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We’ve seen in the past that there is some relationship between the amount of homes for sale, and the frenzy in the marketplace.  The bigger the inventory, the more cautious the buyers are in their search, and when there isn’t much for sale, buyers tend to get more anxious.

Here is raw data for detached and attached MLS listings for the first nine months of each year:

Here is how the sales and total listings compare visually. It isn’t a perfect relationship, pricing and exotic mortgages probably played a bigger role over this same time period. But over the last two years when pricing and mortgages have been relatively tame, the ebb and flow of sales have tended to move with the inventory – we’ll see how it transpires over the next few months/years:

The withdrawn listings in previous years are deleted by Sandicor, so instead of including the 1,688 withdrawns this year, I used the same 140 from 2009.  Previous years show 1, 2, or 3 withdrawns.

The amount of properties being foreclosed is still lower than the last two summers:

But at least the recent trend is heading in the right direction – fewer trustee-sale cancellations:

Will servicers consider that selling more properties when rates are 4.25% might be a good idea?

Either sellers and agents are starting to pay attention, or the reach of bubbleinfo is improving, because list prices appear to be coming down nicely - hat tip to RE for sending these in:

OLD CARLSBAD

ENCINITAS

LA JOLLA

PACIFIC BEACH / MISSION BEACH

PT. LOMA

CORONADO

CARMEL VALLEY

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:

Other factoids:

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.

It was suggested that the market over $750,000 was “becoming non-existant”, and in yesterday’s seminar, a realtor said that demand in general was ”non-existant”. 

Does a market exist? Let’s look at MLS detached active, actives on market more than 90 days, contingents and pendings, sold-in-last-30-days listings, plus the NODs and NOTS counts:

The under-$500,000 groups are running well under a ratio of 2:1 actives-to-contingents+pendings, which has been a healthy sign in the past. As long as the servicers can keep dripping out the short-sale approvals and loan mods, we could call the lower-end market survivable – though, surprisingly, it’s where the bulk of the defaults are.

The $500,001 to $700,000 market is 2.28:1 on their actives-to-contingents+pendings ratio, and the defaults are well under the number of active listings, so apparently there are elective sellers in this group that could cancel and try again later if they don’t find a buyer. Plus, a few from above should drop into this category to keep everyone hopping.

More than a third of all active listings are priced over $700,000, yet no big rush to the exits with 45% of those languishing on the market for more than 90 days. The low amount of defaults seem to justify the loitering, but with only 77 sales closed in the last 30 days, you have to wonder when sellers and agents are going to figure it out – isn’t it obvious that something is wrong after 90 days and no deal and 80+% of those around you aren’t selling either?

A commenter suggested that the higher-end sellers can’t lower their price, due to loan balance – we’ll review that next.

Are the choppy market conditions causing more sellers to give it a go?

Specifically, are new listings on the increase, flooding the market when older reluctant listings are stagnating?  If so, it would sure give buyers another reason to pause.  The new-listing count has been higher than last year, but still historically low – here are the San Diego detached numbers:

No big flood to report, but the water has been rising due to inaccurate pricing. Not enough are selling, and a backlog is forming.

Today’s active inventory is 8,144 detached listings, and 3,908 attached listings, for a total of 12,052, which is 5% higher than it was four weeks ago.

July detached closings are probably going to be 20% to 30% lower than last month.  There were 2,074 detached sales in June, and so far in July we’ve only had 1,238 actually close.  So far there have been 1,656 detached listings get marked pending this month, so closings are going to be modest for the next few months, unless the short-sales can save the day.  Of the 1,238 detached closings this month, 196 were marked as short sales, or 16%, and 226 as REOs, or 18%.

Today’s LPS report noted a rise in mortgage delinquencies, and once the mainstream media got ahold of it, you would have thought that the sky was falling.  They are drooling for bad housing news, and are quickly jump to many generalized conclusions.

Why is anybody surprised to hear that 7.3 million mortgages are delinquent when virtually every lender in the country tells you that you have to miss payments before they’ll talk to you about your options?  You never hear that mentioned on the TV news.

What happens to all of these delinquencies?

Let’s examine the actual events, and how they affect our area specifically.

Here are the trustee-sale results of the big three servicers, ReconTrust (BofA), California Recon (Chase), and Ndex of all property types around San Diego County over the last four weeks:

There have been 1,061 trustee sales that were resolved over the last four weeks, but when 79% of them are being cancelled, the threat of the foreclosure tsunami sure seems manageable.

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The quarterly foreclosure stats are out for SD County:

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Cancellations have been soaring. If we saw a bunch of them being successfully short-sold on the MLS, it would give hope that the servicers might be getting more proficient in their processing. The cancelled trustee sales that weren’t on the MLS are probably the loan modifications.

Here is a review of 50 cancelled trustee sales of SFRs in the North SD County Coastal region only:

On MLS: 20

Not on MLS: 30

Only four of the 20 on the MLS were active listings, the rest had found buyers, and 12 had already closed escrow.  Don’t the other 30 have to be loan modders?  Why else would the servicer cancel the trustee sale? 

There are only 372 North SD County Coastal SFRs on the current foreclosure auction list (revised from yesterday). Over the last 30 days, there have been only 15 SFRs in NSDCC that have had their trustee sale actually happen, and 89 cancellations. Very frustrating for those ready, willing, and able to buy at the court house steps.

The point? When you hear any national housing news, make sure to cull it down to your local area.

From the L.A. Times:

Karl E. Case, a professor at Wellesley College and co-creator of the index, said the improvements were a sign that the economic recovery was beginning to help consumers gain confidence.

“What people are seeing in the stock market, and what people are feeling, is the beginning of a real recovery,” Case said. “Now that the economy is starting to come back, I think the psychology has changed.”

But David M. Blitzer, chairman of the Index Committee at Standard & Poor’s, characterized the report as “mixed,” with 12 cities posting increases on a seasonally adjusted basis. When left unadjusted for seasonal variations, the 20-city index fell 0.4%.  Economists surveyed by Bloomberg had expected the index to fall in January.

Richard Green, director of the USC Lusk Center for Real Estate, said Southern California is showing gains because it was one of the earliest markets to get hit and is rebounding before other areas.

“We fell first, we fell deeply and we didn’t overbuild the way other parts of the country did,” he said. “And if you look at the long-term horizon, the amount of housing built relative to population was less than other places, and it is still really hard to build new houses here.”

That means the chances of recovering sooner are good, he said.

Others were not as optimistic.

“If you look at the last two big real estate bubbles in the late 80s and 70s, you didn’t see the market rebound for five years,” said Christopher Thornberg, principal of Beacon Economics. “It’s amazing to me that people can look at a rebounding market after the largest bubble ever and possibly think this could be sustainable.”

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Click here for interview with Robert Shiller – he says the chances of a double-dip are about 50/50.

A variety of data packages get dropped in my lap from time to time, an excerpt from the latest:

First, we got the existing home sales data for February and they edged down again, by 0.6% MoM, and “no” — it was not due to the blizzards (sales actually rose in the Northeast and Midwest). Also keep in mind that these are closings — so no reason why they should have been impacted by the weather at all.

This is a new downward trend in sales turnover because it was the third decline in a row and we are now all the way back to the depressed levels of June 2009, at just over five million units annualized. Without the tax credits, which expire at the end of April (we shall see about that — Arnold is already moving to extend the goodies in the Golden State) we would have seen an even weaker figure because first-time homebuyers made up 42% of the sales tally last month. Repeat buyers are hibernating, comprising 39% of the sales pace, down from 43% in January.

What was truly disturbing were the inventory data — listings up almost 10% to their highest level since last September — taking the backlog to a six-month high of 8.6 months’ supply (from 7.8 in January), which is materially above the 5-6 months that generally characterizes a balanced market.

We are back to a classic buyers’ market, which means that we are in for another round of residential real estate price deflation. Indeed, average resale prices dropped 0.8% last month and are down in seven of the past eight months — the Case-Shiller home price index is probably not too far behind (recall that the FHFA house price index has declined in each of the past two months).

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Osidebuyer asked about the under-$500,000 market, how hot is it? Here are the SD County detached stats from the MLS for January 1 to March 23 (TNL = Total New Listings):

While it looks smoking hot to have 2,589 sales averaging 100% of list price, sales are down substantially, even though the number of new listings were about the same as last year. As soon as pricing tries to advance, sales slow.

How about the action over $500,000?

The higher-end sales have picked up with pricing staying relatively flat – but new listings seem to be pouring on the market. Keep your eyes on the OPTs – they don’t seem to be moving, and if they don’t sell in the next 30-60 days, they’re going to be cooked.