Closed sales have been booming compared to the same January 1st – April 15th period in 2009.
Though the pending category looks somewhat healthy, it does include the contingents too, so you can figure the fall-out rate to be at least 20-30%.
Detached listings over $700,000:
| Town or Area | Zip Code | ACT | PEND | SOLD/$psf 2010 | SOLD/$psf 2009 | diff # of Sales |
| Cardiff | 92007 | 33 | 6 | |||
| Carlsbad NW | 92008 | 38 | 6 | |||
| Carlsbad SE | 92009 | 111 | 43 | |||
| Carlsbad NE | 92010 | 4 | 1 | |||
| Carlsbad SW | 92010 | 66 | 20 | |||
| Del Mar | 92014 | 124 | 6 | |||
| Encinitas | 92024 | 139 | 41 | |||
| La Jolla | 92037 | 233 | 29 | |||
| Poway | 92064 | 113 | 19 | |||
| RSF | 92067 | 232 | 20 | |||
| Solana Bch | 92075 | 58 | 9 | |||
| RSF | 92091 | 33 | 3 | |||
| PB / MB | 92019 | 75 | 12 | |||
| Univ. City | 92122 | 15 | 4 | |||
| West RB | 92127 | 115 | 55 | |||
| East RB | 92128 | 38 | 3 | |||
| RP | 92129 | 12 | 14 | |||
| Carmel Vly | 92130 | 155 | 44 | |||
| Scripps Rch | 92131 | 60 | 24 | |||
| Totals | NSDCC | 1,657 | 598 |
Let’s check the $800,001+ market next, to see if these numbers are smothered in cheese.
I haven’t closely followed pendings in North county, but from Orange county, I’d put them at about 60-65% short sales as a guesstimate. Do you think the majority of those will close? If so, when? Some have been pending/contingent for more than a year. At what point can we separate out “truly” contingent from those that have no hope of closing in our lifetime (most short sales).
Chuck
Chuck–That would be a good figure to know. I can tell you however, that short sales are nowhere near 60% in North County Coastal–My guess would be closer to 30%–I did check Carlsbad (all zips) and found 104 contingents vs 293 pendings (some pendings would be shorts, but more likely to close than cont). Some of the contingents do have a long market time, so they are suspect. Keep in mind that if a short sale does fall thru, it still might not be considered a piece of active inventory that one can actually purchase.
I agree that contingents are running about 30% of total P+C, but am guessing that more than half of those will fail, and be kicked around for another few months
Wow those stats are just so disappointing. I rember back in 2005, I was giddy with anticipation that the bubble was bursting. It was clear as the day is long.
Speculation ran high on blogs such as this. How much are prices going to fall? 30%? 40%? Even 50%??? The world was our oyster back then. All we had to do was sit back and watch the fireworks as prices come back to us.
I sit here now in mid 2010 a bitter embattled renter. I have had the will to rent beaten out of me. I never, EVER imagined that prices would stay this high this long. In sum, this will go down as one of the more disappointing experiences in my life.
It just wasnt supposed to be this way…
Thank you for this table – it’s a great snapshot that includes area’s you typically don’t list (like UC.)
I like the fact that it weeds out the condos and lower end stuff, too. (Again, useful in a neighborhood that’s bisected, like UC – where the north half, UTC, is condo-ville, and the south half is older SFRs.)
Thanks!
In Riverside, the number of houses marked “under contract/pending” on the low end (houses under $175k, no condos, no townhouses, no land, no multi-unit) is more than four and a half times as many as active non-short sales in the same price category. There are 87 active non-short sale listings and 395 total pending. Heck, all actives, even including shorts sales, only add up to 210.
Agreed, but it is probably not be safe to just consider a failed shortsale an active piece of inventory–it may not even be able to be purchased. While we are considering how shortsales affect the market, we must also look at the “Active” column. “Active” inventory may be overstated by the fact that several “fishy” shortsales, that you can’t acutally buy, are shown in the active column–thus we should actually lower true active inventory. Furthermore, they are skewing the DOM column–raising that number daily as they hang around! What a mess!
Well, the only reason that I point this out is what Geotpf is reporting, and countering what Steve Thomas of Altera was shouting about over on Lansner’s blog the other day… saying that the market is “SUPER DUPER HOT” basically because pendings to actives ratios are so high (except for $1M+).
Unfortunately, some areas are worse than others, but short sales are still a substantial portion of the “pendings” here in OC. And, the problem was exacerbated by the policy change back in 2009 by most of the Southern California MLS rule changes that even short sales with a firm offer be marked as some form of pending. This is skewed the metrics, and made year over year comparison nearly impossible.
My wife and I seriously seriously looked back at the end of 2009 and concluded that there were only 3 types of listings that were active:
1. Short Sales which were reasonably priced but had no chance of ever closing because of the serial refi machine and it’s affect on 2nd, 3rd, and 4th trustees.
2. “Equity” sellers who were so disconnected from the market that they would never get an offer. For most of these, there was seemingly no downturn in housing in 2006 to present, prices simply went up and to the right. Many of them were equity bandits who couldn’t accept a lower offer anyway.
3. Foreclosures, which were sometimes reasonably priced, but constituted less than 5% of active listings because they would disappear off the market within a week of listing by those hoping to “steal one from the bank”.
I have concluded that if we missed the bottom, it was a pretty crappy one and crowded with nimwits, dimwits, and half-wit speculators. I have not seen anything within 10 miles of the ocean that would pencil out as an investment worthy of my housing dollars. Renting has remained a better use of money.
Chuck
Reality of the housing market is that until either the general public, the banks (see mark to myth accounting) or the federal and state governments deal with the debt then there can be no true recovery. We will see little spikes here and there based on spring buying, inventory manipulation or government stimuli but over the long run values must decline. As JTR has already stated the buyers are wise to the game and the banks are sensing this, IMO the next wave of REO starts within weeks.
Julian, what area(s) are you looking at?
I’d be interested in the 800k+ data that you are posting. Thanks.
Julian,
There’s a lot of people that feel the same way you do.
It’s frustrating paying your rent every month. While “homeowners” skate by not paying their mortgage. Living for free in the house you’d buy if you could.
It’s even more frustrating listening to all the housing sob stories from people that bought more than they can afford and now think they deserve some kind of a break.
Hey, ask and you shall receive.
Lansner posted on pendings today.
Seems that of the pendings, 53.2% of all pendings are short sales… which is what I was saying (although it may just be the higher end that I follow has a higher ratio, or something, or the MLS doesn’t show it as short when it’s clear that it is)
Basically, Steve Thomas was showing that below 750K, time on the market was about 1.8 months based on active/pendings ratios. However, if you take out the >50% short sales, and add back in that 25% of those will close in a month (I think that’s super duper optimistic), that changes time on market to more than 3 months. Still, by any standard, that’s hot, which I would say is largely related to the free cheez pulling demand forward.
Of course, by Altera’s math, the $4m+ market is stone dead with market times probably closer to 4 or 5 years.
As AllenM says, “some day this war’s gonna end”. Financial apocalypse wow!
Chuck
Sorry, above notes are from Orange County, not San Diego County!
Julian the vast majority of SD County zip codes are down very significantly from peak prices. Areas that continue to defy gravity are the exception, not the rule. If you are only focusing on one of these small target areas I can see the frustration. But SD is a very large county with plenty of distress.
If you don’t mind how did 2008, 2007, and 2006 looks in terms of sales for these areas. In the areas that went from 30 to 60 I’m pretty impressed but from 2 to 4 or 4 to 10 isn’t nearly as impressive if in 2005 these areas were doing 30 sales during this time and were down 80-90% to start with. It is rather obvious that 2010 has bought out the buyers in the pricier neighborhoods. These are probably people with significant wealth in stocks so they should be feeling pretty confident if they participated in this stock rally.
I agree with the others, Julian. It is widely accepted that “entry level” housing has bottomed or is very, very close to it. If you are a first time buyer, this would be a great time to make the leap while the double cheeseburger is still on the menu.
The wait for mid to upper is going to be a bit longer, the Powers That Be are going to just about any length to keep those prices stable in an attempt to protect the strong hands that just ran into a bit of trouble or are likely to walk away from a what has become a bad deal. Eventually the market will determine where pricing goes. Things are only worth what people are willing to pay for them.
If you thought you were going to see a 50% off sale in La Jolla or CV – good luck with that.
If you thought you were going to see a 50% off sale in La Jolla or CV – good luck with that.
Just a matter of time and patience.
Julian – posts 17 & 18 describe your plight perfectly. Clearly we have massively divergent opinions as to whats gonna happen in the premium neighborhoods. One of them is delusional.
Time will tell which one that is, although point taken – it is now 2010, time is no longer on our sides.
Time IS on your side, much of the debt still remains, very little has been done to address it. Sure many foreclosures have happened but were purchased by just as risky 3% FHA buyers. Kick that can down the road all you want eventually it will be time to pay up. The banks are ignoring the fact that if they had to mark their inventories to market they would be insolvent, they understand exactly the situation. Borrow from the fed window for free, make as much money as possible with the steep yield curve and give yourself insane bonuses before the extend and pretend crashes, you don’t actually think they are delaying the NODs for over 12 months because they’re nice guys do you?
Julian wrote…..
“Wow those stats are just so disappointing. I rember back in 2005, I was giddy with anticipation that the bubble was bursting. It was clear as the day is long.
Speculation ran high on blogs such as this. How much are prices going to fall? 30%? 40%? Even 50%??? The world was our oyster back then. All we had to do was sit back and watch the fireworks as prices come back to us.
I sit here now in mid 2010 a bitter embattled renter. I have had the will to rent beaten out of me. I never, EVER imagined that prices would stay this high this long. In sum, this will go down as one of the more disappointing experiences in my life.
It just wasnt supposed to be this way…”
My sentiments exactly partner!
murf2222
Sure many foreclosures have happened but were purchased by just as risky 3% FHA buyers.
FHA loans are no-where near as risky as 0% down loans with stated income, or neg-ams, or adjustable rate mortgages Surely more risky than 20% down conventional, but they aren’t generally a toxic set of loans. Also, in Jim’s neck of the woods the far majority buyers are bringing huge down payments to the table.
Why aren’t FHA loans as risky with only 3% down? Because you and I are the bank when it gets defaulted on? Real estate does not happen in a vacuum, if the middle and lower range begin to fall again then the upper end will follow eventually, kind of like what’s happening now. Not even CV will be immune, JTR is correct in that come mid summer you are going to have some folks(sellers) peeing down their legs.
JimG
Not if FHA expands up to $10M with the Federal Government giving 10% cash back on closing.
Not if interest rates go to 1% on homes.
Not if Zeus and Thor and Odin and Hercules ride in with pink ponies and bucketfuls of free housing.
If there is one thing I have learned from the past 3 years, it is this. Never, ever underestimate the stupidity and unfairness of government subsidies to homeowners.
The market can remain irrational longer than you can remain solvent. Don’t bet on a rigged game.
Chuck
I agree Chuck and there is no bet involved, just stating common sense. Right now the Feds cannot hope to even service all the debt they issued much less pay it back. The American public has already grown increasingly weary of all the bailout programs and for any hope of a future the Feds must reduce spending, they know it and we know it. Either that or they are planning their own strategic default on US debt.
Jim, Somebody owes money, somebody else is owed money. I am tired of the bailouts but the bond market is lapping up every treasury offered at insanely low interest rates.
I’ve watched interest rates on long bonds drop for over a decade now. Many times along the way people have said “this is it! how can they go this low!?! this is insane!” and then they just ticked lower. The same thing happened in Japan. Japan has a lot of debt and low interest rates. They don’t have as many natural resources or as strong a military as the U.S. With their aging population their prospects for repayment are dim. Yet, the interest rates remain low. Inflation is non-existant. Anyway, if you really can figure out what interest rates will be next year then it’s super easy to make a ton of money. Go for it.
We are living in a time of over-capacity. The fed won’t stop the political madness so long as there is a hint of deflation. The politicians key off of home ownership and housing, and Americans like that. The banks know that and are working it for their own profit.
🙂 Time will tell what happens in the premium cities. The way I figure it, I would LOVE to live in La Jolla. I also figure that the list of people who would also LOVE to live in La Jolla and who have lots and lots more money than I do is….significant. They will willing and able to pay far in excess of what I can, which will likely price me out of that particular market forever or until a wealthy relative I didn’t know I had dies and leaves me a couple million.
Why aren’t FHA loans as risky with only 3% down? Because you and I are the bank when it gets defaulted on?
FHA loans aren’t as risky as zero down stated income loans, or option-ARMS or adjustable rate mortgages in a low interest environment. They are more risky than a conventional loan. They do pay a premium in interest rates and PMI over conventional loans. The second point is that by Jim’s numbers very few homes in his neck of the woods, NCC, have been sold with FHA loans. Most people are putting down huge down payments or paying in cash.
The point Jordan was that if the lower end declines further than the middle tier and upper tier must decline as well.
BTW received a new REO listing from Bank of America today so hopefully it’s one of many. Let the flood begin……
Jim,
You not reporting any longer on Oceanside and Vista.
Any particular reason?
The point Jordan was that if the lower end declines further than the middle tier and upper tier must decline as well.
Not necessarily if the wages of people buying at the upper tier have increased faster than the people buying at the lower tier. Current economic data on wages supports this model. The real price of the house could also go down over the next 5-10 years, instead of the nominal price going down over the next year.
I still don’t think you can make predictions on the high-end San Diego, neighborhoods like La Jolla, based on what the low end did over the last few years. The recession impacted the type of people buying on each of those ends in different ways. In the last 10 years the median wage may not have gone up, but wages for the top 10% did go up over the last 10 years.
Re La Jolla, it’s a tougher area than most to effectively track value reduction in the high end due to the unique aspects of the properties, lack of same-home sales at peak vs. now and also the significant amount of remodels that affect valuation and are tough to gauge. If you toss out the remodels, the evidence I’ve seen indicates about a 25% reduction from peak on most same-home sales, with a few exceptions here and there. That is a very substantial reduction considering the price points found in that zip code.
I used to be of the “LJ or bust” mindset years ago but havng spent more time there over the years I personally am finding it to be over-rated and with plenty of blemishes that are hard to overlook considering the premiums you need to pay to live there. I also think the high end values will deteriorate more. Condos in particular have not fared well and are becoming increasingly cheaper in my view.