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):
| Under $500K | 2009 | 2010 | diff |
| TNL | 5,352 | 5,215 | -3% |
| LP $/sf | $192/sf | $217/sf | +13% |
| Sales | 3,367 | 2,589 | -23% |
| $$/sf | $186/sf | $205/sf | +10% |
| SP/LP | 99% | 100% | -0- |
| DOM | 61 | 59 | -0- |
While it looks smoking hot to have 2,589 sales averaging 100% of list price, sales are down substantially, even though the number of new listings were about the same as last year. As soon as pricing tries to advance, sales slow.
How about the action over $500,000?
| Over $500K | 2009 | 2010 | diff |
| TNL # | 3,243 | 3,574 | +10% |
| LP $/sf | $436/sf | $438/sf | -0- |
| Sales | 848 | 1,101 | +30% |
| $$/sf | $325/sf | $320/sf | -2% |
| SP:LP | 95% | 97% | -0- |
| DOM | 74 | 73 | -0- |
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.
It’s amazing to see the same model house. In the same tract community often within blocks of each other. List at variances of 100k or more.
I wonder what people are thinking when that happens?
What are OPTS? Thanks.
shadash –
They’re thinking “Hail Mary.”
Shadash, my guess is that in many cases the sellers have taken out a 100% LTV loan and they can’t sell below a certain price. That’s why you see the high list prices.
Some of them also justify it by talking about “improvements”–but most homeowners should know these days that many improvements will not increase the value of the home at all.
-Erica
@Jackie: “overpriced turkeys”
I’m seeing homes with views, maybe a pool/spa, upgrades (like granite/SS in the kit) and that show really nicely go for some very high $/sf relative to same floor plan with no view, no pool or spa, and no upgrades. Houses with bad locations (backs to big road, tiny lot surrounded by huge houses) are not moving fast or at all. The concentration of distressed homes in an area also seems to have an effect too.
Shadash
People are irrational b/c their home is special. Special in a tract that is
I wonder what people are thinking when that happens?
You mistakenly assume they are thinking. š
Bank of America to start reducing mortgage principal.
Article: http://finance.yahoo.com/news/BofA-to-start-reducing-apf-93222487.html?x=0&sec=topStories&pos=6&asset=&ccode=
Looks like things are starting to get interesting. Looks like the start of another bubble is in the works.
I see this B of A principal reduction experiment as having real potential as a game changer regarding the number future distressed properties to hit inventory.
Yeah it’s a long shot chance of having a material impact, but a chance nonetheless.
this move by B of A is a step which could have a major impact on keeping families in their homes, reducing the number of foreclosures and stopping a further erosion of home values. we’re all familiar with econ 101 and supply and demand. if this moves is followed by other lenders – it could cut down the supply of homes threatening to come on the market. wall st was bailed out by the gov – why not main st? do they all deserve it – no way. but there’s no way in hell that wall st did and don’t give me that “too big to fail” crap. it’s time to also think about the folks who are not upside down because if the values keep falling – it’s coming to a town near you! i hope this isn’t just another smoke screen because I believe this is a valid possibilities.
Sorry to be off-topic, but does anyone know of any good real estate blogs about the Silicon Valley or SF Bay Area? Yes, I know about Burbed, but I consider that mostly entertainment š It would be nice to find a NorCal version of JtR. Thanks in advance.
Jim, thanks for being responsive to the interests of the readers here, it’s one of the things that make the blog so great.
JtR,
Is your ratio of SP to LP (or vice versa) based on the final LP at the time of closing – or the “original” LP.
Am I imagingin this, or do “some” agents go out of their way to have the final LP match up with the actual SP in the MLS record?
“This move by B of A is a step which could have a major impact on keeping families in their homes, reducing the number of foreclosures and stopping a further erosion of home values.”
I understand this point of view, but this compassion isn’t free. Where does the money come from to buy down these mortgages?
The other issues is that no one held a gun to anyone’s head and made people buy a house that they couldn’t really afford. Regardless if the house is underwater or not, if they could make the payments three of four years ago then then why can’t they make the payments now? And it’s not like people are being thrown out into the streets. Folks can move, rent, etc. If someone has income then they can get housing. If they don’t have income then a principal reduction isn’t going to help them.
Shocking that there are fewer sales at a higher price point, LOL. I have a feeling that the low-end will overcorrect and stay stagnant for years. A friend of mine and I saw a duplex listing (about 4 months ago) in Vista for $140k. One side was rented for about $1000/month. The other side was pure profit, if you could rent it out.
It penciled out at a 10%+ annual return on investment, but I had to keep my powder dry for my own purchase. š
On principal reductions… if that gets any kind of attention, watch the NODs (or 30d lates) absolutely skyrocket from their already high levels. Assuming a NOD (or 1 late payment) is required to be considered for a principal reduction.
The line for free money will be very, very long.
dafox, read the fine print. It is a graduated write down over 5 years and only if the borrower remains in good standing. And even at the the end of 5 years you are 100% LTV. You’ll still have your house, but no equity.
This only helps out a fairly small number of borrowers, which I’d guess is the only way to keep flippers and specuvesters out of the mix. It might be a good deal if you bought your house to actually, you know, live in long term.
Magic – this isn’t compassion – it’s common sense. Turn off or turn down the available supply and the market will firm and become “normal” again (whatever that is). many of these folks can make the payments but how do you justify making payments on a $700,000 mortgage and the house is currently worth $300,000 or less? why let vulture funds and foreign money take over homes that responsible owners are in the process of losing? Reduce the principal, make sure that they can afford it and put an end to this nonsense. I’m not talking about the people who couldn’t afford the home in the first place but there are many owners who are hard working and honest and will gladly take over a mortgage that reflects the true value of their home today. Of course the gravy trainers will come out. there will always be those who attempt to cheat the system. always have been – always will be. but there are many owners who have worked for years to build equity into their homes who have suddenly seen it striped away. I know the moral aspect but you’ve got to play the hand that’s dealt to you. the parties responsible for this – starting with Wall St, bear sterns, countrywide, merrill lynch, lehman bros among others were all rescued by the government. where did that money come from? poor jimmy cayne upon hearing his 6 million shares of bear sterns was now only worth $2 a share said well when you’ve got $6 billion and you lose one – I guess it’s not so bad. when we bail out people like jimmy, why not Mary and John, your next door neighbor?
NorCal – Mary and John were happy to enjoy their good fortune on the way up. If it was good for them on the way up, it should be good for them on the way down. Now we are allowing our neighbors to privatize the profits and socialize the losses. It rankles.
Equity is not magic money, nobody is owed equity. You take that risk when you buy, which is why sensible people hedge the risk and proceed with the utmost caution when they choose a liability that will be with them for 30 years. Any gains that homeowners made on pricing after 2002 was magic bubble money. The only way you get to keep magic bubble money is if you have the foresight to sell before the bubble bursts.
I shouldn’t be asked to cover Mary and John’s losses at the tables in Vegas, why should I or anyone else be asked to cover their losses when they gambled in the housing market during a bubble?
Well said, Art.
What people still can’t seem to wrap their heads around is the fact that 2001-2006 prices WERE NOT REAL. The sooner we come to terms with that fact, the sooner we can get out of this mess.
Taxpayers do not owe mortgage borrowers “equity,” especially when that “equity” resulted from a credit bubble that destroyed our nation’s economy. “Equity” on a home purchase is not a God-given right. If they don’t want to pay what they agreed to when they **chose** to overpay for a property, then they can walk away and rent something cheaper.
Just so it’s clear, high housing prices/costs are a bad thing when people’s wages are stagnant or declining. Low housing costs are a GOOD thing. Reducing our housing prices is one of the primary requirements if we want to compete in a global economy.
“This only helps out a fairly small number of borrowers, which Iād guess is the only way to keep flippers and specuvesters out of the mix. It might be a good deal if you bought your house to actually, you know, live in long term.”
I think thats all it will really appeal to anyways. Many of the flippers/speculators with Option Arms washed out a long time ago. It makes sense that the ones who are left are the people who do want to live there and make a go of it. Not saying its right, but that might actually work for this small group (4.5% of all BOA mortgage debtors).
The banks have to decide which is better: reducing principal or taking over peoperty. They will probably loose less in the long run by reducing principal. Either is unpalateable.