San Diego Housing Bubble News and Analysis

Wow, very nice info SD R. San Carlos is leading the charge follow by Mira Mesa. That's not good sign for me.

I know I was pretty depressed about Scripps as well. I do have several people looking in Encinitas so that is good. For the most part though sellers there are still digging in.

92117 97 50

Whoa, active to pending in Clairemont is 2:1 !
Yikes !! I know these are getting close to making sense for first-time buyers when comparing to rent. I wonder how much is due to a backlog of short sale offers being sat upon ???
Otherwise, it seems pretty healthy to me.
From this metric, it looks like for the more affordable areas stuff is flying off the shelves.

It dosn't mean and end to the drop in prices, it just means things are leveling out. The key was to get back to 2003 prices.

Is this is a listing of Active houses for sale, compared to pending sales to buyers? So my logic would assume the more pending sales vs. lower active for sale would mean it's edging towards a sellers market as opposed to the raging buyers market it is now?

Darn you Mira Mesa... this is like routing for a stock to go up, nothing you do can affect it but you still cheer anyway.

Once more let's step back and look at the dynamics of secular cycles people.

Secular cycles don't go headlong in one direction. Secular cycles are composed of smaller cyclical runs that fluctuate. In a secular down cycle you get cycles inside of them that have lower highs and lower lows. In a secular up cycle you get cycles inside of them that have higher highs and higher lows.

The statistics speak for themselves. Obviously there are certain areas where pricing has reached a point that "pent up demand" the term all the bears hate, has effectively scoooped the homes up. Like it or not, those of you who are forecasting another 30% drop in areas like Mira Mesa or Clairemont may be waiting a heck of alot longer then you want to wait... or forever.

I am not saying anything about a bottom being reached or anything like that. There are plenty of foreclosures in the pipeline, there is employment and interest rate issues to think about and there is plenty of more bad news from banks on the way.

My intention is always to try to "keep it real" as Dave Chapelle would say. Numbers do not lie. Consider this a present snap shot. Basically if you are searching, or thinking about searching for a home in areas where the active pending ratios are "healthy" from a sellers standpoint... well just realize that.

As for short sales and such... these statistics are actually NOT representative. There are MANY actives that actually HAVE short sale offers into the bank. The reality is, any listing agent worth thier salt will NOT enter a property into pending status until the offer is already accepted by the bank. So really the ratios listed above are a best case situation from the bearish point of view.

Again, I am not portending a bottom or being a cheerleader to tell people to buy. Far from it. As a buyer I am bummed by these numbers. However it does help me to ADJUST my expectations with regards to timeframes.

"this is like routing for a stock to go up, nothing you do can affect it but you still cheer anyway."

92126_guy hang in there... just be patient. It is by no means a sellers market in Mira Mesa. It is just that certain sellers are pricing aggressively and those homes are getting sold.

I agree that there will always be mini rally w/in a down trend and mini pull back w/in an up trend. However, the rally and pull back are referring to more about price than sales. If the active vs pending stay this way for MM and Clairmont, I think I'm comfortable to say that the steepest decline is behind us and now we're in a more gradual decline stage. Just like the stock market, when you see price stabilization with strong volume, that's a good sign. Only time will tell whether this demand continue or it'll break down.

Look on the bright side folks.....

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Ouch...That's carmel valley :)

Gotta agree with everyone on MM and Clairmont. It is the first spring where buying a house isn't a financial death sentence for the average CA buyer in a while. To expect everyone to just sit on their thumbs is naive at best.
However even the CEO of Freddie said we are only in the 4-5 inning of the housing reduction. Maybe waiting for overtime isnt a good idea, but the 7th inning strech will be great, and that is still a little bit off.
This damn picher sure seems to be trowing alot of balls, dragging this thing out as long as he can. I think the man on deck fell asleep.

Pending numbers today are not the same as pending numbers of 2003-2005, where probably 95% closed.

What percent of pendings are closing today? 60%???

There are properties that have gone pending back to active 3 or 4 times.

I am not discouraged about these numbers, certainly not the La Jolla numbers. These numbers are not as important as the fact that prices are coming down, during the peak buying season.

Thanks for posting SD Realtor.

SD Realtor - To maybe make you and some others feel a little better, I have seen many places go "pending" only to be BOM. I even dare say as discussed on other threads, it possibly could be a fake pending, or maybe an oral pending that turned out not to be, or a pending to get attention to the listing, perhaps cause someone to panic that the place they want is pending, and then when it goes BOM, attract a buyer.

I know there's a lot of psychological games that occur and I question some of these pendings. Doesn't mean they're not legitimate, but I'm skeptical.

I wonder how the numbers above would are affected by the other recent thread "shadow inventory." I'm thinking those shadows would just increase the Active for sale houses and hence worsen the ratio for those of us hoping for a start to the stabilization.

not having paid much attention to these pending vs. active #'s before....what would be 'bad' #'s?

Cause if I look at over 200 listings in 92128 (RB vs. 40 something pendings...doesn't seem too healthy, but not sure how to gauge this...

SD R - I like to think of it as a ball bouncing down the steps.

This definitely looks to be a bit of a Summer dead-cat bounce, to be followed by the Holy Shit phase starting in Sept or Oct.

These numbers suggest Sept may hold pretty strong so I'm gonna say the HS phase may not start until Oct.

Of course we won't see the data for Oct until Nov, so it'll be a three more months before we can really say "Holy Shit."

The hotest markets already said "Holy Shit"! That is why they are hot now.

SD Realtor

Would you mind posting the Actives Pendings for 92123 and 92105?

Well I would say this... my personal belief is that closings for pending homes are well above 60%. I say that as an assumption of what I have seen but there isn't any fact behind the statement, it is purely speculative. Additionally it doesn't matter to much if it does fall out. There was a recent REO in Mira Mesa that fell out of escrow 2 times and each time there were a pile of buyers waiting for it. Our favorite cracked slab in PQ was bought, fixed, and flipped successfully. I had a client who was recently in a PQ escrow and he backed out and guess what, there were a pile of buyers in the wings waiting.

The problem is, when we have to start reaching back into the sack to explain away the stats it makes me uncomfortable. Yes it is a harsher credit market but I was expecting a HELL OF ALOT slower summer then what I have seen. These numbers back it up in a pretty big way in most of the zip codes.

Nowhere near a bottom yet but for those hoping to lowball or bottom feed in some of these zip codes...well it may take awhile.

Yes, it's true when properties go BOM, they eventually find someone else to buy. Wouldn't that be true of my psychology explanation. Trick someone into thinking it's taken and put it BOM, creating urgency and enticing someone to buy quickly?

Now, according to the realtor, the place on 2828 Deerpark was pending, then BOM, but had multiple offers. And yet, still no sale, 3 months later, during out spring/summer shopping season. I might add, @460k, it wouldn't even be a short sale any more.

According to the MLS history Deerpark has never been put into pending status. It has been on the market 87 days, (under this particular listing) and has offers into the lender for acceptance. Now I show a first of 440k and a second of 130k so I think it will indeed be a short sale. Not sure if they are accepting offers anymore at this point as they may not want to derail the bank. I I put in a call to the agent so we will see what he says.

The reason things don't drop like a rock is that the economy is still nicely funded. No gov't layoffs...and bio-tech, and old-tech openings are everywhere here in SD.

This is for all you future Mira Mesan home owners. This is what Mira Mesa looks like in ForeClosureRadar. Each red dot is a foreclosure. Each blue spot is a house up for auction. Each green dot is a pre-foreclosure. Doesn't look healthy to me.

Mira Mesa Foreclosures

As bad as that may look many for the SFR's there are several buyers for everyone of them at today's pricing.

I prefer to look at it optimistically:
What these numbers are telling us is, somehow the general population still doesn't believe that buying RE is a bad idea. The mood pendulum hasn't even reached the middle point. Which means we are not even half way through the price correction yet.

Thanks sddreaming.
I tried to count this but had a hard time. How many of these are blue (up for auction). How does that number compare to the inventory and pending ?

Thank you, SD Realtor. I was not aware there was a second on this. I should have figured that out. I mistakenly thought that since it was the 95 yo woman's place and probably paid off until the son took a loan out, that it was only one loan amount whenever it was taken. Now it all makes sense.

sddreaming the point is not that there are not foreclosures in the pipeline because there are plenty of them.

Once more, there is a pretty substantial difference between sitting on line and putting up data pulled off of websites and actually submitting offers and watching these properties go into escrow with multiple offers. Do you kind of see what I am saying? Inventory only grows when demand softens and if homes are priced right then they are getting bought. The homes that are sitting on the market now are not the foreclosures hitting the market, they are the homes that the sellers are living in denial and not pricing to sell.

Healthy to me is characterized by homes going from active to pending to sold with an active to pending ratio of 3 to 1 or better. Additionally sales exceeding expireds and cancelleds is also a good sign. Lets look at the numbers from 92126 in July of 07 and compare it to July of 08.

Sales in July of 07 34 at avg price of 506.5k
Sales in July of 08 31 at avg price of 401k

Expireds in July of 08 12
Expired in July of 07 18
Cancelleds in July of 08 7
Cancelleds in July of 07 16

So okay you can sit and tell me it is not a healthy market and that is okay. However I have 4 different people who are ready to buy in Mira Mesa but who are consistently seeing properties of interest get scooped up before they can come down to the pricing level these people want.

I am not saying it will not happen but I am saying it certainly will not happen in the present. I went on record last winter to say I anticipated a spring bump BUT I also said I was hoping for a summer slowdown. Looks like I was only 50% right.

The foreclosures will come. We all know that. The question is though, will people continue to buy. I think PadreBrian got it correct when he said there was no catalyst to prevent buying... at least not yet. IMO we need such a catalyst to rachet down pricing, perhaps it will be interest rates or spreads rising dramatically or perhaps unemployment. However I do not believe that the flow of foreclosures at least in Mira Mesa will be enough to further suppress pricing substantially... maybe some but not much.

Thank you, SD Realtor.

Once again, we have to remember that sales are picking up **because** prices are down.

In the lower-end neighborhoods, I believe you can buy now and risk only $30K-$60K in potential losses, at worst. This would be for $250K homes or less. That's not bad, compared to $200K+ losses.

They are still offering "funky" mortgages, and the upward swing of the housing bubble is still fresh in everyone's mind. They are anchoring to 2005 prices, and things look great to buy!

If the economy continues to get worse, rents will fall, and I think this is key. Rents are in their own bubble right now, IMO. Too many LLs asking $2K+/mo rent for really basic housing in average neighborhoods. I do not think this is sustainable over the long run.

Do you have the numbers for 92118? Thank you.

Rents are in their own bubble right now, IMO. Too many LLs asking $2K+/mo rent for really basic housing in average neighborhoods.

Bubble ? in rents ? Didn't we cover this already ?

2K per month is 24K per year.
Median Household income (as of 2006 per SANDAG) was : 65K

That's 37% of median household income for an average house using 2006 income numbers and your assessment of average. That's a bit high, but the rent was for an "average" house (not including
apartments) and income numbers are from all households including apartment and condo dwellers.

If you look at median rent versus median income it's even lower. Median rent is about 30% of median household income. That's not that out of line with traditional guidelines of 1/3 of your income to housing.

I personally dont think we will see much more decline in places like MM just due to foreclosures. As the relators point out, fundaments in MM and even some similar places such as clairmont, are about as "normal" as todays market place could support.
That isnt to say that there wont be more price reductions, only that they wont come in the same way as in the past. Fannie and freddie are in crisis mode and changing their buisness. interest rates and fees are going up, and buyers are being squeezed out by that. Fannie is ending ALtA loans. Wouldnt supprise me one bit if that took 20% of MM buyers out of the pool. AltA was great for the would be donald trumps, and is going the way of subprime if Fannie/Freddie wont buy them anymore. Less demand........
The last leg to chop off will be the move up buyer. The person who can be an upper end buyer in MM, or a lower end buyer in CV/PQ if prices in those areas will fall. The bottom end of the buyer pool is dead, subprime isnt coming back. AltA is following, and the buyer pyramid starts looking like a diamond shaped as the two ends just cant get financing.
The "trade up" effect plus the further reduction in financing will be the last 15-20%. 350k will become 280k, but I dont know if well actually see 280k as a number. Maybe there are enough asian families and bubble sitters to drag it out so inflation eats the rest. I dont think so, but I am kinda biased. (Fall baby; fall) Just my idiot opnion.