The unseasonal drop in inventory doesn't make sense, unless you attribute it to increased purchasing activity. In other words, inventory is being absorbed by buyers at a faster rate than new listings are coming on the market. If I were a strict doom an gloomer, I would attribute it to expired listings and frustrated sellers.
However I am sticking with the positive explanation because prices have a lot to do with sales activity, and there is sufficient evidence that prices are finally getting back to reasonable levels. Back in April of last year the median home price was $439,500. Fast forward one year, and that median has now dropped to $311,900 according to housing tracker. We have come a long way in a short while (almost a 30% drop).
Of course, this theory is largely driven by my gut. As an average move-up buyer, if I am seeing attractive properties in my price range, I assume others are as well. If we are antsy to become a homeowners once again, I assume others are as well (for instance, one of my favorite bloggers has recently taken the plunge).
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Although I do see pending sales activity picking up, this is normal for Feb./March, recalling that closing last March represented the high point for the calendar year. (And of course, assuming that the pending sales actually close ... In CP many are falling out of escrow.)
I attribute the decline in inventory to a shift in who the sellers are ... Although an over-generalization, the only people who are trying to sell now, are those who must sell, sellers in trouble or lenders. During most good times, there are some "listings" that are merely out there to see if maybe a house will sell for a lofty price. Although I have no evidence, I suspect there are few listings now where the sellers are "testing the water."
Watching the Countywide listings, they actually declined for about a month before ticking up again in the last couple of weeks ... whatever that means.
Along that same line, I kinda see the following scenario playing out.....
Once the MSM gets wind of more sales (year over year numbers will look very appealing because last year was rather dismal)....it will be plastered all over the world, upon hearing this, all those sellers who have been waiting for the market to improve, will then flood the market....putting us right back where we started.
AB--I was just noticing the same thing. I thought maybe it had something to do with Expired/Withdrawns, so I ran some numbers.
Withdrawn/Expired Listings
Dec 1, 2006 - Feb 28, 2007 - 9,040
Dec 1, 2007 - Feb 28, 2008 - 8,962
At present, we have 3,868 pending sales, which is up from 2,812 as of 1/5/08.
I'm seeing a lot more activity in the lower price ranges, but not much in the $500K+ ranges.
Check out the sales activity comparison for the following two timeframes:
12/1/06 - 2/28/07
By Sales Price
>100K - 21
100K-199K - 258
200K-299K - 856
300K-399K - 1417
400K-499K - 749
500K-599K - 376
600K-699K - 201
700K+ - 276
12/1/07 - 2/28/08
By Sales Price
>100K - 106 (+405%)
100K-199K - 731 (+183%)
200K-299K - 1237 (+45%)
300K-399K - 958 (-32%)
400K-499K - 398 (-47%)
500K-599K - 187 (-50%)
600K-699K - 97 (-52%)
700K+ - 127 (-54%)
My theory (and why I guessed lower inventory back in Jan on the RSVP)
- the banks capitulated at the beginning of the year, causing higher number of REO sales mainly at the low end where rents cover expenses.
- the lower short term rates are reducing the number of people that need to sell.
- people that don't need to sell aren't trying any longer.
In summary, it looks like rate of decline should be slowing this coming year.
Thanks AB!! You're the best.
I am seeing the same pricing trend (PS under 500k) here in El Dorado Hills and Folsom, and Paul has also confirmed in Cameron Park.
Its a good sign though, it means the food chain is mending. Cause move-up buyers can't move, unless they have a first time buyer to sell to.
Sactia -
In fact, I actually looked up your RSVP, cause I was gonna give you some public kudos on your prediction... so far you are tracking much better than the rest of us.
Many of the lenders delay foreclosure paperwork during the holidays because the last thing they want are stories of people being thrown out of their homes over Xmas. I also think the lenders are just flat out swamped and can't process REOs fast enough.
So things slow down in early spring then pick back up. This was the case the last 2 years I was really looking. I had about 5 houses I was watching go pending in this Jan and 3 are back on the MLS already.
We also decided to go with a homeownership program that will get us some great rates. The first workshop was interesting because they also have a 'homesave' program. I have never been surrounded so many FBs. Out of 53 attendees, about 1/4 were there for purchase money. Everyone one else was desparate for refis. The refi money for this program had run out already but still they came hoping to get in line for the next phase.
So my question is how many people have withdrawn from the MLS because they are realize the S/S won't work and they are just either bidding time until some program will bail them out or just going delinquent and waiting to be forced out?
a homeownership program? not familiar with this?
Thanks, AB, that was a very enlightening comparison of market trends.
When I first rented up here in EDH, there were really no houses listed for less than 450K and darn few less than 500K. Those same types of houses, older areas like the one I rent in, are now listing at just over 300K to 375K. No mello roos, no hoa's, fully landscaped and/or large lots. In the 2 years we've spent up here, we've adjusted to what once seemed a laughably insular white-bread culture. In my MMORPG archetype social designator, EDH is the "Land of the High Elves". We've made some friends, found the rockin' SCA Shire of Mountain's Gate, and the lower housing prices added to this encouraged me to add EDH Co. to my weekly survey. The downside is cost of commuting, PG&E instead of SMUD, worries about the moral fiber of habitual patrons of Masque, and asbestos.
Email me PR. I don't want to give out the name of the organization because I'm not sure how I feel about it yet.
Another 15 homes in EDH went pending last week, bringing the total over the last 3 weeks to 54 and continuing the uptick trend. Seasonal? Dunno.
One thing also to take into account is what's happening with new home construction in the greater Sacto area. I see in various places emphasis on the inventory of existing homes, but it seems to me that this paints only a partial picture of things. How much has new construction dropped off, and does such drop-off balance out, to some extent, the increase in resale home inventory that's accummulated over the last year, etc.?
"Another 15 homes in EDH went pending last week, bringing the total over the last 3 weeks to 54 and continuing the uptick trend. Seasonal? Dunno."
I would say yes. 55 is the average number of March sales in EDH over the last 5 years, according to the DQ data I have accumulated.
The last 5 years would include in that average the big bubble years. Comparing the current info for 08 with corresponding info pertaining only to the last two years (e.g., 06 & 07) may give a better idea of the extent to which what's occurring this year is merely a seasonal uptick or an indication of some non-seasonal stirrings in the bust era.
Seems like everywhere I go, I hear folks talking about real estate; in a way that seems there's a great deal of pent-up demand. There are a few houses on my block, including next door, that have experienced much more traffic. Oh, there are people just itching to buy.
But the snowball was only stuck on a ledge. The pressure will push it over, and the velocity of the downturn will pick up. Volume is good for RE agents.
volume in pending sales, that is.
1. First (and not last) dead cat bounce.
2. 50% of buyers are still speculators looking to cash in once the market 'recovers'.
3. REOs not all being listed.
4. Conservatively speaking, at least 40%-50% of the houses built in the bubble period were EXCESS. With current population trends, this excess will not disappear anytime soon.
Made a lowball offer on a house that has been on market for 5-6 months. Was just sitting there with no interest.
After, my offer submittal, I found that bank accept an another offer that came in. No worries, there are more fishes in the sea.
However, strange that a stagnant repo home would suddenly have a buyer when I made an offer. The spring buying fever is alive and well. I have a nagging feeling, it is wanna be RE investors snapping up these homes, not true buyers.
Anyway, this pickup in sale will not pass through the summer. It will fizzle soon enough.
We had a stagnant REO go pending in the last week. It had gone down about 25% in asking price, which was 40% less than the last buyer paid (which was an RE0 at the time, 2 years ago). We also had a short sale come back on the market after being PS for several months. The new asking price is $80K HIGHER than the last asking price. I guess the bank won't allow them to go that low. 95765.
There's plenty of real buyers out there...which is needed for the market to move....further down.
Alba-- Is it possible that the Pending Sale came back because a flipper bought it and has turned it around to re-sell at a higher price? I have seen that in CP ... I still see flippers buying here and then immediately putting the house back on the market at a higher price, with or without fixing it up at all. So far, I haven't seen any of the recent flips actually close escrow on the resale, but they haven't given up hope.
We had some sales in late summer and fall in Woodland I had watched to see what they would close at. I'd say maybe 2 out of 7 seem to be owner occupied. The rest were either sales back to the bank (going REO) or they were dumped on the rental market.
We don't seem to be making headway on occupancy. I really is just rearranging the deck chairs.
I know we talk about it all the time but you find another on CL like I did, it just brings the point back home again.
the PS came back on the market without the RE agent even resetting the listing. 221 DOM.
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