It’s November, and 2009 is on the home stretch.
Nationally, the pending home sales have increased 8 months in a row, and are up 21% YOY. Looney Larry says that prices have over-corrected and that the $8,000 tax credit is better than home prices going down $8,000. Why? Because if the national housing stock went down $8,000 it would be an aggregate destruction of $700 billion in housing wealth and raise more foreclosures. The tax credit only costs $10 billion.
What’s really happening?
First, let’s note how ridiculous the ‘Pending Home Sales Index’ is, when 30% to 50% of escrows are falling out these days.
But let’s also look at the October detached sales for North SD County Coastal, from La Jolla to Carlsbad. There will be late-reporters for 2009, but in spite of low mortgage rates, tax credit, and NAR hype, we’re still strugging:
|Year||# of sales||$ per sf||Avg Freddie 30YF Oct|
* The October 2007 wildfires had an impact on closings.
In spite of pricing being 16% lower than 2005, mortgage rates being the lowest they’ve been in October, and the nutty tax-credit hype, you can’t say the local market is cooking.
I think we’ll be in for more of the same over the next few months, but next year is shaping up to be an all-out war between short sales and REOs in the higher-end markets.