Here it is in a nutshell:
Charts and some thoughts below…
Single family home prices dropped pretty hard for the month, but
this only really offsets the big jump from May to June. If you
look back to 3 months ago, there was some intervening “noise”
in the form of a blip up and then eventually back down, but point to
point, it represents a very mild uptrend — which is more what would
be expected given the rising trend in supply vs. demand.
So, last month’s decline is no more meaningful than the rather
abrupt rise a few months back. The underlying trend (up until
last month anyway) has been that of a mild increase in prices.
This trend is a little more evident in the estimate of the
Case-Shiller index, though even that has experienced a bit of noise:
Moving on to demand, close sales continue to be quite weak compared
to last year:
Pending sales are below last year, but not by nearly as much… I’m
not sure the reason for this discrepancy, but I’d assume that the
two will converge at some point.
Inventory has continued its rising trend, with active inventory
growing even faster as contingent listings become less and less of a
thing.
Putting supply and demand together, months of inventory (and more
so, months of active inventory) have continued their rising trend:
The trend may be towards more inventory, but on an absolute basis,
months of inventory still seems to be at a level that would
encourage price mild increases for now:
Stronger US dollar = fewer
Stronger US dollar = fewer foreigners able to afford US housing. Foreign buyers are a big part of CA housing.
Rates will be going up less than a year. Investors are content to wait, maybe this will nudge more people back under water and towards short-sales.
QE3 is being sent to Hell where it belongs next month. The effect on housing when QE1 and QE2 were euthanized was negative.
Here’s hoping for some pain/opportunity ahead! Here’s to chaos!
Great stuff as always,
Great stuff as always, Rich!
I’m curious how seasonal trends will play out this year. There do seem to be a few less buyers running around. I’m guessing prices will be flat to drop slightly this winter, as they often do as we head into the holiday season.
Rich
Do you think there is
Rich
Do you think there is anyway to measure how much pent up demand is out there? Number of families doubling up in SD area?
We recently bought a rental property in San Marcos. Price as about 11% below the appraised value. Another investor wanted to cash out.
Two other homes within days of listing in the area had at least two offers which sold for 7% than our price.
However, there are four homes in the neighborhood listed at 15% higher which continue to sit for months.
To me this implies there is demand but the pricing needs to be very precise.
Big drop in sales. Biggest in
Big drop in sales. Biggest in the country I believe. Is it across the board? Be interesting to see what the next few months bring.
Got an email from Ryland
Got an email from Ryland offering 2.75% 30 fixed mortgage for new home in SEH. Things must be slowing down…
outtamojo
They have two quick
outtamojo
They have two quick move in homes in the 940K range. 3776 sf
I’m sure these are great high quality homes, but by comparison, we recently bought a 10 year old home 3500 sf in Silver Crest for more than 300K less
as such, at that price they need to put incentives in, but at the lower price points 620-640K, the homes move in days after listing, just needs to be priced right