NSDCC New Listings & Sales

Our favorite doomer is predicting 15% to 20% drops in pricing net year (link in twitter feed in right-hand column).  Mark has been making these dire predictions for years now, and eventually he might be right.

But it would take surge in supply to start a downturn…..so all we have to do is keep an eye on inventory counts.  If the number of homes increased modestly, sales should respond accordingly.

Where is the balance of too much supply?  It will vary in each area, and be based mostly on price.  You could have 1-2 over-priced homes not selling in one area, and look like a glut, while in other areas have 5-10 well-priced homes hit the market and all get gobbled up.

I’ll speculate that a surge of more than 20% in the inventory counts is cause for concern.  How are we doing so far?

When comparing to the very consistent last few years, a 4% rise in new listings this year stood out.  But compared to 2002-2011, the inventory has been remarkably predictable lately – we even had two years with identical counts:

Jan-Feb NL

In addition, this year’s increase could purely be due to old listings being re-freshed, an annoying trend that seems to be more popular than ever.

Can we learn from the sales count too?

Absolutely, and any drastic swing in the sales count is the ultimate sign of demand.  We will still have late-reporters adding to this year’s count, which should easily get it above the 2015 sales:

nsdccsales

As long as rates are in the 3s, we should be fine this season!

rates mid feb

Entry-Level

Recently we’ve wondered how many first-timers are participating, but actual data has been scant. D.R. Horton says that 41% of their buyers are first-timers, which is probably similar to the resale market and sounds fairly healthy:

firsttimers

Here are the current market conditions through the eyes of D.R. Horton:

LINK HERE.

Check their #3 point. Entry-level sales are growing because the builders are getting better at devising new products for first-timers.

Frenzy Comparison

The last time the market took off, it was for different reasons (easy money, shorter-term thinking, and more move-ups), but the market psychology should be similar this time around – because buyer exhaustion is inevitable.

Here is how it looked then – during the first part of 2003 you could feel the market bubbling up, and by summer it was evident in the closings.

From June, 2003 to May, 2004, average pricing rose from $331/sf to $469/sf, which is a 42% increase:

graph (27)

Here’s the SD Case-Shiller graph, which reports three months late and documents the whole county, which lagged behind the coast:

Case-Shiller Home Price Index: San Diego, CA Chart

Case-Shiller Home Price Index: San Diego, CA data by YCharts

The big difference this time is that while it feels like a frenzy with prices increasing, the overall stats are far more moderate than last time. Comparing last July’s $366/sf to last month’s average of $420/sf, the increase is 15%:

graph (28)

This frenzy is focused on the quality properties, which apparently doesn’t float all the boats higher this time (or at least not as high), and the fraud is keeping a damper on the statistical increases too.

If a frenzy can stay red hot for about a year, then we should be wrapping up this version shortly – probably in the next couple of months. Future pricing trends should fall more in line with the averages (sub-10% annually), with an occasional outburst.

When to Buy / Sell

The recent frenzy has been frustrating for buyers – should you wait-and-see?

The history of the median sales price shows that there is usually some softening around Dec/Jan – that is, up until this year:

US Median Sale Price

The demand feels extremely deep because there are so many lookers and offers – but not everyone is willing to pay these prices.  It is probable that the demand is truly deep at 90% of today’s prices – back where prices used to be.

Will buyers keep stepping up?

Most likely, as long as the list prices stay within reason, and there are few choices.  San Diego inventory is down 1/3 year-over-year, which is given sellers free reign to push list prices higher.

You can see below that sellers might be reaching their ‘jump the shark’ moment, with both the inventory bottoming, and the list prices on the higher-end rocketing skyward (+16% since December):

http://www.deptofnumbers.com/asking-prices/california/san-diego

This is a great time to sell – even better if you have neighbors who have closed for high prices in the last 30 days!

Comparing to the Last Peak

How are we doing, compared to the ‘peak’ years?

To capture the latest frenzy, let’s use the March 1st to April 30th period, and reflect back to see how the numbers stack up compared to previous years:

graph (23)

Today, both sales and pricing are increasing at the same time – similar to the 2003-2004 era, which was the hottest market in recorded history.

This year we had the fourth-highest sales count, and an average cost-per-sf similar to 2004.  Average pricing is only 14% behind the peak year of 2006!

With sales being a leading indicator, it appears that pricing should continue to climb.

For those who prefer a bar graph, here are the same numbers:

graph (24)

More Inventory Coming?

An excerpt from HW:

Any homebuyer on the market right now will tell you the crowd of buyers and multiple offers are creating a challenge.

Those in search of distressed homes owned by the U.S. Department of Housing and Urban Development are not immune to this supply-and-demand situation. In fact, recently one HUD home in San Diego attracted 100 offers within 10 days.

“In this market, because it’s so competitive we’re seeing buyers just happy to get a house. They are being less selective on location and condition,” said Whissel, broker/owner of Whissel Realty.

But in its latest news report, RealtyTrac reported that an uptick in homes owned by HUD may create opportunities for patient buyers.

Experts project that over the next two years, as lenders steadily work through a backlog of foreclosures delayed by foreclosure-processing reviews, the supply of these HUD homes will increase significantly.

HUDdata

In the western part of Riverside County in California, HUD-owned home sales are increasing significantly.

“HUD sales have increased due to the hold back of bank-owned homes for robo-signing reviews, and, most recently, the Homeowner Bill of Rights,” said HUD local listing broker Nat Genis.

Genis added, “Inventory is there, just not being released during the banks/servicers review of the loan/mortgage documents.”

Read more here:

http://www.housingwire.com/news/2013/04/29/hud-homes-add-inventory-starved-market?utm_source=feedly

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

For those hoping for more inventory, it’s good to see that the recent foreclosure activity around San Diego appears to have been going in the right direction over the last couple of weeks:

San Diego County Filings

“Smoking Hot” Market

Rich is the king of graphs, and here are two from his latest at Piggington:

The median-price-per-square-foot since the 2009 trough:

Piggington march_2013_housing_data

OK, you can probably ignore the huge spike in the condo psf, as the condo series tends to be all over the map.  But how about that (much more reliable) detached home psf — up 4% for the month, and 18% year-over-year.

JtR: Here is the big change – how quickly good listings are getting snapped up, which is keeping the county’s active inventory down to about 4,000 OPTs:

Piggington march_2013_housing_data-10

See his TEN other graphs, including the Case-Shiller predictions, here:

http://piggington.com/march_data_rodeo_housing_market_smoking_hot

Pin It on Pinterest