San Diego Housing Bubble News and Analysis

"What does this portend???"

Not what you want it to yet. Talk to us about this in October.

What JWM said.....................again.

It means that people buy homes in Spring. Nothing more, nothing less.

Hmmm . . . I bring hard data and these two geniuses bring their wistful speculation. You can't consider much of anything that Ex-SD says to have the least shred of credibility or value. Note his assinine and completely erroneous comment re Dataquicks numbers in the April Sales increase thread.

http://piggington.com/data_quick_shows_2...

Guys I am just bringing data that may be of value to Pigs on the thread here. I offer no opinion, only facts, and seek the insight of wise and considered Pigs of which there are many . . . . but not you two.

In search of a crystal ball . . . .

Yes, and AOL bought Time Warner. There are more houses that need to be sold, but the system just can't handle them. When I go for runs, I see several vacant houses with dead lawns and weeds in the driveway.

If you want to see what the market is like in a neighborhood, buy a pair of running shoes and use them. You will quickly see what is happening in a neighborhood. I can tell which houses are coming onto the market a few months before the for sell sign is up. And I can tell you, there are several houses waiting for signs over all my running routes.

If you are going to bring data, bring all the data.

The article also states a 19% year over year drop in sales. Is a 19% YOY drop a sign of a healthy market that has reached bottom?

I read the headline and thought "Let me guess...schizo2buyor not?" Ding, ding, ding....we have a winner!!

That's one of the first bad news for RE bears in awhile. I was hoping 2008 to be another record breaking inventory year too. Take it for what it is, total supplies are down. Must sale supplies might be up, but that doesn't change this fact. We're still far from bottom though. There's still way too much inventory to burn through.

FYI - a change of 0.8% in any direction is not statistically significant.

schizo2buyORnotL You are well known as one of the top-3, resident, nut jobs that post on this site. You are correct that I misunderstood the way that DataQuick counts sales............pure and simple. It certainly doesn't put me in the nut-house resident category with you & Alex Angel.

If you think it's such a great time to buy, PLEASE get on your donkey and buy a house TODAY!

I made a lot of $$$$$$$$ by recognizing what was going to happen and acting on it before the bubble busted. Did you do the same? Is that the sound of silence that I hear?

It's only significant because we haven't got the volume bump in this spring like every other years.

"It's only significant because we haven't got the volume bump in this spring like every other years."

Precisely. Good point. If the inventory level was adjusted for seasonality, then it would look even lower still.

Quite frankly, neither the bump up in sales nor the bump down in inventory is surprising to me. It would have been more surprising if there had not been one. I was expecting both to be more robust due to knifecatchers who are ignorant but necessary to reset comps lower.

Inventory is flattening on declining sales. A necessary stage to work through to get to a bottom. But not a sign thereof. Potential "want to" sellers are currently on the sidelines because it is pointless to list your home with so few buyers and compete against the REOs and other "must-sell" sellers. Number of sales is still declining year-over-year.

What usually happens next in the market cycle is that sales bottom out, then flatten and eventually start increasing (with seasonal variations obscuring the overall trends). Inventory may initially also increase to match increased demand as want-to sellers come back into the market. We may even see increasing inventory at the bottom of the market. But what matters is how much inventory relative to sales. As sales start to increase faster than inventory, that's when we start to see a recovery.

JWM-
I think we need to encourage investors to re-enter the RE market place at this time. That will help keep the ball rolling to the inevitable bottom.

(Sarcasm on) Na na na na na naaaah . . . I made more money than you Ex-SD and then I bought gold and oil futures 24 months back and quadupled that. So shut your pie hole. (Sarcasm off).

You sound like such an infantile ignoramous to come on to an Internet blog with an alias and proudly proclaim what an investment genius you are. Bring facts not braggadocio BS. For all we know you are a street sweeper who collects cans from trash bins and uses the change for a token at the local Internet cafe to post here from time to time. So hilarious to see you continue to tout what an investment genius you are.

OK everyone go get one or your gold stars from you Kindergarten scrapbook so we can collectively pin it on Ex-SD's forhead so he can feel validated as the great investment genius he claims to be.

In search of a crystal ball . . . .

Agree with the wait statement. (MLS) Inventory alone is not a good indicator. You'll want to take into account months of inventory, as well as what could be skewing the MLS inventory downward, the "shadow" inventory. Not to be tin-foil hat, but my daily tracking of foreclosures listed on foreclosure.com shows that ~7,000 foreclosures in SD, or roughly 30% of the MLS inventory.

With 63% (source: some article on Piggington.com) of sales last month being short-sales or REO... yeah, talk to us in October.

Bearnanke.

The inventory decline observation is a valid point: it could (obviously) be construed as bullish. What's the counterargument? Some above have alluded to it.

Inventory is declining because the MIX of inventory changed over the past six months. That is, normal sellers withdrew homes from the market and were replaced with REO's. These REO's are, almost by definition, high-velocity sellers. So the impacts should be 1) a decline in market times; 2) falling inventory; and 3) an acceleration in price declines.

The question is, what happens when inventory falls? Do prices stabilize? I would argue no for two reasons. First, falling prices beget more foreclosures, which beget more inventory. We have not seen this because the banks are just now trying to move through the accumulated backlog of NTS of the past three to six months. Until they do so, they will be reluctant to place the newer REO's on the market.

Second, its likely that a good percentage of REO sales become resale inventory in a few months -- because they are sold to REO investors. What's caused market time to decrease for REO's is a change in bank policy towards giving REO investors a good deal, i.e. a return based on a flip to current market prices. So we'll see the inventory come back on, and the potential effect on prices is obvious.

All this is based on logic and some anecdotal evidence. If anyone has evidence to the contrary (i.e. real FTB's are the ones buying up the vast majority of REO's), I'd love to hear from you.

schizo2buyORno: Your post is very revealing. I think you just Outed yourself. Now we understand.

If you look at the foreclosure numbers, there's plenty of phantom/hidden inventory out there. That hidden inventory will hit the market in due course.

Here's the answer to this question last time you asked.

http://bubbletracking.blogspot.com/2008/...

I guess this bring up the million $ question... when will the "phantom" inventory hit the market? In association to that, why haven't these "phantom" inventory hit the market yet? How long can the banks hang on to them or let the borrower live rent free?

As posted on the other blog site, in one specific area (4S) 2 out of 9 defaulted homes are listed. Why the others are not is anybody's guess: perhaps they're living there for free until the sheriff comes a' knockin'. Perhaps they're hoping for a bailout. Perhaps they're wanting the bank to recognize them as "distressed" so they can short sale. Who knows?

2 of the condos in my 10-unit bldg are foreclosures. Neither of them is listed for sale.

One thing is for sure: the "facts" our whiny, schizo friend posts about are not as reliable when you take into account that everyone here knows of numerous foreclosed homes that are not being listed. This is why I like this blog, we share info which doesn't always make it into the MSM.

here's the million $ answer from Jim the Realtor's encounter with a guy that bought a > $900k home in Valley Center that is now a REO but is still living there:

"No one was home when I was there Sunday morning at 8:30 am (temp was 95 degrees!), but I caught the kids over there late in the afternoon.

Pops called me back when he got home, and explained that with five kids and asssorted family members living there, they couldn't possibly move for a couple of months. He plans to leave the state."

that's right, I know I haven't paid the mortgage payment for months and I have been living rent free. And yes, I know the house is now officially the bank's. But due to all the kids and family members, we'll be hanging out here for just a few more months if you don't mind. Think of the CHILDREN!!!

there's one of your phantom/shadow inventory for you.

ocrenter, so based on your reply, the process for the bank to put some REO on the market and priced it right, these people's attitude, and the length of time required to evict someone, these "phantom" inventory can possibly stay "phantom" for a very very long time.

As sales pick up, more and more of the phantom inventory will be moved to the market place. There will be precious few lenders looking to "hold for the long term."

As many on here have predicted, price will keep on falling for awhile since we're no where near bottom. Which means sales won't pick up in earnest until after we created a base and start moving back up. Which by your argument, these phantom inventory won't hit market for another 5-10 years?

reset

it really isn't up to the lenders. none of them want to "hold for long term."

first you got the borrowers draining all of their 401k and savings to save the home, in general in subpar neighborhoods that timespan is quicker than good neighborhoods.

then you got the length of time it takes the bank to even send out the NOD from time of delinquency. that has been extended from just 3-4 months to well past 1/2 year.

then there's the recurrent postponements that extend the NOD to REO time period from 3.5 months to who knows how long.

then once you get the REO in the bank's hands the borrower refuses to leave. (I've got 5 kids and we can't move).

so you go from a 7-8 month process from delinquency to REO and we drag it out to maybe a year and a half or two?

looking at the graph above, you say to yourself, wow, we are already at month 17 of the reset, it is almost over!!

But no, remember people still try to pay for a few months after the reset and we got this dragged out process to REO to follow. the REOs we are handling right now may still be from resets that occurred in early '07! and as opposed to last year and a year ago, very few of these homes in this long trip down the REO road are listed for sale.

This graph is nice to know in Jan 2007, but I have a feeling a lot of people who area already underwater and will give up anyways when time comes, will stop paying much earlier than their reset date. Do you think that's likely? I know that's what I'd do if I was in that situation. But I guess since I'm not your average buyer and ocrenter scenario seems more likely, these "phantom" inventory will stay "phantom" for a very long time.

asian-
I'm not sure that an increase in sales is indicative of a bottom. If prices adjust to meet a demand that was considered "unreasonable" at the start of the 2008, then sales would increase, even as prices continue to fall.

Sales is always a leading indicator. So when sales rise or fall year over year by my large amount, you can be pretty sure you're either at the top or the bottom. I'm not talking about 4-5% rise in sales either. It has to be a large amount, like 20+% rise compare to last year.