May sales down 28% from last May

[powayseller]

Thanks to Bob for his June 2006 report.

Homes sold in May totaled 2,805, down 28% from May 2005.

May pendings should bring June down 23% from last June. At least the rate of change is not increasing.

He explains that the high inventory is due to slow sales. It is NOT due to more people putting their homes on the market, but to FEWER BUYERS.

“The growth in inventory this year from 13,376 to 20,635 is caused by the slow sales rate which is causing it to take more time to sell the homes not by increased listing activity. The unsold listings are stacking on top of the new listings.

I have read reports indicating that San Diego is in a period of population decline, if correct this affects our market even more than interest rates. When you have families leaving the area combined with new construction continuing to put new homes on the market, the effect is to reduce the occupancy rate of housing which puts pressure to lower purchase prices and also in time rents.”

[Bugs]

I can’t figure out how a 28% decline in sales transactions translates into a doubling (or more) of available listings. Marketing times would have to quadruple in order for it to stack up that much.

[lostkitty]

Bugs – I think the inventory # would be compounding monthly while the sales % for May is just for one month.

[sdrealtor]

Kudos to Bob. He’s on target on this one. We are not experiencing anything close to people dumping homes on the market.Inventory is accumulating because of slower sales. If sales were flat from last year, I suspect inventory would be nearly half of what it is today.

[Anonymous]

This explains why prices have not fallen yet, although inventory is growing there is still no significant seller desparation due to ARM resets and foreclosures.

Imagine what is going to happen in the next two years as the ARMs start resetting and sellers become desparate on top of the already record inventory, its going to be an absolute bloodbath!

[LA_Renter]

Here is something to consider; Bob indicated that the rise in inventory is not the result of increased listings just slower sales and I have no reason to doubt that. I think this possibly paints a picture the worst is yet to come. I check OC Renters site bubbletracking daily and always wonder to myself exactly how high are these inventories going to go? I see no signs of any slow down in the rate of increase. Lets face it, prices ain’t going up anymore not with growing inventory, so there is no longer any profit motive to flip and what I read from this report is that flippers have not noticeably added to the increase in listings. I take this to mean there is still a great deal of inventory to be added. Does anybody have any thoughts and analysis on how high San Diego inventory can go? What will the peak be and how many months of inventory are we potentially looking at sitting on the market.?

[Anonymous]

Phoenix is well over 45,000 listings and they have a similar population to San Diego. I don’t see any reason why we couldn’t see 40,000 San Diego listings within a year.

[powayseller]

How can inventory be at the peak level of the last housing bust, and we are only at the beginning of the bust?

Something is going on that makes this time very different.

If we were mirroring the 1990’s downturn, our inventory numbers should be about half, right?

This is another thing the UCLA Anderson Forecast overlooked. They did not mention inventory at all. Not one word about it.

They took the tactic of eliminating factors they couldn’t measure or explain.

Hey, I know. Let’s forecast the weather, but not consider that El Nino thing. After all, it’s kind of complicated and we don’t understand it too well, so we don’t really need to deal with that stuff. We call ourselves the UCLA Anderson Weather Forecast.

[PD]

When comparing our current sitution to the 1990s through a mirror, I think it should probably be one of those circus mirors that make things look much fatter.

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