Some areas have less than a month inventory

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Submitted by gzz on December 24, 2012 - 9:24am

How long can this last without a big price increase? A year ago OB/92107 had around 25 condos and 45 single families on the market, now it is 4 condos and 20 single families.

Makes me want to flip my house, except that I like it here and don't want to move, and there are basically 0 nice houses on the market in the 550-700 range that I like, which is why I posted earlier about building one.

I see the same huge decrease in Linda Vista and western Claremont. Point Loma inventory is also way down, but not quite as much, and PB/La Jolla/UTC seem to only be down 20% or so. It is stange to see such a big difference in the central coastal areas.

Submitted by livinincali on December 24, 2012 - 10:21am.

gzz wrote:
How long can this last without a big price increase? A year ago OB/92107 had around 25 condos and 45 single families on the market, now it is 4 condos and 20 single families.

For as long as buyers remain patient. Put your house up for a with a make me move price and see what happens. That will probably show you the dynamics of this market. It will move if priced right, it will sit if it's priced wrong.

Submitted by AN on December 24, 2012 - 3:36pm.

92126 inventory problem is even worse than OB. July 2011, there were 165 SFR and 65 condos. A year ago, there were 90 SFR and 36 condos. Today, there are 22 SFR and 7 condo. I too wonder how long this will last. This spring should be interesting.

Submitted by gzz on December 24, 2012 - 5:16pm.

Prices right now seems to be about 10-15% higher than a year ago. I might be priced out of what I want, which is an updated 2 story with 2+ baths and a view on a full lot. Several of these sold for around 600-700 in 2011 to mid 2012. Now there are none on the market at this price and the closest are 800k+. 160k downpayment and then paying jumbo rates are beyond my budget.

Submitted by SD Realtor on December 24, 2012 - 5:19pm.

I agree with the inventory and price assessments. It is a very frustrating time for buyers and I don't see it changing at all in the near future until rates move. Bodes well for those who have purchased in the last few years. Does not bode well for families looking to buy a home/condo for themselves or for a long term investment.

Submitted by ctr70 on December 26, 2012 - 7:34pm.

Where is the inventory going to come from? I don't see where.

-It's not going to come from a flood of REO's, the "next wave" that was always "just around the corner" never happened and was an urban myth
-Not going to come from builders, they can't build that fast
-Not going to come from normal sellers, still not enough equity
-I don't see a sudden rush of short sales, anyone who wanted to short sale has had ample chance the last few years

...so I think inventory will be tight all of next year. That plus low rates and healthy buyer demand: boomerang buyers coming back into the market who had short sales or foreclosures 3 years ago, plus household formation, plus investors, etc... will drive prices up again next year. Prices went up about 15% in San Diego in 2012, they should do that again at least in 2013. Wow 30% rise in 2 years? Who was predicting that in 2011????

And as we know well this is mostly artificial based on the Fed keeping rates low & all the stuff they did to stop foreclosures from happening. People don't realize how low rates are, we literally have not seen rates this low since the 1800's! But artificial or not, prices are still going to go up.

It's disappointing they have to blow another bubble of CA prices once again with these rates instead of just letting the market correct once and for all to it's natural level with normal rates.

Submitted by carlsbadworker on December 27, 2012 - 8:54am.

ctr70 wrote:
It's disappointing they have to blow another bubble of CA prices once again with these rates instead of just letting the market correct once and for all to it's natural level with normal rates.

Technically, RE is not a bubble when the mortgage payment to rent ratio is in multi-years low.
Bond however is a different story and it may be the most damaging bubble that we ever see.

Submitted by Jazzman on December 27, 2012 - 12:21pm.

Not sure where the 10-15% price rise is coming from. According to y-o-y Case Shiller index, prices are only up 4.3% http://www.mortgagenewsdaily.com/1226201...

Predictions for rapid price rises may be misplaced according to the CAR. "[T]he market won't be "corrected" until as far off as 2017, said Leslie Appleton-Young, leading economist of the California Association of Realtors". http://www.utsandiego.com/news/2012/nov/...

If low rates are bringing forward buyers like they did with the tax credit, demand may wobble down the line, and with one in four homes owners in SD underwater, the move up market will continue to suffer.

And not too fast with the declining foreclosures please. The drop may have been largely due to the well publicized 'mishandling'. NODs actually increased in July in some areas. http://www.nctimes.com/business/housing-...

I doubt there is enough momentum to produce a strong sustainable recovery. More likely things will just tick along and remain volatile until unemployment improves and all foreclosure are flushed through the system. And by that time both rates and inventory may have normalized, which will put a dampener on appreciation.

Submitted by AN on December 27, 2012 - 12:37pm.

Jazzman wrote:
Not sure where the 10-15% price rise is coming from. According to y-o-y Case Shiller index, prices are only up 4.3% http://www.mortgagenewsdaily.com/1226201...

According to redfin, in December 2011, the San Diego county sold $/sq-ft was $198. Today, it's $220. That's 11.1%. December 2010, it was $212, which is 3.7% increase over 2 years. But we all know price came back big time w/in the last 12 months while it declined through the last 6 months of 2011.

Submitted by ctr70 on December 27, 2012 - 12:50pm.

http://www.dqnews.com/Articles/2012/News...

I'm going off Dataquick which shows a 13.7% rise year-over-year for SD County. Dataquick uses data directly from closed sales from the county recorders office. This is consistent with what I'm seeing being an active investor/buyer in this market since it crashed in 2008. I actually think in certain sub markets it is up much more than 13.7% in 2012. Like the lower end parts of town.

Case Shiller is 6 mos old, tired, stale data.

Submitted by ctr70 on December 27, 2012 - 1:05pm.

Jazzman wrote:

And not too fast with the declining foreclosures please. The drop may have been largely due to the well publicized 'mishandling'. NODs actually increased in July in some areas. http://www.nctimes.com/business/housing-...

I have heard the two best minds in the state of CA regarding the housing market, Bruce Norris of The Norris Group and Sean O'Toole of foreclosureradar.com speak in person. And they say there is no wave of REO's coming (in California at least). The REO listing agents have actually laid off all their staff and many have changed careers because the banks are telling them there is NO inventory coming. Also, it's a total myth that banks are "holding on to a ton of inventory". Yes they are letting people squat in their homes for 3-4 years not making payments, but they are not physically holding on to inventory.

Another thing is with prices rising this year and next, it's creating less underwater owners. And it's creating a psychological change with owners. Home owners are now getting hope they may be able to sell some day without losing money, so they may decide to make their payments and keep their property. Rising prices creates a positive domino effect with less owners underwater + construction starting up and creating jobs.

I'm saying all this being a huge housing bear myself. Bruce Norris was the most famous housing bear in the state in 2005 writing reports and speaking throughout the state telling people to GET OUT of the market. He is a contrarian thinker. And he is predicting prices to rise very steadily in CA the next 3 yrs due to no relief in site for low inventory issues + low rates for the foreseeable future + boomerang buyers coming back in the market.

Submitted by ctr70 on December 27, 2012 - 1:10pm.

And I wouldn't listen to anything Lisa Appleton-Young or at Cal. Association of Realtors or the clowns at the Nat. Assocation of Realtors puts out. They totally missed the bubble in 2006 (see David Learah) and now they are trying to make up for it by being overly conservative. Classic. I would listen to investors with lots of money at stake in the market like Bruce Norris.

Submitted by ctr70 on December 27, 2012 - 1:16pm.

It's amazing to me that everyone criticized & demonized Greenspan so intensely for keeping rates so low for so long and playing such a big part in the housing bubble, yet Bernake is doing the exact same thing now. No way prices would be rising if 30 yr fixed rates were at a long term average of 6-8%. With a 3.5% rate right now, they are going to have to stay low for a long, long time for prices to keep rising and not fall. Or we would need incomes to start rising at a healthy clip to accompany a rate rise & house prices to not fall.

I mean freaking 3.5% 30 yr fixed. This is not even close to anything anyone has seen since the 19th century!

Submitted by livinincali on December 27, 2012 - 1:51pm.

ctr70 wrote:
Where is the inventory going to come from? I don't see where.

-It's not going to come from a flood of REO's, the "next wave" that was always "just around the corner" never happened and was an urban myth
-Not going to come from builders, they can't build that fast
-Not going to come from normal sellers, still not enough equity
-I don't see a sudden rush of short sales, anyone who wanted to short sale has had ample chance the last few years

FHA is where the new defaulters. Of course that's government run and if there were foreclosures from FHA it would be coming out of HUD. Right now there's nothing coming out of HUD and with government help I doubt there will be.

I figure those that really want to buy will do so in the next year or two and then we'll have a pent up demand to sell from all the sellers hoping to sell for higher prices. Unfortunately I figure the buying pool will be pretty small at that point and sellers will have wished they sold when things were good in 2012-2013. It always seems to work out that way.

Submitted by Jazzman on December 27, 2012 - 2:42pm.

I agree with livinincali there definitely seems to be time lags produced by buyer and seller perceptions which affects supply and demand.

Ctr70 the median can prduce results all over the shop. Look at Rich's comments for condos recently. I'd definitely put more weight on CS. The question of where is the inventory going to come from, is answered by where did it go? I don't see why CAR's seemingly 'negative' comments should be dismissed since they have an interest in pushing for a recovery.

While I share your views on the craziness of low rates, I don't see it as a cause to celebrate.

Submitted by AN on December 27, 2012 - 3:06pm.

Jazzman wrote:
Ctr70 the median can prduce results all over the shop. Look at Rich's comments for condos recently. I'd definitely put more weight on CS

Rich's comments for condos recently is correctly. But I don't recall him saying the same about median price. He also said CS # are backward looking and stale. Just like what ctr70 said. If you look at $/sq-ft # from 5-6 months ago, that match up with what CS data shows, which is pretty flat. But over the last 5-6 months, price went up a lot. You can click on the link on the bottom right of this site.

Submitted by bearishgurl on December 27, 2012 - 3:22pm.

Jazzman wrote:
I agree with livinincali there definitely seems to be time lags produced by buyer and seller perceptions which affects supply and demand...

This has always been the case. It will never change so we must live with it. This phenomenon is even inherent in *normal* markets (whatever that's supposed to mean).

Submitted by jpinpb on December 27, 2012 - 10:44pm.

92117 inventory is down 75% from last year. 92107 is down 67% from last year. This according to Redfin. As for interest rates, I had seen it as low as 3.125 for a 30 year fixed on bankrate.com for re-fi with 740+ score and 80% LTV.

Submitted by flyer on December 28, 2012 - 1:35am.

Along with our neighborhood, family members own homes in 92107 (Sunset Cliffs), 92106 (Point Loma), 92037 (LJ), etc. etc., and all have noticed the low inventory as well.

Since we all bought our homes many years ago, it's really a moot point, but still interesting to see another cycle play out.

Should be extremely interesting to see what happens in the next 5-10 years with so little "buildable land" left in desirable areas. It could present a real challenge for future buyers.

Submitted by CA renter on December 28, 2012 - 5:20am.

ctr70 wrote:
It's amazing to me that everyone criticized & demonized Greenspan so intensely for keeping rates so low for so long and playing such a big part in the housing bubble, yet Bernake is doing the exact same thing now. No way prices would be rising if 30 yr fixed rates were at a long term average of 6-8%. With a 3.5% rate right now, they are going to have to stay low for a long, long time for prices to keep rising and not fall. Or we would need incomes to start rising at a healthy clip to accompany a rate rise & house prices to not fall.

I mean freaking 3.5% 30 yr fixed. This is not even close to anything anyone has seen since the 19th century!

I think that quite a few of us have criticized and demonized Bernanke for suppressing interest rates. He is killing savers and fixed-income earners...and blowing more bubbles that will have devastating consequences (IMHO). I think the bond bubble that is a continuation of the credit bubble that caused all the problems in ~2008, when/if it bursts, is going to make 2008 look like a non-event, especially when one considers what it will do to the govt's debt burden.

Submitted by Jazzman on December 28, 2012 - 10:38am.

bearishgurl wrote:
Jazzman wrote:
I agree with livinincali there definitely seems to be time lags produced by buyer and seller perceptions which affects supply and demand...

This has always been the case. It will never change so we must live with it. This phenomenon is even inherent in *normal* markets (whatever that's supposed to mean).


Not sure that's true. One big factor has been the internet and the amount of information freely available. Absent from the heated forums on RE are sellers/homeowners, outnumbered 10:1 buy buyers and fence sitters. The incentive to educate oneself seems to be higher before making a huge financial commitment, than after making it.

Submitted by Jazzman on December 28, 2012 - 10:52am.

AN wrote:
Jazzman wrote:
Ctr70 the median can prduce results all over the shop. Look at Rich's comments for condos recently. I'd definitely put more weight on CS

Rich's comments for condos recently is correctly. But I don't recall him saying the same about median price. He also said CS # are backward looking and stale. Just like what ctr70 said. If you look at $/sq-ft # from 5-6 months ago, that match up with what CS data shows, which is pretty flat. But over the last 5-6 months, price went up a lot. You can click on the link on the bottom right of this site.

How much is a lot? And what is driving it? How much does it matter what is driving it? I just hear the same pre-bubble drum pulsating just beneath the surface, scarcely able to constrain the ferment as it grasps at it's old friend 'greed and stupidity', discarding cautionary notes and rationale with its usual careless abandon. You know, good luck to you, if that is what you want.

Submitted by AN on December 28, 2012 - 11:05am.

Jazzman wrote:
How much is a lot? And what is driving it? How much does it matter what is driving it? I just hear the same pre-bubble drum pulsating just beneath the surface, scarcely able to constrain the ferment as it grasps at it's old friend 'greed and stupidity', discarding cautionary notes and rationale with its usual careless abandon. You know, good luck to you, if that is what you want.

I'm sure you can look at the data yourself. It's not that hard, just click on the chart at the bottom right of the page. As to what's driving it, your guess is as good as mine. I'm neither a permabull nor a permabear. I'm just a realist and state the data as it presents itself. I've been around here for over 7 years and have been beating the bear drums before the crash and throughout the crash. But I switch gear when it became much cheaper to buy than rent from day one. I got even more bullish in areas where cap rates become 7-8%+. You didn't find me beating the bull drum in 2004 much less 2006-7 when it start to decline and you won't see me beating the bear drums today. When price has risen over 10% w/in 1 year AND PITI is cheaper than rent.

I'm neither greedy nor stupid nor discard cautionary notes and rationales. I look at data and come up with my conclusion. I'm glad you have to resort to personal attacks to prove your points. Especially when you can't back it up with data and numbers. I can easily back mine up with cap rate, PITI vs rent, etc.

Submitted by scaredyclassic on December 28, 2012 - 8:24pm.

Animal spirits drive everything we do.

Submitted by Ren on January 7, 2013 - 10:34am.

*bump*

Inventory is very slightly better in Temecula than the coast where I'm always looking, but prices are still rising and getting silly in many cases, especially on the low end.

Just for fun, I put a zillow "make me move" price on our house which I thought was ridiculous - 25% higher than our purchase price 3 years ago, even higher than a recent sold comp which I also thought was ridiculous.

The next day I got an email from someone who sounded desperate to buy it. I explained that we haven't made the decision, just gauging interest.

Submitted by The-Shoveler on January 7, 2013 - 12:41pm.

Near the coast there is just not a lot of buildable land IMO and what is there is very costly to develop.

Out in east county and SWRC there is a lot more buildable land so I would expect that to keep a lid on prices for a while yet.

Near the coast I would expect things will get more and more ridiculous as far as price. JMHO.

The above might change if something like super storm sandy hit SoCal. I guess we wait and see.

Submitted by bearishgurl on January 7, 2013 - 1:53pm.

The-Shoveler wrote:
Near the coast there is just not a lot of buildable land IMO and what is there is very costly to develop.

Out in east county and SWRC there is a lot more buildable land so I would expect that to keep a lid on prices for a while yet.

Near the coast I would expect things will get more and more ridiculous as far as price. JMHO.

The above might change if something like super storm sandy hit SoCal. I guess we wait and see.

Shoveler, there is NOT `a lot of buildable land' in SD East County. The vast majority of east county areas within 30 miles of dtn SD are very well established, some est as far back as 1930.

Building is not allowed on rocky mountaintops. And there is too much community opposition to increasing density in areas of 1 AC+ lots so that will never happen, IMHO.

If you are referring to rural east county and the mountains, what available parcels with utilities at the ready are far and few between and a construction or take-out lender would still require a VERY costly fire policy to be in place before the commencement of construction. Those parcels without utilities will undoubtedly be VERY costly for today's specuvester to bring them in. MWD access and utility meter fees, in every jurisdiction, have risen repeatedly since 2000.

The above also applies to semi-rural and rural SD North County.

The reality is that there is VERY little to zero land available in SD County for tract or spec development, period, which is not already owned by developers or a single infill lot with a demolishable structure on it.

And I would not advise "waiting" to see if a tsunami hits the CA coastal areas to buy there.

If the "coast" where you want to move next, I would advise selling your inland property forthwith, lowering your standards re: your dwelling "requirements" and buying a coastal property ASAP. OR, buying a coastal property and renting out your inland property after you close escrow, if you can afford to do so.

It doesn't get any better than this, folks. The (native San Diegan) horse left its barn several years ago and is "lost" on the trails.

Submitted by sdduuuude on January 7, 2013 - 3:52pm.

BG - you misquoted him.

He said "a lot more buildable land"

not

"a lot of buildable land"

Submitted by jpinpb on January 7, 2013 - 4:43pm.

Well, I had the thought there's not much buildable land along the coast, but just driving back from Carlsbad along the 5 south there is a LOT of mowed down, graded land. I mean a LOT. Not sure what's getting built, but surprisingly, there's still land that's available to be built. I want to say it's the Leucadia area, west of 5 where I saw the graded land. In that vicinty thereabouts.

Submitted by FormerSanDiegan on January 7, 2013 - 5:22pm.

jpinpb wrote:
Well, I had the thought there's not much buildable land along the coast, but just driving back from Carlsbad along the 5 south there is a LOT of mowed down, graded land. I mean a LOT. Not sure what's getting built, but surprisingly, there's still land that's available to be built. I want to say it's the Leucadia area, west of 5 where I saw the graded land. In that vicinty thereabouts.

If you look at google maps there are two reasonable areas west of the I-5 between Carlsbad and Del Mar. One of these looks to be directly adjacent to a water treatment plant, just south of Palomar airport road.

The other, larger area is just south of Santa Fe Drive. I estimate that at the same density as the surrounding neighborhood, this area could include 80-100 SFHs. If it's made more dense, like most modern places, maybe 200 SFHs.

So, at best that's 100-200 homes developed over say 2-3 years.
That's not a lot. Consider that North San Diego County had 54 listings added for sale in just the first 5 days of 2013 per www.bubbleinfo.com

Submitted by FormerSanDiegan on January 7, 2013 - 5:23pm.

... also, these may be zoned commercial. who knows ?
Anyway, not much potential for new coastal development.

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