I think TG brought up a good point. As I remember for the survey “where you are here”, many of you claim that you are here to learn. I enjoy learning and the best method that I have found is to come up with a theory (or accept an existing theory), set out expectation based on such theory and then constantly check the reality with the expectation and modify the theory accordly.
So what do we have here? We have a decrease of inventory that was completely out of our expectation if we ask any of you to guess a year ago? So what could be the cause? It could be a decrease of the REO entering the market or it could be an increase of the sale activity. We have both. The decrease of the REO could be explained by the government activity, etc, whatever new theory we are coming up with. I think that is quite satisfactory since the NOD is increasing as we expected. But what about the increase of the sale? SoCal has over 50% yoy sale increase right now. In the middle of recession, and the equity market although recovering is still far below its recent high, it is a little bit surprise that the activity is rising so fast instead of dropping right now(note: that it is yoy increase so it should take care of the Spring buying season theory). I don’t have the answer, but maybe someone can come up with a theory to explain that…and then we will be closer to the truth, rather than just keeping insisting that the world is going to end like many of R.T.66’s post. His/her post is entertaining, but I don’t learn anything new from reading his/her post, because that theory was thrown at us years ago, wasn’t it?
One last note: it is very easy to dismiss the data that you don’t like to see. Some of it can be statistical abnormalty. It takes a lot of work to get through the data to dismiss theory though…as Rich has shown through his excellent analysis of the “rent bubble” theory.
