We saw the Pacifica REO on the previous post, and here are three four other REOs around the same price point (half-million) in Encinitas. Once they are closed, they should make for excellent double-dip banter if they end up selling for well under list price.
But take a good look – would you be surprised if you hear that they end up selling for less?
What are the ingredients for a double-dip?
We could say that declining sales would be a precursor, and a downward trend in pricing would be an obvious sign. But the best signal would be houses on the market but not selling, listed for the same of lower prices than recent comps – or last year’s comps.
| Town | Zip | Oct ’09 Sales/$persf | Oct ’10 Sales/$persf | ACT listings/$persf, LP |
| Cardiff | 92007 | |||
| Carlsbad NW | 92008 | |||
| Carlsbad SE | 92009 | |||
| Carlsbad NE | 92010 | |||
| Carlsbad SW | 92011 | |||
| Del Mar | 92014 | |||
| Encinitas | 92024 | |||
| La Jolla | 92037 | |||
| RSF | 67+91 | |||
| Solana Bch | 92075 | |||
| West RB | 92127 | |||
| RP | 92129 | |||
| Carmel Vly | 92130 | |||
| Scripps Rch | 92131 | |||
| Total | All |
The average list pricing shows how insane most active (un-sold) sellers are – they are way above market. What is worse is that no one really knows what list price it would take to be attractive to a buyer – all we know is that their current list price is wrong.
Take a good look at 92009, 92010, 92129, and 92131 – areas where the current average list pricing is within striking range of the last two Octobers, yet a lot of homes not selling.
The mainstream media, hungry to proliferate the most negative news possible, is struggling to see an actual housing double dip. So cnbc.com has decided to just go ahead and call the “double dip“.
Here are excerpts:
Sellers on the market today have cut $29 billion off their collective home equity. (they didn’t lose equity, their list prices were too high!)
They say today’s buyers are only looking for great deals, so if you price the home at its actual value, nobody’s interested. You have to go below. (huh?)
Some of you responding on the blog yesterday said that your markets are just fine, even seeing competition in offers again; I’m sure this is true in many local areas. The trouble is that those areas are in the vast minority. Unless we see a marked, widespread increase in home sales over the next several months, prices will go from flat to down once again.
The last sentence is old-school, and today’s market environment is going to continue to baffle those who can’t shake off the past.
1. To begin with, we don’t have an accurate way to measure pricing when some houses/areas sell for more, and some sell for less. The Case-Shiller is too general and vague for me. But that’s not stopping Diana from talking her book, insisting that prices will be going down.
2. Regarding her last line, in today’s world we CAN have sales can go down and not affect pricing. Why? Because no one HAS to 
move. If you are in distress, you can stop making your mortgage payment and stay for a year or two. Back in the day when banks would foreclose on you, it was different – we had regular market clearing. Not now.
3. If the housing market got worse, the government will create a new basket of cheese.
Considering Dataquick’s report yesterday on the August sales, our market is looking pretty good. When all we’ve been hearing about is the lack of demand, in San Diego County it seems there were plenty of sellers who were able to get their price right:
The housing double dip, and for that matter, ALL real estate market conditions should be discussed on a case-by-case basis. It’s local!
(hat tip to clearfund for pointing this one out!)
This interview with Robert Shiller is 20 minutes long, so here are some markers:
4:00 – He suggests more government intervention, particularly with regards to job creation.
14:00 – Housing forecasters are predicting that ‘nothing’s going to happen’ over the next few years.
17:00 – Deflation will be on and off.
18:20 – Bond bubble = flight to quality
This video has Yunnie saying that the sky may not be falling, which proves that he reads here.
Larry, the next time they stick a microphone in your face, say that the problem with the record-high inventory is that the sellers are crazy about their list prices! Lower prices will fix anything!
Everyone is looking forward to the existing-home sales data coming out Tuesday:
Hat tip to SM for sending this over, from our friend Nick at the WSJ:
Is this what the beginning of a double-dip feels like?
The number of homes listed for sale grew in many U.S. cities in July, a month when inventory typically declines.
The supply of homes available for sale in 26 major metropolitan areas at the end of July increased 2.6% from one month earlier, the seventh straight month-over-month jump, according to figures compiled by ZipRealty Inc., a real-estate brokerage firm based in Emeryville, Calif. The figures include all single-family homes, condominiums and townhouses listed on local multiple-listing services in markets where the firm operates. (See the data.)
Nationally, inventories typically decline in July as the big spring sales months give way to a more sluggish summer. Zelman & Associates, a research firm, says July listings have typically fallen by 0.8% from June over the past 28 years.
Compared to one year ago, the July inventory in the 26 markets covered by ZipRealty was up 7%.
Western markets continued to see the largest monthly increases in inventory, led by a 9.6% gain for Las Vegas, 7.9% for Orange County, Calif., and increases of 6.3% in San Diego and the San Francisco Bay Area.
Markets with an increase in inventory also saw declines in list prices. Median list prices fell by 3.6% in Phoenix and San Francisco, and by 3.3% in Las Vegas, from the previous month.
“We just don’t have as many people out actively transacting,” says Pat Lashinsky, chief executive of ZipRealty. “They’re waiting, they’re looking, they’re seeing homes, but they’re not buying.”
California cities also had the largest annual increases in housing inventory: San Diego (53%), Orange County (32%), and San Francisco (28%).
Compared with the previous month, inventory fell in just two markets—Boston and Charlotte, N.C.
Many housing markets face the prospect of additional inventory as banks repossess homes through foreclosure and list them for sale. Meanwhile, housing markets that have seen steady home price recoveries may have more “pent up” sellers who have decided to test the market after sitting on the sidelines for years.
I think there will be a very high rate of cancelled listings in November and early December. JtR
All that is really needed for a double dip is for the arrogance of the sellers (and listing agents) to get so strong that it turns off the buyers, and nobody is left to play:
It could have been that the flippers, all on a good run, decided to go on vacation this week – and didn’t coordinate their plans with each other? If it wasn’t some quirky oddball coincidence, then maybe they’re getting nervous? That’s hard to believe, because this one seems like a no-brainer. A good reminder – be looking when everyone else isn’t:
How are we going to know if we have a double dip?
What is a double dip?
Investopedia defines a Double Dip as: “When gross domestic product (GDP) growth slides back to negative after a quarter or two of positive growth. A double-dip recession refers to a recession followed by a short-lived recovery, followed by another recession.”
Let’s apply that to the real estate market.
Would 3-5 months of steady negative Y-O-Y numbers and heading for previous lows be considered double-dip-ish? If we hit previous lows, or lower, we’re double-dipping!
It’s all local, but here are the SD County detached numbers so you can see what it’ll take to double-dip. Sales tend to taper off around the holidays, so there is some seasonality to the numbers.
To be in double-dip territory, the SD County detached sales around year-end would be approaching those of late-2007 and early-2008, when they were under 1,000 per month for five out of six months (see below):
The pricing low spot was $209/sf, in March, 2009 (see below). If we get into the low-$200/sf range again, we’ll be in the dip-a-roo zone. If you want to apply it to your local area, compare to comps from the early-2009 era.
If both sales and pricing do the double-dip, we’ll call it full collapse.
Of the two, sales are the leading indicator.
This month’s sales look like they are going to be down substantially, there are only 1,308 detached closings so far with three business days to go (plus late-reporters). But those are averaging $262/sf, which is 25% higher than last year’s low.
There were 1,711 sales in June, 2007, and 1,748 in June, 2008 – the recent low spots for that month. With the federal tax-credit wrapping up, we should exceed those, but not by much.
Are you looking for an experienced agent to help you buy or sell a home?
Contact Jim the Realtor!
CA DRE #01527365, CA DRE #00873197
