[quote=davelj]Lemme lay some numbers on you folks and tell me what you think. I’m just kind of spitballing, but that’s what we do here.
There are currently around 13,000 properties on the SD MLS right now. About half are foreclosures, so around 6,500. Let’s assume – just for the sake of this discussion (and feel free to chime in if you think this is silly) – that there’s one “shadow” foreclosure (that is, not in the MLS) for every MLS foreclosure. So, that would put us at around 19,500 in REAL inventory.
Now, let’s further assume that we’re going to average more than 1,000 new foreclosures on the market each month through the end of the year, so we’ll make it 10,500 just to use a round number. And let’s also assume another 5,000 of non-foreclosure inventory to hit the market (crazy folks who shouldn’t be trying to sell their houses right now but are doing so anyway) through year end.
So, assuming zero sales, we’d end up with about 35,000 units of REAL inventory by year’s end (19,500 + 10,500 + 5,000), about 2/3s of which is foreclosed homes.
Through the first four months of this year, home sales are up 50% over 2008 in SD. If we assume that home sales – let’s go with resales alone – are up 40% over 2008 levels for the rest of the year, then that equates to about 25,000 sales between May and December.
35,000 – 25,000 = 10,000 units of REAL inventory at the end of the year (I’m excluding new home sales and new “new home” inventory, just to simplify things, although the beginning inventory figure includes some new homes).
That doesn’t seem like much inventory. And that’s assuming a LOT of foreclosure activity through the end of the year (more than we’ve seen in the last couple of months) as well as a pretty large shadow foreclosure inventory. So there’s some cushion in that number.
Don’t get me wrong, prices are still heading down… but it would appear at a much-reduced rate going forward. So long as rates remain relatively low, the sub-$300K foreclosures are getting sucked up faster than they’re being created. And since most folks who don’t have to sell in this environment aren’t bothering to try… the REAL inventory’s going to be tight for a while.
Anyhow, just an observation. Feel free to point out that my assumptions are nuts (although do us the favor of adding some explanation).
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Makes sense to me with two caveats:
1. You say that any non-distressed seller today is crazy. If I were a long-time owner and were concerned about the housing and stock markets (not even going into the default risk for municipal bonds, which so many seniors own…or the Treasuries that are yielding next to nothing), I’d seriously consider selling my still-bubble-priced home so I could move to a much cheaper location and preserve some of my equity.
In many areas, prices are still in bubble territory (post-2001 prices), and the market is HOT…this is the time to sell, not buy, IMHO.
2. That interest rates will remain low. I’ve been waiting for higher rates now for years, so concede that I’ve been terribly wrong for a long time, but someday it has to happen with all the printing going on, no?
