RIP: San Diego

[ybbor]

http://bubbletracking.blogspot.com/

It has been just 2 months since the post, Code Blue San Diego, when we passed the historic inventory height of 19,250. 2 months and 3,000 additional homes later, we now pronouce our Canary officially dead.

It took 6 years from the peak of last bubble in late 1989 to the previous peak inventory in July 1995. This time it took 27 months, just a mere 965% increase from historic record low to the current new population adjusted record high inventory, 22,203. This increase averages out to a 35% increase per month. Of course, this is helped tremendously by 23 straight months of sales decline.

Meanwhile, percentage of reduced listings on the MLS is now 36.4%. In addition, median home price has been falling since November 2005, and year-on-year appreciation is now 0.4%, finally edging on negative territory.

Soft landing? Well, there’s always cryogenically frozen canaries, I suppose.

[yooklid]

How can people in “the business” still be in denial about the state of Real Estate in Southern California?

What will it take? Does the SD inventory have to double from this number before people finally face the music?

[carlislematthew]

Ahh, but when/if it *does* double, this will be GREAT news because we’ll be entering a buyers market and there will be many deals out there.

So, whatever you do, keep buying houses!!! 😉

[sdrealtor]

While it’s safe to expect prices to continue creeping down, it is not safe to expect inventory to keep increasing. By mid-September many of the people testing the market will recognize that their experiment has failed and will take their homes off the market. I have no idea how many this will be but I wouldnt fall out of my chair if inventory fell 20 to 30% for this reason.

Will it happen? Only time will tell. But don’t be shocked if it does.

[an]

sdrealtor, so you think that 20-30% of the sellers are just testing the water and they will pull their listings off the market. Lets assume that you’re right and there really is 20-30% testing the water. According the many sites that track invetory, inventory went up about 27%. So in 3 months, inventory will go up 27% at the current rate of increase, and then drop by 20-30%. By your best case scenario, we’re looking at a 3% decrease in inventory from today’s population adjusted record high. That’s still alot of houses that need to be sold. That doesn’t count in the people that will be force to list their house because their ARM adjusted that’s not listing now. $300B nation wide this year and $1T next year.

[Anonymous]

sdrealtor,

Not sure which dimension you are currently residing in? Do they have an MLS there?

[sdrealtor]

Nice try chump (CFO Not AN)! My feet are as firmly planted on the terra firma as anyone’s. Check my post and you will see that I did not say this WILL happen, only that it is a plausible scenario. We really have no idea of how many people are testing the market/don’t HAVE to sell. Inventory continuing to increase or at least stay flat looks to be the case. I was just introducing the possibility that it could actually fall, so those of you out there would not be completely shocked if this does happen. My suspicions are that the number of “unmotivated sellers” is somewhere between 10 and 30%. What they will choose to do when faced with a new market reality is anyone’s guess.

Inventory going up 27% when more people put their house on the market than any other time does not necessarily equate to 27% growth over the next 3 months. We typically see a fall off in the number of new listings around July.

We are in uncharted territory and I nor anyone knows what will happen. However, intelligent people like to look at all angles of things so as to avoid being blindsided.

[waiting hawk]

ya prices only have one way to go….up!! It nvr goes down. Everyone wants to live here and no more land is made.

[sdrealtor]

I guess we have 2 rocket scientists out there! Did you read the initial post? It started with “While it is safe to assume that prices will continue creeping down…..”

[Bugs]

I think the rate of increase on the listings demonstrates what we were talking about a couple months back about how the ready availability of information might change the pace in which the market moves. Back in the early ’90s the masses didn’t have so much information from so many different sources to influence their decisions.

If a lot of people really do get financially hurt in this cycle it will cause a lot more people to research their markets from multiple sources and in multiple ways in an attempt to get in front of the trend instead of behind it. Taking that idea a little farther, a better informed buying public could self-regulate on pricing and cut down on the extreme swings we’ve been getting. That could result in a more orderly market with less drama.

Or not. An appraiser can dream too, you know.

[Anonymous]

There is no reason to expect inventory to decrease in September, SDR is definitely smoking something. Just look at the Phoenix inventory to see a glimpse into the San Diego crystal ball.

[Anonymous]

The MLS is increasing at this rate inspite of the best efforts of the RE community to manipulate it. I am a CFO of a $96 millon packaging company and very profitable I might add. I always need sales people but I have NEVER had one come in with sales targets that could be met and it’s always a different story why. Makes the budgeting process very difficult.

[sdrealtor]

You miss the point. I never said that inventory would fall only that it could. To refuse to llok at both sides of an issue is to set oneself up to get blindsided. Personally I beleive it will stay pretty close to what it is now. But several long time successful agents that I greatly respect and who are sitting on a lot of listings believe a good portion of their sellers will stay put and take their homes off the market potentially reducing inventory levels.

[sdrealtor]

CFO,
I dont understand what you are trying to say, could you please calrify this statement. “I always need sales people but I have NEVER had one come in with sales targets that could be met and it’s always a different story why.”

[Anonymous]

RE People = Sales People

Sales People = Always Pie in the Sky

Not that I really have anything against sales people as I indicated before, I need them however, a little bit more reality would be greatly appreciated.

[Author]

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