Powayseller almost stays away BUT!

[sdrealtor]

I’m a little pissed off this morning. Yesterday I thought it was great that PS stayed away for a day and let the forums go w/o her. It was interesting to see and we got lots of new participants. Than last nite in one short sentence she undid all her good intentions.

Rich posted new analysis for the 1st time in over a week. He doesn’t post much and when he does, it is usually a good objective point worth following. He pointed out that inventory peaked in August and has since leveled off/declined. In 2004 and 2005, inventory rose by 20% or more between August and the typical October peak.

In one short sentence PS completely minimized the point he was making which is both significant and bears watching. She said “Inventory always dips in the fall. So do sales.” That is not the point as the timing of the trend evident the last few years changed this year.

It is unfair of her to minimize his hard work! This is his blog and the data he presents is truly objective. In one short sentence she obliterated his point with her subjective self-centered comment. I hope others see through it too.

I have to admit that part of my frustration comes from speaking to lots of my colleagues and postulating in July that inventory would begin declining precipitiously (sp?) after Labor Day as there were alot of unmotivated sellers that would just give up. This is what we are now seeing. I don’t know what this will do to the market but it is significant and bears watching.

I feel better now…….

[PerryChase]

sdrealtor, you’re making a mountain out of a molehill. What powayseller said was innocuous and did not minimize Rich’s work. Rich reported inventory and powayseller just pointed out that inventory declines in the fall.

[sdrealtor]

Amazing! It is a break in a trend that has persisted for a few years and is significant. Yes inventory typically has declined in the Fall. But this year it declined in Summer. You are minimizing it also. These are the types of changes we should be looking for. When we see them, we should follow them as they could lead us to places we may not have considered before.

[(former)FormerSanDiegan]

Rich’s work started with the words,
“It definitely appears that inventory has peaked for the year”

Key words …
for the year

IMO, I see no difference in the post by Rich and the initial comment from ps, except that it was redundant. In addition it was a redundant statement and I see no difference, in my opinion.

[gromit]

Seriously, guys, get a life.

[PerryChase]

Here’s the professor’s full article from the Voice of San Diego.

Declining Home Inventory

It would seem that San Diego’s housing inventory flood has finally begun to recede. According to my spot checks at ziprealty.com (an incredibly useful site, I would add), the number of condos or single-family homes for sale peaked in August at right around 21,000 before starting to head down.

This is interesting because in both of the prior years, as the accompanying graph indicates, inventory growth didn’t turn around until October. Why the early peak in 2006?

It’s not that more units are selling. Sales volume continues to shamble along at 20 to 30 percent below last year’s levels. So it would seem that fewer people are listing their homes for sale — and that more would-be sellers are removing their homes from the market.

I think the most likely explanation is that the combination of slow sales and heavy competition has caused people to throw in the towel. Those of us who have been through it know that having a home on the market is fairly high-impact, requiring one to keep one’s living space in museum-quality shape at all times. Rather than enduring this situation into the slow (or in this case, “even slower”) season, many a seller is likely giving up and hoping for a more housing-friendly 2007.

If this theory proves correct, we can expect inventory growth to be fast and furious early next year.

— RICH TOSCANO
Tuesday, October 3 — 9:39 am

[sdduuuude]

Come on, sdrealtor. Even I’m OK with it. Try to argue the point in the appropriate thread. We’ve been rough on PS and she has taken it well.

[PerryChase]

I agree with Rich’s analysis of inventory.

I have a friend who’s about to pull his house off the market and rent it out (so he says because he still lives there) since he can’t stand showing it anymore.

I wish the sellers good luck with an uptick in the Spring of 2007. I believe that 2007 will be the harbinger of what’s to come for real estate. If sales continue to slide in 2007, then all bets are off for housing.

[powayseller]

I am a big fan of Rich, and I didn’t intend to “negate his work”. I don’t think he made any strong conclusions from that data, and he really can’t. My point is: the chart is interesting, but not too useful. We can’t make too much out of inventory falling unless we know how much sales fell. I agree with sduuude (gosh, can’t believe he and I are getting along now….too weird to figure that one out), that it is months inventory that matters.

So what if inventory falls, if sales are falling the same amount or more? We need a chart of sales next to the chart of inventory.

If months inventory is rising, pricing pressure will keep falling. So I think that months inventory is a more useful chart, if you wanted to have only one chart.

I think that Rich appreciates my comments, because ultimately we are all collaborating on figuring this stuff out.

[sdrealtor]

Perhaps I was abit pissy this morning and I apologize but we really need to look for changes not just what we continue to see. The chart is useful because it gives us something to objectively watch over the next couple months. It’s nice to agree with Rich’s theory but that is not what we are here for. We are here to learn and to stay ahead of the curve.

The excess inventory puts pressure on prices. If alot of the inventory vanishes so will some of the downward pressure on prices. Personally I hope it stays high because it will help me to negotiate for my buyers that will be purchasing in late Fall. I recently had a client purchase a home in the mid $1M’s against comps close to $2M. High inventory makes my job easier when representing buyers.

[PerryChase]

…..until buyers see high inventory and decide not to buy.

[JES]

I’ve been following a neighborhood in San Marcos that seems to be a good gauge of what is going on overall in this market. In June there were 15 homes for sale in this 120 home community, none pending or sold, all priced at comps. In August, still 15 for sale, but one was also for rent and a third to half were reduced. Early September I drove through and there were 12 for sale and 3 for rent. Finally, last week there were only 8 for sale and all were reduced, 3 for rent, all the rest cancelled. One of the 8 had listed in March at 725k and now has 589k as the lower end of the range!

Conclusions:
-Some sellers really want out = huge reductions.
-Other sellers have cancelled and will re-list in Spring.
-Median prices reported this Fall will be ugly. I don’t remember seeing price drops like this in June and July and once these things sell it will really pull things down.

[PerryChase]

JES, it’s looks like you’re considering buying.
How low would it go before you buy?

[JES]

I have been looking at relocating out of state, but if it gets low enough I may consider staying. It’s tough to say that now is a good time to buy though since it is likely just going to go lower in the coming months. This board provides us with so much insight that we will likely have a good sense as to when the market is near bottom before the masses believe it, don’t you agree? It is not even necessary that this be predicted so long as we keep our ears to the pavement and recognize it when it happens.

It is interesting because unlike previous cycles, the average person has unbelievable information resources like blogs and useful websites to gauge the market. However, the vast majority of people are not tracking these things to the extent that we are and I believe that this gives those of us who are a great advantage. Contrast this with the stock market where information is absorbed immediately, the market is extremely efficient and therefore there is little opportunity to use information to your advantage. Here we have inefficient, local/regional real estate markets where a minority of people have their hands on the most up to date information.

Even if I move, I plan to keep my ear to the pavement and follow this market. If you take a very long range approach San Diego is a very solid investment. A city like San Marcos, for example, with the university and growth is a great place for a rental property.

[PerryChase]

JES, you make really good points. I too beleive that this time around the Internet will allow savvy buyers to have an advantage. Over time, slowly, the Internet will change how houses are bought and sold.

Buyers will be very reluctant to pay the high profit margins once that information is widely available.

By paying attention to the market we can determine when the right time to buy is. It’s still some years away though.

For rental property, I think that Merced, in the long run, might be a better deal than San Marcos. UC Merced is growing and the market there is already crashing.

What price point for a decent SFR would make you stay in San Diego? I guess you’ll know it when that time comes.

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