The market has been hot lately because the inventory is low. There are only 5,880 detached, and 3,043 attached active listings in the MLS – about 38% of what it was in September 2007.
Waiting buyers are frustrated and should be jumping at new product – how are the June listings faring?
This is the chart of all the detached listings that came on the MLS in June, and the number that have gone pending. If the market is hot, and realtors price them within 5-10% of being right, we should see a third or half of new listings selling:
| Town or Area | Zip Code | June Listings | # Found Buyers | Ratio |
| Vista | all | |||
| San Marcos | both | |||
| Oceanside | all |
Those towns are hot – there are plenty of buyers waiting, and close to half of every house listed sells right away. What about the ‘tonier’ parts of town?
| Town or Area | Zip Code | June Listings | # Found Buyers | Ratio |
| Encinitas | 92024 | |||
| Carlsbad | all | |||
| Carmel Vly | 92130 | |||
| Solana Bch | 92075 | |||
| La Jolla | 92037 | |||
| Del Mar | 92014 | |||
| RSF | both |
Houses stand the best chance of selling when new on the market, yet SIXTY new listings have come on the MLS in Del Mar and Rancho Santa Fe, and NOT ONE of them have found a buyer?
Buy now or be priced out forever.They aren’t making anymore land.
Low end hot; high end cold. Not really a surprise, as this has been happening for some time, although this is getting a bit extreme.
What is a normal ratio in a normal market?
although this is getting a bit extreme
Exactly – the sellers and agents need to start figuring it out! And don’t tell me that it takes longer to sell the expensive ones…..your price is wrong, and getting wronger by the minute!
Our ‘normal’ gauge of actives-to-pendings is around 3:1.
Nothing like a little supply and demand from ECON 101. It seems that high priced neighborhoods have forgotten this fundamental rule.
On altosresearch.com.
Average days on the market in San Diego
July 2008 – 80 days
June 2009 – 130 days
We shall see by the end of the year when option arm house start flooding the system what happens to days on the market.
You would think lowering the price would be a no-brainer. Especially for sellers who are not underwater. In the areas I am looking in, there seems to be a very distinct price per sqft line. Homes that list above it sit and languish for months, homes that list below it – gone within a week. That line is slowly dropping too. Sell now or be priced in forever.
With banks allowing deadbeat borrowers to stay in properties indefinitely. Where’s the incentive to price to sell?
Think about it…
If a deadbeat prices their property at a ridiculous price and it doesn’t sell they just get to stay in the house longer. If it does sell they “might” be able to get out from being underwater.
Time for all of those high end sellers to rent the houses out at 4,000/month. There are tons of folks are out there just waiting to dump 4K plus per month on rent especially if you list it as an “executive home with granite countertops”.
On the higher end homes that aren’t selling… Are any of them short sales?
The move up buy is gone, because nobody has equity.
Jim,
This is a great post! It totally points out how some areas are hotter than others, but I wonder if it’s not more price than area. If you compared the number of new listings to the number of listings that found buyers by price instead of area what would you get? My guess is you would clearly see that in the low price range (<300k?) tons of buyers, in the 300k-600k range still lots of buyers, in the 600k to 1M range things are slower, in the 1M to 2M range a few buyers and over 2M nothing but barren desert. Just my guess though. Can you put together the stats to confirm or dispute my guess?
Spotty
Only two emotions in real estate – greed and fear. Right now greed is overwhelming fear…but when / if the dam breaks, people will run like lemmings to sell
Put it this way: I check redfin once a month, and every now and then I see the right place for the right price. It is *always* a house 1-7 days on the market, and *always* when I call a day or two later it has already been sold. Three times already between CV and UTC. On the other hand, there are always 20 other units in my price range that I wouldn’t even look at without a 10% discount. It’s no coincidence they’re always the 8-300 DOM houses.
Well priced houses sell fast, but because they sell fast they make up a small portion of houses active on the market at any given time. I.e. a house that lasts 100 DOM is going to have 10x the chance of showing up on MLS as a house that lasts 10 DOM. This is purely an illusion, and that’s why a snapshot of the market today will only show 2 or 3 decently priced houses crowded by 100+ overpriced turkeys.
http://www.businessinsider.com/henry-blodget-next-segment-of-the-housing-market-to-crash-1-million-mcmansions-2009-6
Next Segment Of The Housing Market To Crash: $1+ Million McMansions
Henry Blodget
Jun. 30, 2009
The new hallucination for most strapped McMansion owners is that they’ll “rent the house for a year and then sell when the market comes back.”
The happy theory here is that, yes, prices are temporarily depressed, but when the green shoots really take hold, we’ll go roaring right back to 2006 levels again.
Most real-estate agents will be eager to tell you that they agree with this theory. What they won’t be able to tell you, as Mark Hanson of the Field Check Group points out, is why.
There’s so many motivations and scenarios of sellers, it’s not possible to apply one seller’s rationale to another. I’m often comparing identical floor plans of a condo complex, and one owner will be bending over backwards to short sell (Ex: Bought at $560K, selling at $430K, actual example) and nobody will buy. But a nearby neighbor is selling at a gain (Bought at $400K, selling at $450K) and will sell in days.
It’s hard to compare the two because the short sell was in trashy condition needing at least $30K of remodeling. They actually *tiled the stairs and didn’t cut the tile* (i.e. it just overhangs each individual step). Half the house is tiled with one tile with the other half on another, leaving a huge crack down the middle of the house. It’s on MLS but you won’t see any pics of the inside.
The point is sellers have different motivations, and you can’t tell the value of a house from the stats or the outside. That’s what’s accounting for huge 20% discrepancies in list price, where *better* houses sell for *less* than the list prices of trashy units with 100, 200, or even 300+ DOM. Good luck!
Carmel Valley and Del Mar are different. They’re immune.
It’s different this time!My realtor told me so.
What the experts are saying…
http://www.bloomberg.com/apps/news?pid=20601087&sid=atwY13VdQtLk
Home prices saw a “striking improvement in the rate of decline” in April and trading in funds launched today indicates investors believe the U.S. housing slump is nearing a bottom, said Yale University economist Robert Shiller.
“At this point, people are thinking the fall is over,” Shiller, co-founder of the home price index that bears his name, said in a Bloomberg Radio interview today. “The market is predicting the declines are over.”
…
“My guess would be that home prices are going to level off — they’re not going to keep falling,” Shiller said in a separate interview with Bloomberg Television. Still, it’s “hard to predict” a speculative market, and “I am not optimistic that we’re going to see any sharp rebound.”
“j”–Actually, a lot of people who bought before the bubble have equity. Folks who resisted the temptation to spend all that lovely money the banks threw at them via a HELOC and also stayed in their original homes have equity.
The problem is that many like their homes and want to stay while those who might want to move are puzzling over a market filled with investors, flippers and bargain hunters along with a few normal buyers who just want a house to live in. They don’t do a lot of checking, but they assume that there is such a flood of cheap bank-owned property that they couldn’t possibly compete. In fact, a lot of folks could get a price that they would have been delighted with a dozen years ago. However, they take a passing look at the media reports and figure this is an impossible time to sell.
Very nice post, JtR. Concise and spot-on analysis.
it is amazing how the current lack of sales in the coastal/higher end market mirrors the lack of sales that occurred with the low end market prior to the low end crash.
From briefing.com (via WSJ)
California realtors to revise home sales downward – WSJ
WSJ reports the California Association of Realtors expects to make sharp downward revisions in its recent monthly reports of soaring home sales in the San Diego area, Robert Kleinhenz, deputy chief economist of the trade group, said in an interview. Those revisions will mean modest downward revisions in statewide sales, he added. The revisions are likely to be announced in late July, when the Realtor group reports home sales for June. The problem resulted from a glitch in data from a multiple-listing service in San Diego, Mr. Kleinhenz said. He said a change in computer systems used there resulted in incorrect data being sent to the Realtor association over the past year or so.
San Diego sales data from CAR horribly wrong.
By JAMES R. HAGERTY
The California Association of Realtors expects to make sharp downward revisions in its recent monthly reports of soaring home sales in the San Diego area, Robert Kleinhenz, deputy chief economist of the trade group, said in an interview. Those revisions will mean modest downward revisions in statewide sales, he added.
The revisions are likely to be announced in late July, when
the Realtor group reports home sales for June. The problem resulted from a glitch in data from a multiple-listing service in San Diego, Mr. Kleinhenz said. He said a change in computer systems used there resulted in incorrect data being sent to the Realtor association over the past year or so.
Thomas Lawler, an independent economist in Leesburg, Va., who tracks home sales nationwide, raised questions about the San Diego data in a report last week. Mr. Lawler noted that the numbers reported by the Realtors vastly exceeded those from MDA DataQuick, a research firm in La Jolla, Calif., and other sources.
The California Realtors have reported that San Diego sales in April were up about 63% from a year earlier. Mr. Kleinhenz said that is expected to be revised downward to a gain of about 20%. For May, the group reported an 89% increase in sales in San Diego; that will be slashed to about 6.5%, the economist said.
As a result, he said, the state-wide sales gain for May — reported last week as 35% — also will be revised down, though it probably will remain above 30%, Mr. Kleinhenz said.
“The problem resulted from a glitch in data from a multiple-listing service in San Diego, Mr. Kleinhenz said.”
Classic pump and dump.
I cannot wait for someone to come out with a new rel estate data service.
http://www.bloomberg.com/apps/news?pid=20601087&sid=amq8v.M.ak60
Prime mortgages 60 days or more past due climbed to 2.9 percent of such loans through March 31 from 1.1 percent at the same point in 2008, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said today in a report. First-time foreclosure filings on the loans rose 22 percent from the fourth quarter, the report said.
“I’m very concerned about the rise in delinquent mortgages and foreclosure actions,” Comptroller of the Currency John Dugan said in a statement released with the quarterly report.
*****
http://mortgage.freedomblogging.com/2009/06/30/delinquencies-rise-on-least-risky-mortgages/12869/
The agencies also said, not for the first time, that mortgages modified to help struggling borrowers stay in their homes fail about half the time. For example, about 53 percent of mortgages modified in the first quarter of 2008 were 30 or more days delinquent after six months. That increased to a 63 percent default rate after a year.
The only thing that would significantly improve the loan mod success rate would be principal reductions. But banks almost never willingly reduce debt on a property, which would mean recognizing a loss without gaining control of a property. And bankruptcy cramdown legislation keeps getting stuck in Congress. So the foreclosure tsunami continues.
Jim / other realtors,
What will the CA budget issue (i.e. no money as of tomorrow) do the SD RE market over the next month / 6 months?
Come on…
“For May, the group reported an 89% increase in sales in San Diego; that will be slashed to about 6.5%, the economist said.”
This either proves CAR is immensely stupid, or “on the take”
shadash, they’ve been doing this for a long time. Some of us noted that at one point for 12 months straight, every single month was revised down. This led to 12 months of increases that added up to a year of decrease! Every month was quietly downgraded in hindsight so the only way you knew they were lying the whole time was to have kept track of their trumpeting predictions.
Sdbri, that is too funny. This whole revision thing so phoney.
Oceanside, Vista, and San Marcos homes are flying off the shelves. Even the short sales seem to be closing within 30-60 days. With inventory so low, will the shadow inventory have the effect we are predicting?
Is anyone bold enough to predict bottom for these three cities or do you think it is simply a spring/summer fever bump?
I’ll be happy to predict bottom is here so as long as I can downgrade/revise my prediction next month if I’m wrong 😀
Total macro shot-from-the-hip here. We are currently in the eye of the storm in SoCal real estate. The next wave of damage will probably begin sometime in Q4 2009. The real cynical part of me thinks that politicians will try to stall until just after the 2010 elections. If so, that’s when stuff will really hit the fan. No hard data, just a gut feeling. Yes, there are deals out there in spots. But those are small in number and getting sucked up as soon as they are listed. The banks are playing footsie with us and not showing all their cards.
JK – California hasn’t passed a budget on time in quite a while. In practical terms, they apparently still have two weeks (which is quite a while) to work things out.
Vista is at the bottom! Come on out and take a look! The ice cream trucks are spending the nights here in the Vista holding pen and driving the Mc Mansion neighborhoods by day!