A number of people that I talk to know that they are currently screwed. They say that there is no sense in listing their home for sale, they know it will not sell (net) for anywhere near what they owe.
If they have a purchase money loan, they know that a short sale may cost them in income tax, while a foreclosure will not cost them anything other than a reduced credit score.
Why bother listing it ?
If you take summer 2006 inventory and add foreclosures and REO’s and take the same 3 factors today AND add the people who are headed to default and don’t want to waste their time listing, the “true” inventory numbers are much higher than what you are seeing.
In the Temecula valley, in the last week, I have spoken to 5 or 6 people who would gladly walk away if someone would just take over their payments.
I imagine that San Diego has similar thinkers.
There are probably hundreds (thousands?) that feel the same way. They ARE willing to sell, but they are like deer caught in headlights. They don’t know what to do, but they aren’t listing their homes on MLS.
And of course there are those that are holding and not listing on because………”they don’t want to lose money”
The vast majority of people do not have a payment or loan problem. It is possibly only 5% of the homes that do. This isn’t causing imploding, it’s more like crumbling, slowly.
Statistics are quite misleading, especially the MEAN that is used by many. In most areas, even if the mean is exactly the same as it was one year ago, you definitely get more house for that amount today.
Another factor that cannot be measured by the inventory numbers is the lack of easy financing that was available 12 months ago is no longer available, both jumbo and subprime.
Finally, the most important factor not reflected is psychology and sentiment has changed 180 degrees.
My expectation of a 5 year housing decline has extended with the disappearance of the secondary market on Wall Street.
The 1930’s Depression was a long 12 years.
What is now a blip in history was certainly painful for those who lived it day by day, week by week.
