A reader who stopped by yesterday noted how the shortage of inventory is not just a San Diego problem – the phenomenon is happening across the country. 

He suggested that it is more than just a seasonal change in local real estate markets, instead that it is a full-blown shift in American macroeconomics.  Could there be a societal shift in the works? Let’s examine some of the particulars.

First, the new listings coming on each month.  In January, we started out with at least 10% fewer listings than in recent years, and have stumbled along with remarkably-few new listings each month:

At the same time, buyers are gobbling up the good and decent buys (in San Diego County there are 10,261 listings marked contingent or pending) and the active inventory keeps plummeting – literally almost cut in half in less than two years (thanks Rich T.):


Is there one reason, or a combination of events, that is causing fewer listings to come to market? Do they reflect bigger changes in society?

A.  We saw in the previous post that more loan modifications are being completed (now that they have tweaked the qualifications so most anyone who applies will get approved).  All distressed-home categories are in decline – here are the SD County counts per month of each:

Type Jan ’12 Feb ’12 Mar ’12 Apr ’12 May ’12
REO listings (MLS)
Short-sale listings (MLS)
Trustee Sales (FR)
Cancellations (FR)

(From Sandicor MLS or ForeclosureRadar)

The new issues on NODs are running fairly steady, but we don’t know how many of those are recycled old defaulters – I regularly see the same suspects on the new default lists. 

B.  Have those folks in real distress already been relieved of their homes, and now we’re just down to those in a comfortable, or semi-comfortable financial position?  Most residents probably have no intention of moving (less than 5% of San Diegans sell their house each year), and those who have hung on this long might make it through?

C.  Of those who are just hanging on, how many are successfully learning to adapt – by either renting out the home, or modifying it in a way that makes it more suitable, eliminating the need to move?

D.  Are we still in the early stages of the baby-boomer generation needing to move?

E.  Has the mortgage underwriting guideline known as the Anti-Buy-And-Bail rule effectively killed the move-up market, squashing the dreams of growing families?

F.  We thought that we’d see more sellers flood the market with every sniff of rising prices, but it’s been the opposite so far.  These conditions are ideal for prices to appreciate – will more seller eventually come to market once they hear the good news?  Are they solely waiting for higher prices?

Did we run out of sellers, before we ran out of buyers?

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