1st. If they have been in escrow longer than that, they are less likely to close.

How are today’s buyers financing their purchases? 

January, 2008

Carmel Valley – 23 sales

0 of 23 used less than 10% down payment

5 of 23 used 10% to 15% down payment

18 of 23 used 20% or more down payment

*****************************************

Encinitas – 23 sales

0 of 23 used less than 10% down payment

1 of 23 used 10% down payment

22 of 23 used 20% or more down payment

****************************************

Carlsbad – 29 sales

1 of 29 used 5% down payment

9 of 29 used 10% to 15% down payment

19 of 29 used 20% or more down payment

****************************************

In total, 59 of the 75 sales, or 79%, of the buyers used at least 20% down payment, none financed 100%, and only one financed 95%. 

For the sellers waiting for the “lucky” sale, you can fuggetaboutit – the lucky sales were those buyers who didn’t care about what they paid because they had nothing at stake – those who financed all or almost all of their purchase. 

Today’s buyers are being very deliberate, and only buying when they see a good value –  and using a good-sized down payment.

Are sales “picking up?”  It feels good because people are out looking, but for sellers the odds of selling are still daunting:

Carmel Valley – 131 active listings/23 solds = 5.7 month supply

Encinitas – 171 actives/23 solds = 7.4 month supply

Carlsbad – 472 actives/29 sales = 16.3 month supply

*********************************************************

Jim ratio trend (actives/pendings):

The actual counts of actives and pendings tell an interesting story – we’ll watch these closely as the spring selling season rolls out. 

Carmel Valley

Jun 30 = 157/57

Nov 12 = 152/39

Feb 7 = 131/30

Encinitas

Jun 30 = 216/53

Nov 12 = 209/27

Feb 7 = 171/27

Carlsbad

May 12 = 435/152

Jun 30 = 515/115

Nov 12 = 515/69

Feb 7 = 472/82

We’re halfway through 2007, what areas are doing the best?

Watching the number of actives and pendings help indicate what areas are having moderate inventory growth, and continued new escrows opening.  Any explosion in inventory, or decline in new-escrows-opening (or both), would indicate trouble brewing.  We’ll keep an eye on these areas the rest of the year:

 June 30th           Actives/Pendings       Ratio

Carmel Valley         157/57                        2.75

Cardiff                         40/13                        3.08

Solana Beach            54/16                         3.38

Encinitas                  216/53                        4.08

Carlsbad                   515/115                      4.48

Del Mar                       91/17                         5.35

Oceanside               901/135                      6.67

RSF                           220/21                       10.43