Remarks from page 42 of the C-S May Survey of real estate agents (mostly new-home sales):
Traffic fails to meet expectations.
Buyer traffic came in short of agents’ expectations in May, as our traffic index fell to 20 from 52 in April, short of a neutral reading of 50, pointing to traffic below expectations (readings lower than 50).
70% of agents said traffic was below expectations, 20% said it met expectations, and 10% said it was above expectations.
Prices and incentives stabilize.
Home prices stabilized in May, as our price index came in at 55 (from 69 in April), in-line with a neutral reading of 50, pointing to sequentially unchanged prices (readings greater than 50). 50% of agents said prices were unchanged over the past 30 days, 30% said they increased, and 20% said they declined.
Meanwhile, sellers kept incentives steady in May, as our incentive index came in at 50 (from 39 in April), with readings of 50 suggesting stable incentives over the past month. 78% of agents said incentives were unchanged, 11% said they were lower, and 11% said they were higher.
Length of time needed to sell a home increased – a negative indicator for future pricing trends.
Our time to sell index came in at 25 in May (from 58 in April), falling below a neutral reading of 50, suggesting an increased time to sell over the last 30 days.
50% of agents said the time to sell increased, and 50% said the time to sell was unchanged. We view the longer time to sell as a negative indicator for future pricing trends.
Comments from real estate agents:
- “The tax credit ended. It helped April, but left May dead.”
- “The tax credit brought buyers into April, and left nobody for May.”
Standard Pacific and Lennar have the greatest exposure.
Standard Pacific has the most exposure to the San Diego market, as it represents approximately 5% of the company’s sales. San Diego represents 1% of Lennar’s sales.
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Here’s a review of SD detached listings from the MLS:
| SD Det | May ’09 Closings | Apr ’10 Closings | May ’10 Closings | May ’10 New Pendings |
| # of | ||||
| $$/sf |
A whopping 4% increase for the number of May closings, Y-O-Y, and it looks like slowdown ahead with May pendings indicating fewer sales in June/July (much like last year). Will it pick up towards the end of summer?
“Will it pick up towards the end of summer?”
Probably the only pickup will be JTR’s Chevy (with a Corvette motor) on a F-tour.
The only hope for the bulls at this point IMHO is much lower interest rates. Something like a 4% 30 year fixed might get things flowing again. The 10 year treasury yield is back down to 3.2% so who knows.
Lowering interest rates is a short-term solution.
This, of course, depends on how short is short. Lowing rates may save some people today, but it only pushes the problem down the road. I guess if you push the eventual problem onto someone else, what does it matter, right?
$100k tax credits for all!
You know I think the govt should somehow allow people who are upside down to refinance.A lot of people are screwed right now because they have negative equity and cannot refinance.If they really want to help people allow people with good credit and jobs to refinance and take advantage of these low rates.A lot of people have interest rates at 7% but are stuck.If they could refinance at 4.5 – 5% it would keep a lot of people in their homes.
But how would the squid make any money? Can’t let the squid starve.
“Length of time needed to sell a home increased” does that factor in the actual days an address is listed (and relisted) or going strictly by the MLS#?
Think positive!!!
Perhaps some of those whopping 20K newly employed will be out buying homes this month. That works out to at least 66 or 67 for North County.
BP is going to be hiring a lot of people to plug what well and clean up over the next decade!
The lawyers are going to be busy and The Fed could help the deficit with massive fines to BP.
Bayou Real Estate experts out there?…anyone?
Heard today of floating “Crude Balls” down there, what a mess!
tweeter-“You know I think the govt should somehow allow people who are upside down to refinance.A lot of people are screwed right now because they have negative equity and cannot refinance.”
I know a lot of people who saved up to buy, and now are very frustrated that the government keeps handing out to those who didn’t save and then buy.
Moral hazard at its best.
Jim, have you ever written/video-ed any tips about how to become a real estate agent?
Not interested for myself, but I have a friend in her mid 20s who is interested and who would probably be good at it. Anything she should read, any recommendations you have to get someone into the business the right way (which, if I can say this without sounding too much like a suck-up, I would define as being the way you do it)?
I agree with tweeter. I know this is in hindsight and 20/20 but I think the government should have either completely taken over the mortgage market or just stay out of it completely. If early on in this process they would offered everyone (whether an existing underwater homeowner or prospective buyer) access to a 30 year fixed rate mortgage at 4% and made the loan full recourse (like student loans) they could have kept a lot more people in their houses. If a homeowner chooses not to take the deal or still cannot afford the payment then the house should be immediately foreclosed on and sold to the highest bidder.
With my solution, if the banks made a decent loan and the homeowner can afford the new payment, the bank gets payed in full. If the homeowner cannot afford the house at 4% then clearly the bank made a bad loan and should be forced to immediately liquidate the asset at market value.
Totally agree with your solution, pemeliza.
The only problem with it is that the bankers wouldn’t get their cut. For that reason, we’ll never see common-sense solutions like yours enacted.