The MLS shows 1751 SFR/Condo sales for February 2007, vs. 1916 sales in February 2006. A good percentage of those were new units that wouldn’t have been marketed in the MLS a couple years ago.
I took the liberty to thumbing through a couple cities to see how many of the listings for closed sales mentioned they were bank owned or subject to short sale approval. Oceanside had 13 of these out of 113 sales. Vista had 4 of them out of 54 sales. Carlsbad had 4 out of 82 sales, and San Marcos had 6 out of 72 sales.
That doesn’t count the probate sales, the relocation company sellers or those couple that were stated as divorce sales, nor does it include any sales in the must-sell categories that were were not openly marketed that way.
I don’t think it’s much of a stretch to suggest that in some market segments right now these numbers indicate as many as 15% of the total sales in Feb. 2007 were in the must-sell category where the seller didn’t have the option of waiting for better days. Meanwhile, there are other market segments with no outward indication of forced sales.
The newer homes and the higher price ranges seem to have fewer problems at the moment, as far as the manner in which they’re being marketed, anyway.
Seeing as how subprime just got cut back, I reckon we’ll see a few of the current pending transactions fall out of escrow for lack of financing. But the real impact will come when the number of the must-sell transactions starts increasing because of the mounting pressures on the overleveraged of the homeowners. That will be in addition to the declines that heretofore have been attributed primarily to price declines and lost employment in the RE sectors.
It’ll probably take at least 6 months before the banks get through the foreclosure process and start closing REO sales resulting from the mauling of subprime. It’ll probably take another 6 months before that trend fully hits its stride. By then the market psychology will have already passed the tipping point and will take on a life of its own.
That’s why I think 2008 could wind up being as bad as 2006 and 2007 put together.
