San Diego YOY inventory remains near flat line

User Forum Topic
Submitted by schizo2buyORnot on May 6, 2008 - 10:35am

A weekly update to a previous thread
http://piggington.com/san_diego_yoy_inve...

This weeks inventory stats remain essentially unchanged on a YOY basis. 4% increase YOY as of last week and 3.7% YOY increase as of this week.

http://www.housingtracker.net/askingpric...

Another intersting note of this weeks numbers.

2008 "Spring bump/buying season" inventory increase

02/01/2008 19,218
05/01/2008 19,562

2008 increase during "spring buying season" = 344 units for a 1.02% increase in inventory. Essentially no increase in the inventory of homes for sale during the "buying season."

2007 "Spring bump/buying season" inventory increase

02/01/2007 16,011
05/01/2007 19,408

2007 increase during "spring buying season" = 3,397 units for a 21.2% increase in inventory. Typical "buying season" increase in inventory. The 2006 numbers (only april/may available) also reflect similar spring increase.

Why is there no spike in inventory during this Spring "buying season"?????

One ongoing debate is that the inventory doesn't reflect all of the "phantom inventory" (foreclosure squatters, bank owned and not on MLS, etc., etc. etc.). If there is a large amount of this so called "phantom inventory" not reflected in the numbers in 2008 wouldn't there have been at least as much "phantom inventory", if not more in 2007? This leads me to believe that the current flattening inventory is reflective of a leveling out/peaking (at a very high elevated level) of the supply.

‹ FHA "motivation letter"? What does this mean? How far we've come... ›
Some of my thoughts - the
Submitted by SDEngineer on May 6, 2008 - 10:51am.

Some of my thoughts - the market in 2007 was not nearly as bad as it is this year (the foreclosure wave hadn't even really started to build back then), which I think has had a couple of effects relative to inventory.

Firstly, the market today is made up in large part of "must-sell" inventory (foreclosures + short sales is approaching, if not exceeding the 50% mark in San Diego as a whole - add to that job transfers and other must-sell properties, and it is almost certainly the large majority of the market). "Must-sell" inventory, by it's very nature is not seasonal - no bank, short-saler, or job-transferee is going to pull a listing off the MLS in November and put it back on the market in March.

Secondly, all this "must-sell" inventory I would think would have the effect of keeping a lot of houses which don't have to be sold off the market - I suspect a LOT of potential sellers who aren't in a "must-sell" position are keeping their properties off the market because they don't want to compete with the "must-sell" inventory. This inventory I would think would normally make up the large part of the seasonal variation - people who don't have to sell their house have the luxury of listing it during the spring buying season, and being able to pull it down if it doesn't sell at the price they'd like to see. This is "phantom inventory" as it is inventory that would likely be on the market if not for the severe economic conditions in the current market.

And, of course, banks and courts still haven't been able to keep up with the incredible foreclosure rate, meaning there's still a ton of stuff in the wings just waiting to be processed.

Why is there no spike in
Submitted by FormerSanDiegan on May 6, 2008 - 10:54am.

Why is there no spike in inventory during this Spring "buying season"?????

I take this as capitulation of the "want to sell" inventory.
These people still had hope in late 2006 and put their homes on the market in Spring 2007 to make want they wanted to so they could move up or move out or break even or get out from behind resets. Now, with prices down people know they won't be able to sell easily. So, folks are simply holding on.

Distressed property totals
Submitted by HereWeGo on May 6, 2008 - 11:12am.

Distressed property totals in San Diego County.

I don't know how frequently that data is updated.

No 2008 Spring Inventory
Submitted by schizo2buyORnot on May 6, 2008 - 11:18am.

No 2008 Spring Inventory Bounce???

A graphical representation of the above mentioned lack of a 2008 Spring bounce. Link to chart is here http://www.housingtracker.net/askingpric...

WSJ analyst gives credence
Submitted by schizo2buyORnot on May 6, 2008 - 11:37am.

WSJ analyst gives credence to importance of inventory numbers . . . .

http://online.wsj.com/article/SB12100360...

"In the past five major housing market corrections (and there were some big ones, such as in the early 1980s when home sales also fell by 50%-60% and prices fell 12%-15% in real terms), every time home sales bottomed, the pace of house-price declines halved within one or two months.

The explanation is that by the time home sales stop declining, inventories of unsold homes have usually already started falling in absolute terms and begin to peak out in "months of supply" terms. That's the case right now: New home inventories peaked at 598,000 homes in July 2006, and stand at 482,000 homes as of the end of March. This inventory is equivalent to 11 months of supply, a 25-year high – but it is similar to 1974, 1982 and 1991 levels, which saw a subsequent slowing in home-price declines within the next six months."

In search of a crystal ball . . . .