The shortage of inventory during the prime selling season is astonishing – we haven’t had a spring like this in recent history.
Compare the new listings of detached homes in the North SD County Coastal area (Carlsbad to La Jolla) that hit the MLS between April 1st and May 7th, and closings during the same period.
NSDCC New Listings vs. Closings, April 1 – May 7
| Year | # of New Listings | # of Closings | Ratio | New Listings LP $/sf-Closings $/sf | LP-SP Gap |
| 2000 | |||||
| 2001 | |||||
| 2002 | |||||
| 2003 | |||||
| 2004 | |||||
| 2005 | |||||
| 2006 | |||||
| 2007 | |||||
| 2008 | |||||
| 2009 | |||||
| 2010 | |||||
| 2011 | |||||
| 2012 |
If sellers can live with today’s prices, it is a great time to sell!
I think the pricing gap shows who is in control – the bigger the gap, the more critical buyers are being about getting a deal.
do you think inventory is being held back on purpose by the reo machine?
Astonishing! The banks are colluding & keeping foreclosures suppressed. And the government won’t prosecute.
I don’t believe that we’re having significant holdbacks on REO. I believe that current market strength has everything to do with lifetime, historic low interest rates and liquidity.
If anyone is gearing up for inflationary pressures, land and housing is one of the best places to be… forget gold and precious metals, those are crisis hedges, not necessarily inflationary hedges. Besides, they’re expensive in relative terms. Houses in much of coastal California (by way of monthly payments), on the other hand, are quite inexpensive on historical terms.
The word “foreclosure” today has such a negative association , that the local ,state , national goverment and banks are doing whatever they can to avoid foreclosing at all costs.
Case in point – Las Vegas market. Infamous AB-284 has created a inventory shortage of 2004 proportions. Where typically we have 150 NOD’s(notice of defaults) filed a day. Yesterday we had 2 and are averaging about 4 a day. There are 5200 available homes on the market, 16100 in escrow and under contract! and because they are all being bought by invetors- there are 7000 active rentals available fighting for the few availble renters (1000/month gets you a great rental in good area). I just received 56 offers on one REO that was available- Cash only -as it has mold. I received these offers in 3 days.
Sellers- In San Diego- here is your opportunity to get out- take it before the window closes again late fall /early next year.
Andrew, how much have Vegas prices gone up this year?
Am I missing something here? Wouldn’t housing starts numbers play into this inventory equation?
Yes, “inventory” could be seen as tight- but to compare it year over year would not be comparing apples to apples?
Hard to articulate- but if we say 2000 is pre-bubble and “normal”- i.e. a good baseline- then today’s ratio seems normal. In fact you could say we have further to go as migration numbers to CA are different today than in 2000?
Interesting Vegas info Coronadoandre
Jim,
Our shortage appears to me to be primarily demand driven here in Orange County. There are very few foreclosures, and I don’t see a lot of distress like I did in 2006.
Jumbo loans at Wells Fargo are quoted at 3.875 with 3/8 points. You can nearly get the same pricing as super conforming.
This has fundamentally changed the buy/rent calculation for houses that were unaffordable at 5.5% a few years ago.
720K loan at 3.875% = $3,385 P/I
720K loan at 5.5% = $4,088 P/I
869K loan at 3.875 = 4,088 P/I
Due to interest rates, jumbo buyers can afford almost $150K more today than a couple years ago for the same payment. This is ON TOP of the price decreases.
I used to be a raging bear on housing, but at these prices I’m finding myself way more bullish. I’m too conservative to be a raging bull, and frankly, noone knows where future pricing is going with demographic shifts that will happen.
Chuck
Jim
The Las Vegas median prices are up 4% over March and over 2 % from April 2011 thus far. However this is only closed sales. Most accepted contracts right now are 10% over asking prices- So I predict you will see a 10 % rise in vegas median pricies this year.
http://www.lvrj.com/business/las-vegas-home-prices-rise-with-fewer-homes-for-sale-150558035.html
We saw this in the lower end when the tax credit was expiring in 2010. I remember 92126 was around 80 actives vs 50-60 per month sold spring 2010.
There’s no denying there’s a mad dash into real estate right now. Whether it’s respected analysts calling bottom, low interest rates, inflationary fears (QE3 coming), or just a better mood about the economy, it’s happening.
I’m a little skeptical about this bull rush maintaining itself, but you never know.
Chuck….I like those numbers too.
But let’s say I buy a house today. Everything stays equal for the next 5-10 years EXCEPT rates-they go up.
I would now have a much smaller crowd of qualified buyers at that hirer monthly payment- right? i.e. don’t look for appreciation gains in a higher rate environment. (note I am not expecting higher rates to mean we have a booming economy- wage gains etc)
Let’s imagine the future.
6 months from now:
Las Vegas prices up 10%
Phoenix prices up 10%
San Diego prices up slightly
Increasing sales in all areas
10 months from now:
Election is over, and buyers are getting anxious with so little inventory to consider, and rates still low. Sellers smell it, and hold out more.
Isn’t that an environment that causes appreciation?
It has in the past, but buyers have been very cautious/conservative. The market will probably be decided by the banks, and so far their drip system has worked masterfully.
Anon:
Yes, but a better economy is the most logical way we’ll see higher rates. Better economy means wage increases.
The conservative buyer is not as concerned with price appreciation to speculate. It is focused on a lowest cost of ownership coupled with an aggressive amortization of debt. At 3.875 $720K 30 year fixed loan, more than $1000 is going towards principal pay down each month from day one. And, that’s fixed for 30 years, the Cadillac of low-risk financing.
It might not appreciate, but I don’t see significant downside risk from here. Couple that with $1000 per month in forced savings (not to mention possible tax benefits as well), and yes, the equation has changed from 2 or 3 years ago.
Just my opinion.
SD County:
Active listings: 6,953
Contingent: 4,656
Pending: 5,577
Total: 10,233
Can’t believe I wrote “hirer” instead of “higher”! LOL- Been reading too many unemployment articles.
But I think the odds of higher rates coming from too fast of GDP growth is much less likely than higher rates from some other cause.
Amazing the amount of money that goes towards principle starting at month one!