National Data

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).


Magnolia Estates – SOLD!

The remains of the former Barratt American tract in Carlsbad has closed escrow. Bank of America had foreclosed on their $7,812,000 mortgage in December, 2008, and they put the whole package of six houses and five lots on the market in May, 2009.

Click here for our first and second youtube tours from last year.

Although the salespeople said in May that the bank was adamant about a quick close, it took until now to wrap things up.

Here is our next, but probably not last, segment in the Saga of Magnolia Estates:

Double Cheese Burger

Thanks to Mark for sending along this confirmation of first-time home buyers being able to claim both the federal and state tax credits, from the WSJ:

But, it might not get off to a peaceful start on May 1: Get ready for a stampede early on as some buyers rush to overlap with the federal tax credit that’s dangling as much as $8,000 to buyers. (Yes, that’s up to $18,000 for buying a house.)

For the federal incentive, contracts must be inked by April 30, while closings have to happen by June 30. The California credit covers closings on existing or new homes on or after May 1, leaving a short window for double dipping. “We already anticipated increased contract activity in March and April due to the federal tax credit with scheduled closings in May and June,” writes Credit Suisse builder analyst Dan Oppenheim. “These buyers will now be eligible for both the federal and state credit and will likely consume a significant piece of the state credit given the first-come, first-serve allocation.”

He estimates the tax credit will benefit about 14,000 new-home buyers, lasting as long as five months. KB Home and Lennar could benefit the most given “their outsized exposure to California at 44% and 25% of ’09 revenues, respectively, vs. the 20% group average.”

Given that the state’s existing sales dwarf new sales – 2009 saw an average of 42,500 closings per month – that allotment should be snapped up in about a month. Stampede, indeed.

Doesn’t End Well

Eric at the North County Times was asking last week about the direction of pricing.  I was the last to be interviewed that day, and it sounded like all the other realtors thought we’d see a slightly upward trend from now on.

He was taken aback when I disagreed, and went with the slightly downward trend.  Why? Rampant realtor fraud and deceit will undermine any momentum.

Not saying anything is wrong here, I’m open to a logical explanation of how this video ended, after six sales from $950,000 to $1,200,000 between June and January – can you think of one?


(editor’s note – I inputted this before noon and forgot to press send!)

Bank of America’s announcement (link here):

Bank of America will on Wednesday announce plans to start forgiving mortgage loan principal for troubled homeowners who owe more than 120 percent of their home’s value or are battling ever-expanding “negative amortization” loans.

They’re going to knock off the neg-am portions that they have no hope of ever getting anyway?  Not much of a concession or benefit there for anyone.

Seller Optimism Gauge

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.

Sneek and Creep Back to No-Docs?

First Arnie signs in $200 million more free cheese, now this. Although when I receive unsolicited emails I never know for sure how to verify them, so I’ll call this a rumor – but very believeable:


I was just at a conference in NY and they said that the Treasury knows the HAMP program was not working because they were requiring homeowners to sign statements to document their income and no one wanted to do that. The Govt is going to stop requiring that additional documentation of income, and the expectation is that the numbers of mortgages being modified under HAMP will go up significantly.

More CA Tax Credits!

From the latimes.com

Sacramento — After weeks of bickering over how to cut the deficit-ridden budget, Gov. Arnold Schwarzenegger and lawmakers agreed Monday to trim $1.1 billion from mass transit but give new tax breaks to home buyers and green-technology companies.

The linchpin of the legislation is the tax credit of up to $10,000 for first-time home buyers and those purchasing newly built homes. It would take effect May 1.   Lawmakers are setting aside $200 million to pay for it. Buyers can receive 5% of a home purchase price back as a state tax credit, up to $10,000, as long they reside there for two years.

A similar program that passed last year was wildly popular. Buyers snatched up all $100 million in available credits within months.

From Business Week:

In January, the governor proposed a $200 million tax credit that would allow first-time California homebuyers to claim up to $10,000 for new and existing homes. An earlier tax break capped the credit at $100 million only for those who bought new homes between March 1, 2009, and March 1, 2010.

The extension would apply to homes purchased between May 1, 2010, and Dec. 31, 2010.

Sen. Roy Ashburn, R-Bakersfield, who carried the homebuyer’s tax credit bill in the Senate, said there is no question last year’s program created jobs.  “At a time when California’s economy needs a real jolt to get moving … this bill will make a difference,” Ashburn said.

Here is the link to the FTB to apply – they haven’t enacted the new form yet though:


Gully Side

This is the second half of the ‘luz tour, covering the western side. 

At the end of the video there is mention of a flipper who just paid $1,430,500 at the trustee sale on January 13th, and then closed escrow with the new buyer on February 26th for $2,175,000 cash. If you’d like to see photos of it, click here:

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