San Diego Housing Bubble News and Analysis

I have a theory that there is some pent up demand, which we are seeing now.

There is a finite supply of this, however.

google the words

layoffs

job cuts

income cuts

salary freeze

Foreclosure trends

Biotech bankruptcy

Missed payment trends for mortgages

credit card default

small business bankruptcies

The economy is navigating through a mine field with enough black swans circling to blot out the sun!

La Jolla & PB still have lots of downside risk as they didn't decline much in 08. Tons of inventory.

Uptick is temporary. Unemployment is the driving factor at this point. Impossible to sustain growth in housing in a bad job market.

This didn't come as a total surprise because inventory is almost the tightest in the last 12 months. The question is with the spring coming, would the banks start to release the inventory or they are still hoarding them for Tim Geithner to take them over with his 2-trillions bad asset plan in work. And you know that when the government gets hold an asset, even with their best intention to sell, it will take them months to get started as they need to read through their 616-page job description first.

People do tend to confuse hope for belief. It is a sign of fear and it is nothing to be ashamed of.

The key is to look at Months of Inventory and to assess
the foreclosure inventory.

with jobs roaring out the window and foreclosures sitting in
inventory, i'd stay cool

How crappy is San Diego's job market?

I thought it was better than most of the state.

Arraya hit the nail on the head.

Employment is the fundamental for real estate and RE won't hit bottom until after the UE numbers top out.

Nokia 1700 jobs gone

Banks are keeping a large number of foreclosures off the market to create a sense of scarcity.

Crappy.

That is true, but still very crappy, and still worse than a majority of the states outside of CA. 8.6% is not a healthy number.

http://www.sandiegoreader.com/weblogs/fi...

http://www.bls.gov/web/laumstrk.htm

Unemployment is up because people aren't spending money.

People aren't spending money because they are scared.

They are scared because their house values keep falling and their stock market portfolios lost 50% in 18 months.

Stock market is 50% off the peak in 18 months, even though GDP growth was positive during most of these 18 months, and there was a single quarter of contraction during which the economy contracted whopping 0.9%. Why? Because everyone is afraid of prolonged recession, everyone assumes that house prices will keep falling for at least one more year, and fall additional 20% to 25%.

And then there's an uptick in housing prices.

you know, I don't know what all the hub-bub is about. Maybe it's just the areas I follow and the price ranges I'm looking at, but I see *plenty* of inventory and many nice properties within that. And the prices continue to tick downward.

According to some of our "men in the street", it's real slim pickin's out there, but I just don't see it.

It might be near the bottom at the lower end, but the rest is still falling.

I read the dataquick numbers today as well. It is not surprising to me at all.

Some of us have been crowing about the fact that sales have increased and yes that inventory is poor. Also think of it this way, even if inventory DID match the same levels as last year, the months of inventory would be way down due to the increased sales rate correct?

sdcellar, inventory is pretty poor. Let me ask you this, you said you "see" plenty of inventory. Do you mind if I ask what you are looking for? Which zips, what types of homes. Also have you called (or asked your agent to call) on any of the homes that you are referring to? I just want to be sure.

What I will try to do is see if we can do a present inventory level and compare it to "active" inventory last year and see how the numbers look.

Also please recall I have been harping endlessly that for active listings that are short sales it is my opinion that as many as half of them are either not accepting any more offers or are only accepting backup offers.

***************

Now as you said it might be the bottom for the lower end but everything else is still falling. I could not agree with you more.

So lest look more into the numbers and compare some zip codes from my post a few days ago comparing sales volumes and average price..

I think that for the most part the lower end zip codes do have more sales in 09 then 08 but there are some that don't fit the trend. However if we have a few more months in there, I think we will see the pattern emerge that is consistent with your statement and I agree with it.

Still though it is hard for me to see this being a bottom even for lower end stuff given the economy.

Like I have said over and over, I think this is a cyclical thing and I want to see how things look come mid summer. I anticipate a slowdown.

yr zip sales lp sp dom
09 92009 13 692 671 93
08 92009 21 957 919 98

09 92011 10 731 720 44
08 92011 17 882 838 50

09 92056 37 299 304 23
08 92056 23 428 414 54

09 92056 22 932 857 63
08 92024 21 1.32 1.21 69

09 92128 24 495 479 63
08 92128 17 591 568 65

09 92129 20 599 581 66
08 92129 14 643 619 87

09 92126 24 356 353 55
08 92126 23 422 411 83

09 92131 14 674 649 47
08 92131 13 780 745 68

09 92130 18 842 800 81
08 92130 24 1.12 1.07 41

09 92037 10 1.56 1.43 77
08 92037 12 3.05 2.78 155

09 92104 9 447 436 107
08 92104 19 455 424 77

09 92103 9 736 662 48
08 92103 4 499 461 40

09 92119 12 437 433 77
08 92119 7 473 449 83

09 92117 29 387 376 36
08 92117 13 480 455 59

09 91913 32 407 403 55
08 91913 23 481 464 82

09 92101 44 501 476 42
08 92101 41 614 581 98

I would take this as a Contrarian indicator these day’s ,

You can only take so much 24 hours a days hyping of the recession/depression before it get’s old.

That being said like some have already said on this thread, I think the lower end is very close to the bottom the upper end ??? that’s still a little bubbly.

One last point here there are a lot a sales happening at the lower end (Temecula Valley for example has number 1 & 3 Cities in re-sales in the U.S. etc...)

This in my mind anyway is a/the signal that the recession is comming to an end.

Just my two cents ...

As I understand it most of those will be voluntary (severance deal) and most the involuntary ones will be in Finland.

also Wireless is one of the few Tech area's that was still seeing growth in 2009 (slowed down somewhat but growth none the less) and there is a lot of Wireless employment in SD ..

Didn't Rich tell us to expect something like this?

A rise in the DataQuack(tm) headline median could be a sign that the high end is starting to capitulate. This would drive up volume in that category and shift the overall median higher.

It will be interesting to see what the Case-Shiller report for February looks like.

It's a record down-turn. And the news is getting worse. 30% of mortgages in SD are upside down. If you consider this a bottom indicator rather than an indicator of extreme downward pressure yet to come, good luck to you in all things.

But if the homeowner can wait for, uh say 30 years, help is on the way:-)

http://news.yahoo.com/s/ap/20090318/ap_o...

All bets are off with rising empoyment, the next huge wave of option arms reseting and a foreclosure prevention policy that excluded almost 90% of CA. I just dont think there will be enough buyers to buy all the current shadow inventory and the coming onslaught of new foreclosures ( see Rich's new NOD graph) to say that this is the bottom. Just my thoughts.

OP - how can we be at bottom considering the other thread just posted Cool foreclosure map

People aren't spending money because they don't have money. If you depend on a greater fool (pension fund, preferably foreign) to fund your spending spree sooner or later you will run out of fools.

Sandiagon, after looking at the source of your information I can't for the life of me think why you would make that claim. Volume is up, but prices are way down.
Feb 09 Feb 08
Median Price: $325,000 $430,000 ~ -25%
Average Price: $384,188 $573,022 ~ -33%
Home Sales: 1,432 1,035 ~ 38%
Sale/List Price Ratio: 98.0% 95.2%
Days on Market: 78 83

So the the numbers in terms of median and average are down hugely for one year, and volume has risen accordingly. Every leading indicator in our economy is screaming depression print in 52 point font and you are thinking the bottom is in. As they say on tickerforum, "sold to you."

Even our house realtors, who I love to bash, unabashedly, aren't saying the bottom is in. This is a spring bounce.

Oh wait just checked you've been a member for 2 months.
Josh

What arms resetting? You mean that those lucky homeowners are soon going to get lower payment because of the dropping of the treasury rate? FED is announcing that they are just going to print all the money to keep the treasury yield low. What a wonderful world that we have been living in...

Using that same link, wouldn't you say from this map that anything in the blue area is at or near bottom? This is the price vs rent ratio.

But who says just b/c you can buy a house for what it would rent, that people would buy?

IF banks are requiring 20% down, many people don't have that amount.

Say they go w/3% FHA, there is a cap on how high they can go.

Also, now they have to prove they are making what they say they're making. Can be a problem qualifying.

Also, you have to have pretty impeccable credit nowadays.

These are factors to take into consideration. It makes perfect sense to buy if the mortgage equals the rent, but now you have to take into consideration other obstacles.

Houses are not where they need to be in price yet. People are buying and banks aren't releasing inventory.

I have looked at a few places and they all seemed fishy. I'm going to look here and there but something has to give, this doesn't make sense right now.

When I pencil out rent/own numbers I don't see anything that really pencils out that isn't a beat up pile of crap. If it does, it has offers on it before it is even listed, or mysteriously vanishes 2 days after it is listed.

Maybe this is the way it will be though, banks will hold out, sucking on the govt's tit until wages catch up to current price levels. Kind of hard to do though with employment being the thorn that it has been lately.

JP yes on proving income, no on impeccable credit. Over 620 gets you an FHA loan with most lenders. They may raise that but as of today that is what it is.

I am not saying it makes sense to buy, but did want to point out the topic of impeccable credit for FHA.

james no houses are nowhere close to where they need to be for a fundamental bottom IMO. I agree with that entirely.

SDR - good to know about FHA and only 620 score. But nevertheless, there is a cap on how much of a loan you can get w/FHA.