San Diego Housing Bubble News and Analysis

It appears YOY inventory in all of the major "bubble" markets has peaked and is now down on a YOY, not just San Deigo.

RE Inventory levels YOY:

Riverside: -8.0% http://www.housingtracker.net/askingpric...

Orange County: -4.0% http://www.housingtracker.net/askingpric...

Sacramento: -13.7% http://www.housingtracker.net/askingpric...

It appears San Diego's shrinking inventories are not an anomally. The SD, OC, Sacramento, Riverside RE markets have led the rest of the nation through the various stages of the RE cycle both up and down. This collective group of market leaders now all have declining inventories.

In search of a crystal ball . . . .

Aren't you aware of all the pent up demand from "sellers" who are just waiting to get even ???

What's the sense of listing today when over 90% of what is listed isn't selling, and many people think that their neighbor's house that remains unsold is too cheap anyway, theirs "must be" worth more.

MLS listings don't tell the whole story in a declining market.

It's a pain to list a house for sale. It's easier to stay for free and get foreclosed on someday. Why bother trying to sell when you owe $200K more than it's worth, unless you have to.

In many areas, every single home bought in 2004,2005,2006 and 2007 the "owner" has paid more than the house is worth today.

I wouldn't pay much attention to falling inventory numbers.
It may turn out to be a foolish indicator.
The available pool of buyers has probably dropped over 50%,
who cares that MLS inventory has dropped 4% or 8%.

There is still plenty to choose from, unless you only want a certain color house on a certain street.
As far as shelter, there is no shortage of houses.

The comparison of inventory #'s is COMPLETELY different when everybody HAS equity and is holding off selling because they want more. Contraction of inventory in an up market is much different.

Just like there is no shortage of cars that provide transportation either, but if you only want a 1965 pink Cadillac, you may have a tough time finding exactly that, although there are thousands of other choices that provide the same result.

The simple need of shelter or transportation is very easy to meet. It's only the location of the shelter that creates different issues (or the look of the vehicle)

The MLS inventory is suspect, because there is evidence that a majority of the bank-owned homes are not on the MLS. I forgot where I read it, but somebody claimed that out of the 6000 bank-owned homes in the area, only 2000 are listed on the MLS. If that's true then there is a glut of must-sell homes sitting vacant.

Bank-owned properties and short sales are currently the real-estate market for San Diego. As long as we keep hitting record foreclosure numbers, my guess is that prices will continue to drop and then stagnate once the foreclosures come back to normal levels. A 4-5 year stagnation would be a significant price drop in real terms. If there is some major government bail-out I think that the nominal price drop will be less, but the stagnation period will be longer and we'll end up with a similar real price drop in the end.

Wrong. MLS-listed inventory may be shrinking. In this market, which is REO and short sale driven, we need to look at the inventory of bank-owned homes, short sales, and NODs. Can you post that before you say inventory is shrinking? I just want the facts.

Check out Mr. Mortgage, his inventory numbers include REO and short sale and he says we have 4.25 years of inventory on hand.

This article directly debunks the myth that inventory is shrinking. The research includes such mls-ignored facts as actual numbers of shadow inventory.

I read an article a couple of days ago on MSNBC or CNN (can't remember which) that said that the majority of realtors in Stockton, Merced and Sacramento wouldn't take any new listings since there were too many homes that weren't selling. I don't know if there's any of that going on in SD. So, in addition to what the posters above my post have listed, I don't think it means too much at this point. If the inventory starts dropping heavily and the sales are also increasing at a heavy rate, then this will be much more meaningful.

Nothing about sales? They tell you the median price, and how much is for sale, but not how many are really selling. (at least I missed it) I mean inventory is down 3.2% yoy, but sales are down,,,, what,,,,, 18%? So even if inventory is falling alittle, sales are falling faster, meaning that total months of inventory is up.

WHo cares if we only have 10 houses for sale in all of SD? If we only sell 1 house a year, we have 10 years of inventory sitting around. Sure is gonna be a long wait for that 10th house to sell. Think maybe they may try to "jump ahead" in line by cutting price alittle?

I see no problem with not-so-subtle attempts to convince prospective buyers that the bottom is in. In fact, I support such efforts wholeheartedly. The more investors who jump in to the market at this point, the better.

Buy Buy Buy.

You can look at total inventory including REO's on sdlookup.com, by zip code, for the last 6 months:

http://www.sdlookup.com/Market-92129-Pen...
http://www.sdlookup.com/Market-92128-Ran...
http://www.sdlookup.com/Market-92130-Car...
http://www.sdlookup.com/Market-92131-Scr...

Etc, etc

Of course some listings may be missing, but the general trend can probably be ascertained if someone were to go through the trouble of aggregating all the zip code data.

FWIW my office is busier than it has been in years and there are relatively few listings coming on the market in my area. I understand we are the exception though.

I agree with HereWeGo and am happy to hear what sdrealtor said. I hope many, many buyers run out and do their thang... I've only seen crappy homes at reduced prices (at least, not any homes that I would want to buy) so the more buyers snatching up those deals, the less competition when I mosey on into the buyer's pool.

Remember the wise story about the young bull and the old bull? They are standing on a hill and see some cows. The young bull says "let's run down there and bang one of those cows". The old bull says "no, let's walk down and bang them all".

If you switch bulls to bears and "a cow" to "a house" and "all" to "a nice house" and "bang" to buy then this perfectly describes our situation. ;D

This guy says the same thing every month. Ocrenter explicitly proved him wrong one of the times yet he continues.

Then again even if inventories are down and there isn't loads of pent up inventory yet to be listed, does that mean we're a bottom? I think not.

We'll see how inventory is 3-6 months from now.

cooperider14,

Do you have a problem with reading simple English . . . . In this post I said exactly nothing of my own opinion. I simply brought facts from the MLS to the table. Exactly how has ocrenter proved anything wrong in terms of what the actual numbers of listed homes for sale on the MLS this year versus last year are???? It may be a challenge for you but re-read the original post in this thread. I only bring the facts. The facts speak for themselves. As Rich's motto says . . . "In God we trust. Everyone else bring data." I'm just bringing you the data.

Here ya go coop . . . just in case you missed the first day of Econ 101. There is this little phenomena called Supply and Demand which affects the price of a given commodity, in this case housing. Well the best available hard data on the Supply side of the equation comes from . . . the MLS. Now of course this is only half the equation. Unfortunately there is no hard repository of data indicating exactly how many buyers their are out in the market actively looking to purchase (uh . . . that would be the "Demand") one of the homes in the "Supply." All you have is anecdotal evidence in the form of realtors who post here and comment on the current level of traffic and interest. Median Price, Case-Shiller, etc. are all somewhat stale data in that the arms length purchase agreement event of a buyer agreeing to a price with a given seller represented in those numbers is stale by at least 2-3 months. The MLS data is current however. Thus while being only half the equation it is important data.

I know that for most restating the obvious (Econ 101 - Supply/Demand etc) in this way is not necessary. But in your case coop I'll gladly try to educate you a bit.

In search of a crystal ball . . . .

cooprider,
Ya got that wrong buddy! Check out my update on thread where ocrenter "explicitly proved me (sic) wrong". It's th e San Marcos price reduction thread, I updated yesterday and you will find quite to the contrary that I explicitly provided ocrenter wrong.

update: After reading a bit more I guess it wasnt me that ocr proved wrong. That's right, I forgot, I'm never wrong;)

Folks, this is far from the bottom. Economically we are in an extremely weak period, loss of jobs, declining home prices, inflation and of course skyrocketing energy prices (which I think we have yet to even see a slight impact from). This housing picture becomes much greater than a simple equation of inventory. We have to start thinking outside the box in order to understand what is going to happen to this market.

Not only are we far from the bottom, but we are, no doubt, going to have an unqualified President running this country, which scares me even more. I urge you all to look beyond the lines and realize that this country has some big problems economically and we are far from any sort of bottom in this recession and housing market.

schizo2buyORnot - There is only one problem w/your data. It is NOT complete. You are just providing MLS listings, which do not include the endless supply of bank owned which are not listed. Thus it is not accurate or complete and it is misleading.

Yawn, wake me up when we the combined attahced/detached listing inventory drops below 10,000. At this rate it should only take 3 more years. That's if nothing bad happens between now and then. LOL

The foreclosures from actual ARM resets have yet to hit. Gross number of sellers being down belies the impact of the increase of compelled-to-sell-now sellers. The bust of the 1990s had 3 distinct rallies before it bottomed out. As I see it, we have been long overdue for a sucker's rally.

I just did an analysis of the Escondido market. They currently have a year's worth of SFRs and almost 16 months of condos sitting around; and there are a lot more foreclosures reported for those zips in Foreclosure.com than the total number of sales over the first 5 months of this year. And more coming online every month.

I swear, S2Buy must be holding a property or two; otherwise why would he/she do this every month?

I'm more amused that the quotes the motto "In God we trust. Everyone else bring data"

Then he doesn't bring all the data to the table, just picking and choosing and selecting data. Very flawed.

So I guess everyone should jump on schizo because he simply quoted official statistics. While he posts a 100% valid statistic there are a bunch of quotes that talk about shadow inventory and such yet nobody can come up with a hard fact. I saw the Mr Mortgage video... interesting but I feel he does take liberties with the data... maybe he is right though but only time will tell. I am not saying there is or is not shadow inventory, or that we do not have an inventory overhang. Yet the guy (shizo) simply posted something that is 100% validated.

Does anyone here recall people crowing about 30k inventory levels. Some of you did not post here back then but some of you did.

How bout in 2006 when we hit 23k inventory? Everyone was pretty wild about 30k being the next stop in 07. No? How bout 08? No well it must be there but maybe it is hidden... Not so sure I agree... Not so sure it really matters... The point is that no I don't believe we are any closer to the bottom then most of you but I d

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Look I don't buy in that we are even close to a bottom as well but jeez... the data is simply gathered and posted. Whether you like the data or not it is what it is which is a valid point. If someone wants to dig up more valid data then have at it.

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The bottom line is that last year at this time Scripps had about 125-130 active listings and it barely is at 100 this spring. Do most of the properties suck? Yes they do. I will say that I am VERY uninspired by alot of the inventory out there.

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Schizo my read on the inventory reduction (rather then refuting your data I will try to rantionally analyze it) is that as previously mentioned by HLS, many non distressed homeowners are now sitting out. They have realized it is game over and they will sit out this housing cycle for as long as it takes. As more of the market segment becomes distressed we may see a normalization of inventory which will pretty much seek an equilibrium maybe at the 15-20k levels depending on the time of year. One thing to note though, while inventory is lower by 3 or 3. whatever percent, yoy sales are still lower by more then that so you do have a net INCREASE in homes still staying on the market, you see what I am saying? Similarly we are now finally seeing the slowly grinding wheels of the new home buildouts stopping and that will also lead to less new homes which then lead to helping a consumption of inventory. Finally there is the give up factor...basically people throwing in the towel, abandoning the homes, not even trying to list to sell.

There may indeed be banks holding back properties in CERTAIN neighborhoods but not in any nice neighborhoods.

So schizo... I think it is good to keep monitoring the stats... Don't get fooled though... especially next spring where I am thinking we will get yet another bump in activity but that will be (at least to me) the calm before the second wave.... just my guess...

SD Realtor

I believe it was Josh who was planning the 30K inventory BBQ at his pad. SD R is right on. NO one is claiming any of the permabears are wrong about the outcome just the timing. While the declines in the lower income areas have been astounding, RE is still a slow moving ship in most areas. I dont think we'll see a bottom in the better areas until 2011 or 2012. Alot of RE was purchased between 2004 and 2006 with 5/1 ARM's. There are a ton of 5/1 Int only loans sitting out there with interest rates below 5% (and even 4% in some cases). Until these come to roost, we arent done. No one knows how the economy will look in 3 or 4 years yet alone what interest rates will be. The depths of bottom will greatly depend on factors like these not how much or how quickly you would like to see prices fall.

I just thought the statement that he made: "It appears YOY inventory in all of the major "bubble" markets has peaked and is now down on a YOY, not just San Deigo," to me seemed a bit disingenuous, that's all. Almost an underlying suggestion that since inventory is low, the worst is behind us.

How many of us are renting a "hidden inventory" house? The house I am currently renting was taken off the market about a year and a half ago, and rented, "until the market goes back up" Anyone else renting a house that was for sale? Not a very scientific survey, but maybe useful.

"NO one is claiming any of the permabears are wrong about the outcome just the timing."

C'mon, sdr....is it fair to paint someone like myself, who arrived in SD in 2003 and scoffed at the ridiculous prices being paid for homes and the methods being used to do so, as a "permabear"?

I don't think so. Not anymore than suggesting that you, being in the real estate business, must be a permabull.

Perhaps your patience is wearing thin and you are feeling a bit bitter lately? Or, perhaps, you simply didn't mean to paint everyone with the same broad brush.

LBC

not a "permabear" but also STILL not interested in buying your STILL overpriced POS

SD R,

Well said. As I posted in response to cooprider the inventory is only half the equation. The problem is that the other side of the equation . . . demand . . . is much harder to measure. The MLS accurately enumerates the actual supply for sale at any given moment. Arguments of impending explosions in inventory due to "phantom inventory" or "ARM reset waves" have been made for over 12 months here and yet the inventory has shrunk. That doesn't mean that such phenomena won't bloat the inventory in the future but so far it hasn't. I'm more of a "show me the money" type when it comes to data. I fully agree that the demand side while hard to quantify is definitely weak. Unfortuneately all you have is either stale hard data (closed sales) or anecedotal current data (broker traffic). I was actually part of the demand last month when I lost out on a lowball bid on a REO in 4S. Even I have since backed off and am continuing to wait for now even as I closely watch and monitor all relevant data. No doubt inventory levels is one dimension but a very important one. Put me in the Pig camp of one who has the money to buy, will buy at some point in the future, and am actively assessing all data in advance of perhaps the most important financial decision I will make in my life. I get the sense that many of these other types are just in the camp of attack even hard data if it suggests anything other than Armageddon is coming to the SD housing market. Their as hapless as the fools that piled in at the top in the sense that this sort of attitude will probably mean the will miss the bottom, assuming they even have the resources to by SD RE at any level and aren't here just grave dancing

In search of a crystal ball . . . .

perma(bull/bear) are people who will flat out dismiss any data given that challenge their position and cherry pick or spin other data to support their position. To me, permabulls will always miss the top and permabears will always miss the bottom. Permabulls will think that falling from top is just a healthy profit taking and we'll start running again. While permabears will see the rise from the bottom as nothing more than just dead cat bounce and we'll start to fall again. So, LBC, are you a permabear or just a realist like most of us here on Pigg? Only you can say what you are. Most of us here are just trying to gather as much DATA as we can and interpret them. This is just another piece of the puzzle. Like it or not, it's going in the direction that we don't want it to. Data doesn't imply anything, it is what it is.

Looks like I hit a sore spot.

Schizo, you brought facts that many here question. Your assumption that the phantom inventory doesn't exist is not fact based.

One reason I agree with the phantom invntory idea is from looking at Countrywide REOs in my city. CW has been rocked, was one of the biggest culprits in the mortgage mess, and probably owns more REOs than anyone. Yet in the last several months their REO listings have decreased. Couple that with banks hoarding inventory the answer seems pretty obvious.

You said, "The MLS accurately enumerates the actual supply for sale at any given moment." How do you know? Some Realtors are telling people not to even list their houses right now.

I personally don't care either way if the MLS is right because I think the bottom is still a ways off.

You want to measure demand take a look at the drop in mortgage applications, but save your flaming comments. When you make the same claim every month while prices continue to drop you start to sound like Chamberlain. You're also ignoring how much prices have dropped, ironic considering your claimed expertise on Ecnomics 101.

You talk a big game schizo, why don't put your money where your typing is and jump in a buy if you're so convinced inventory is past its peak? Just don't flame me when the house down the street sells for less 6 months later.

Coop,

I probably shouldn't even waste my time replying to your sophomoric drivel but since I have a spare moment.

"Your assumption that the phantom inventory doesn't exist is not fact based." OK . . . so show me the "facts" that it does exist. Facts that is . . . .

"You want to measure demand take a look at the drop in mortgage applications." I would welcome factual data that current mortgage applications are down or up YOY. Please post such "facts" if you have them or if they exist.

"When you make the same claim every month while prices continue to drop . . . You're also ignoring how much prices have dropped." Duh . . . prices have dropped. I have never said we are at a botton. Merely one of the several factors required to make a bottom, which was previously not in place, is now beginning to occur . . . declining inventory. Other factors are not present thus . . . no bottom yet. So exactly how is a past price drop relevant to a potential buyer trying to assess the current direction of the market????

"why don't put your money where your typing is and jump in a buy if you're so convinced inventory is past its peak?" This is where you really sound like a sophomoric A$$. "Yeah . . . come on . . . I call ya out . . . I dare ya." This may have impressed your friends in elementary school but most here are looking for a little more in the form of enlightening analysis/facts.

In search of a crystal ball . . . .

I do not see SD Realtor posting about making his wife happy and making low-ball offers anymore. That's telling in my opinion. I'm betting that, in light of the drops, he's setting his sights higher up the real estate ladder.

I do agree with sdrealtor (the other one) that patience is key. People will buy no matter what the market is. The market doesn't move that fast.

I do however think that interest rates will spike next year so that will crash the market further.

It is coop and everyone else who should not be responding to the stupidity of schizo; however, since we all respond to his lame posts here's mine. It cracks me up when schizo tries to act smart. Anyone can look up words in the dictionary but if you were truly smart you'd know how to use them.

Phenomena is the plural form of phenomenon. Don't use words that your mind doesn't fully grasp, you'll just look even more stupid.

Asinine is spelled with one s, not two. (see your other lame thread where you spelled it wrong many times)

Check out the many words schizo has pulled from his dictionary to sound smart:

infantile ignoramous
braggadocio BS
vacuous idiocy
rambling diatribe

Today's dictionary words are "sophomoric drivel" which are used twice to show how smart schizo is.

Simple-minded schizo's formula is easy to see:

Post a lame and useless fact.
When people comment on it, whine and state that it's a fact.
Get defensive and go to the dictionary to look up big words to sound smart.
Go away for a while, then come back and start a new thread with the exact same useless fact.

Uh. . . yea and making sure my spelling is perfect and taking time to correct my typos is soooo important when posting to a blog. You must be one of those Type-A persons who actually corrects spellings in SMS and e-mail messages. "Tries to act smart . . ." ???? No its just communicating in the English language. BTW no need to consult a dictionary. Its called E D U C A T I O N and having a V O C A B U L A R Y.
In search of a crystal ball . . . .