bubbleinfo.com

This youtube video shines the spotlight on Carlsbad’s La Costa Oaks development, one of the four villages subdivided by Morrow Development (La Costa Valley, La Costa Greens, and La Costa Ridge are the others). As with other tracts sold at the peak, there is plenty of noise in the data, challenging buyers to make sense of it.

Southeast Carlsbad’s 92009 zip code is physically about the same size as Carmel Valley’s 92130; 20.2 sq. mi. to 19.7 sq. miles. But 92009 has about 66% more homes than CV, so the foreclosure stats showing them having twice as many NODs and NOTs isn’t that drastic (the stats in video says “Carlsbad”, but they are just the 92009 foreclosure numbers):

The late-reporters will add about 10% to these numbers, but it looks like the overall sales will continue their downward trend.  When you drill down to the individual zip codes, it’s a mixed bag, but good to see 92067 slip under $400/sf for the third time this year. 

Detached sales for August, Year-Over-Year:

The sky will really be falling now.

The S&P Case-Shiller Home Price Index for San Diego dropped from May’s 163.78 to 163.27 in June for seasonally-adjusted numbers, breaking the 13-month streak of slight increases – though the non-seasonally adjusted went up from 163.11 to 163.82.  Here is a link to their site.

The S&P’s Dave Blitzer had the standard negative slant on cnbc.com:

“Given the way home sales collapsed in July and given the boost in housing activity across the board in the second quarter, it’s clear this may have been the calm before the storm,” David M. Blitzer, chairman of the index committee at S&P, told CNBC.

S&P, which publishes the indexes, also said home prices nationally rose 4.4 percent in the second quarter after a 2.8 percent drop in the first quarter.

Prices rose in 17 of the 20 metro areas in June, S&P said, adding that in the first half of the year 15 of the 20 areas had positive annual growth rates. The housing market is in better shape than a year ago, S&P said.

“The worry starts when you remember that the Homebuyers’ Tax Credit has expired, foreclosures are still at high levels, and July data on home sales and starts were very, very weak,” Blitzer said in a statement.  The inventory of unsold homes and months’ supply data were particularly troubling,” he said, adding that “if this relative weakness in demand continues, it will likely filter through to home prices in coming months.”

Look for September to be cancellation city – sellers aren’t going to put up with this!

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

The August foreclosure stats, plus examples of houses that went back-to-bene last week:

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.

Hat tip to Cheese who sent this in, from Bard College:

Self-reported home values are widely used as a measure of housing wealth by researchers; the accuracy of this measure, however, is an open empirical question, and requires some type of market assessment of the values reported.

In this study, the authors examine the predictive power of self-reported housing wealth when estimating housing prices, utilizing the portion of the University of Michigan’s Health and Retirement Study covering 1992–2006.

They find that homeowners overestimate the value of their properties by 5–10% on average.

More importantly, the authors establish a strong correlation between accuracy and the economic conditions at the time of the property’s purchase. While most individuals overestimate the value of their property, those who buy during more difficult economic times tend to be more accurate; in some cases, they even underestimate the property’s value.

The authors find a surprisingly strong, likely permanent, and in many cases long-lived effect of the initial conditions surrounding the purchase of properties, and on how individuals value them. This cyclicality of the overestimation of house prices provides some explanation for the difficulties currently faced by many homeowners, who were expecting large appreciations in home value to rescue them in case of interest rate increases—which could jeopardize their ability to live up to their financial commitments.

An example of a buyer who took a lowball shot at a listing that had some tell-tale signs:

1.  A number of other active listings nearby that weren’t selling,

2.  Out-of-town REO listing agent,

3.  A World Savings/Wachovia/Wells Fargo original loan amount of $687,000,

4. A newer tract house that was unattractive enough that it probably wasn’t getting any offers.

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.

The mainstream media has really been loading up and blasting the negativity this week, since the housing stats came out.  The people they interview get caught up in the hoopla too, and the more negative you are, the more you’ll see yourself on TV!

I went to a seminar yesterday, and it was happening there too.  Local realtors were spewing negative statistics that were blatantly false when checked later on the MLS – and not even close to accurate.  Question authority!

Readers TJ and the Bear and John both asked about the claim on zerohedge that no new homes sold in July over $750,000, for the second month in a row – and I think he’s referring to the USA.

There were 14 new homes closed in June, and 2 in July in San Diego County. But the new-home stats are based on when escrow is opened, so the claim may be that no buyers signed a contract last month. But how many new homes are being built that are priced over $750,000? I’ll check with Bridle Ridge today, and maybe Davidson in Carlsbad, but there aren’t many around here.

The claim was also that the high-end market is becoming ”non-existant”.

There were 469 detached listings on the MLS that were priced over $750,000 that opened escrow in June and July (251 and 218), and 334 of them have closed.  So apparently buyers exist.  Can the new-home builders compete with existing homes, and will they?