The boat turns slowly

[SD Realtor]

As I posted a few weeks ago, I am seeing some signs of slowing down in several (but not all) of the submarkets that I work in and track for investment purchases. In general the symptoms are growing inventory and market times, poor active to pending ratios, and fewer closed sales.

This time around it is more interesting then in 2006 when it was happening. Actually in some submarkets it even started as early as 05 but lets not digress to much. Back then we had alot of things that were in sync and alot of unknowns. We knew we had foreclosures coming, we knew we had high unemployment coming, we knew we had a world of hurt in the banking world coming. We knew all these things but it played out much different then many of us thought/hoped it would. Dig far enough back and you will find the old “Bring it on” posts with regards to the recession and how “affordable” housing will be in 2009 and 2010.

Now we are on the other side. We all know now that the govt has successfully manipulated market conditions, lending conditions, and outright took over companies in some industries. We see that concepts such as moral hazard and dealing with the root of the problems have been tossed aside at the expense of our children and perhaps grandchildren with regards to future debt. So now as inventory starts to slowly build again and sales are dropping off, how will things play out? We have presumably peaked with regards to unemployment, and those who thought that 10% unemployment would unhinge housing were far from correct. As all of us know the real unemployment numbers are closer to 17-18% in reality. Even with that, pricing still is fairly crazy. There are not riots. There are not roving hoards outside the gates of 4S Ranch.

So what can we deduce? Well, that the uneven distribution of wealth is more uneven now yet it has not tilted the San Diego housing market. The number of white collar jobs, well educated people holding those jobs, dual income families, wealthy people, etc has continued to keep demand high for most of the communities that are desired here. As things become more and more sluggish it will be interesting to see how it plays out. I know of alot of people looking for homes but buyers seemed to have come to their senses now that the stimulation mania has settled down. They are being more patient and demanding lower prices. Sellers are still entrenched in denial. The past 18 months of craziness undid the much need slap in the face that relectant sellers needed to knock the entitlement out their psyche. This is unfortunate.

The other major difference between now and say summer of 06 is that we now all have seen how the govt will cope with sellers in distress. It is about the worst thing that can be done but it is what it is so I for one am not counting on the tsunami that never came but was for so long predicted. This is not to say that more foreclosures will not come, we know they will. I also know for sure some speculators purchasing at auction will get caught with properties if things continue like this. However we are so far off of 2006 inventory it is not worth talking about.

So back to the main point. I think things are changing slowly. My thoughts are that more sellers then usual will pull off the market in late summer with hopes for the 2011 spring market. Some of them will reduce pricing but I do think that things will not hump down in a drastic manner. Still though I think there will be some better deals as we move forward then we had in the previous spring and winter. The pricing most sellers are demanding right now are freeking ridiculous. At the very least there will be more to choose from and hopefully some sellers will price more aggressively. If the active/pending ratios stay this poor that bodes well for buyers. However patience, alot of it will be required.

[scaredyclassic]

Sounds right. Still I feel like at some moment there could be no buyers for certain properties we follow without rock bottom pricing. The pool of people who will pay 500000 plus in the outskirts of temecula for a pseudo ranch cannot be infinite! There has to be a last sucker. And what does it matter to a bank anyway? The price is real to me but isn’t it truly fake money to them? I have to pay but they don’t kind of. But yeah this did not play out quite like I’d thought. I am willing to admit I know nothing. But one thing I do have is patience…patience and an unfounded certitude that I am or will be right in the face of strong evidence that I am in fact wrong. F it f the banks f reality f it all. Can I put it in my contract that a vp or higher official at the bank must kiss my ass at closing?

[scaredyclassic]

Sounds right. Still I feel like at some moment there could be no buyers for certain properties we follow without rock bottom pricing. The pool of people who will pay 500000 plus in the outskirts of temecula for a pseudo ranch cannot be infinite! There has to be a last sucker. And what does it matter to a bank anyway? The price is real to me but isn’t it truly fake money to them? I have to pay but they don’t kind of. But yeah this did not play out quite like I’d thought. I am willing to admit I know nothing. But one thing I do have is patience…patience and an unfounded certitude that I am or will be right in the face of strong evidence that I am in fact wrong. F it f the banks f reality f it all. Can I put it in my contract that a vp or higher official at the bank must kiss my ass at closing?

[scaredyclassic]

Sounds right. Still I feel like at some moment there could be no buyers for certain properties we follow without rock bottom pricing. The pool of people who will pay 500000 plus in the outskirts of temecula for a pseudo ranch cannot be infinite! There has to be a last sucker. And what does it matter to a bank anyway? The price is real to me but isn’t it truly fake money to them? I have to pay but they don’t kind of. But yeah this did not play out quite like I’d thought. I am willing to admit I know nothing. But one thing I do have is patience…patience and an unfounded certitude that I am or will be right in the face of strong evidence that I am in fact wrong. F it f the banks f reality f it all. Can I put it in my contract that a vp or higher official at the bank must kiss my ass at closing?

[scaredyclassic]

Sounds right. Still I feel like at some moment there could be no buyers for certain properties we follow without rock bottom pricing. The pool of people who will pay 500000 plus in the outskirts of temecula for a pseudo ranch cannot be infinite! There has to be a last sucker. And what does it matter to a bank anyway? The price is real to me but isn’t it truly fake money to them? I have to pay but they don’t kind of. But yeah this did not play out quite like I’d thought. I am willing to admit I know nothing. But one thing I do have is patience…patience and an unfounded certitude that I am or will be right in the face of strong evidence that I am in fact wrong. F it f the banks f reality f it all. Can I put it in my contract that a vp or higher official at the bank must kiss my ass at closing?

[scaredyclassic]

Sounds right. Still I feel like at some moment there could be no buyers for certain properties we follow without rock bottom pricing. The pool of people who will pay 500000 plus in the outskirts of temecula for a pseudo ranch cannot be infinite! There has to be a last sucker. And what does it matter to a bank anyway? The price is real to me but isn’t it truly fake money to them? I have to pay but they don’t kind of. But yeah this did not play out quite like I’d thought. I am willing to admit I know nothing. But one thing I do have is patience…patience and an unfounded certitude that I am or will be right in the face of strong evidence that I am in fact wrong. F it f the banks f reality f it all. Can I put it in my contract that a vp or higher official at the bank must kiss my ass at closing?

[bearishgurl]

Regarding a large ranch-style home on 1/2+ AC in Temecula, I think you are absolutely right by waiting it out to get exactly the right one at the right price, Scaredy.

There is NOT an infinite pool of buyers in this price range for that area. Most folks who can spend $500K+ would choose to buy in a more convenient area, IMO.

This is nothing against Temecula but you appear to be looking for a “niche” property there that might cost $750K in Poway. The VAST MAJORITY of folks who buy in RIV Co. who HAVE NEVER BEEN residents of RIV Co. do so to get the most bang for their limited buck without regard for commute times.

[bearishgurl]

Regarding a large ranch-style home on 1/2+ AC in Temecula, I think you are absolutely right by waiting it out to get exactly the right one at the right price, Scaredy.

There is NOT an infinite pool of buyers in this price range for that area. Most folks who can spend $500K+ would choose to buy in a more convenient area, IMO.

This is nothing against Temecula but you appear to be looking for a “niche” property there that might cost $750K in Poway. The VAST MAJORITY of folks who buy in RIV Co. who HAVE NEVER BEEN residents of RIV Co. do so to get the most bang for their limited buck without regard for commute times.

[bearishgurl]

Regarding a large ranch-style home on 1/2+ AC in Temecula, I think you are absolutely right by waiting it out to get exactly the right one at the right price, Scaredy.

There is NOT an infinite pool of buyers in this price range for that area. Most folks who can spend $500K+ would choose to buy in a more convenient area, IMO.

This is nothing against Temecula but you appear to be looking for a “niche” property there that might cost $750K in Poway. The VAST MAJORITY of folks who buy in RIV Co. who HAVE NEVER BEEN residents of RIV Co. do so to get the most bang for their limited buck without regard for commute times.

[bearishgurl]

Regarding a large ranch-style home on 1/2+ AC in Temecula, I think you are absolutely right by waiting it out to get exactly the right one at the right price, Scaredy.

There is NOT an infinite pool of buyers in this price range for that area. Most folks who can spend $500K+ would choose to buy in a more convenient area, IMO.

This is nothing against Temecula but you appear to be looking for a “niche” property there that might cost $750K in Poway. The VAST MAJORITY of folks who buy in RIV Co. who HAVE NEVER BEEN residents of RIV Co. do so to get the most bang for their limited buck without regard for commute times.

[bearishgurl]

Regarding a large ranch-style home on 1/2+ AC in Temecula, I think you are absolutely right by waiting it out to get exactly the right one at the right price, Scaredy.

There is NOT an infinite pool of buyers in this price range for that area. Most folks who can spend $500K+ would choose to buy in a more convenient area, IMO.

This is nothing against Temecula but you appear to be looking for a “niche” property there that might cost $750K in Poway. The VAST MAJORITY of folks who buy in RIV Co. who HAVE NEVER BEEN residents of RIV Co. do so to get the most bang for their limited buck without regard for commute times.

[UCGal]

I am about as good at predicting the housing market as I am at predicting the financial markets… In other words – I keep trying to apply reason and sanity to a system that is manipulated in a way that I can never predict. I didn’t predict the government intervention in housing to the extent it’s happening. They’ve come up with so many creative, unpredictable ways to prop it up and reinflate – from overt stuff like the 8k incentives, to more subtle ways like free, unlimited credit to the banks which allows them to carry non-performing mortgages indefinitely.

[UCGal]

I am about as good at predicting the housing market as I am at predicting the financial markets… In other words – I keep trying to apply reason and sanity to a system that is manipulated in a way that I can never predict. I didn’t predict the government intervention in housing to the extent it’s happening. They’ve come up with so many creative, unpredictable ways to prop it up and reinflate – from overt stuff like the 8k incentives, to more subtle ways like free, unlimited credit to the banks which allows them to carry non-performing mortgages indefinitely.

[UCGal]

I am about as good at predicting the housing market as I am at predicting the financial markets… In other words – I keep trying to apply reason and sanity to a system that is manipulated in a way that I can never predict. I didn’t predict the government intervention in housing to the extent it’s happening. They’ve come up with so many creative, unpredictable ways to prop it up and reinflate – from overt stuff like the 8k incentives, to more subtle ways like free, unlimited credit to the banks which allows them to carry non-performing mortgages indefinitely.

[UCGal]

I am about as good at predicting the housing market as I am at predicting the financial markets… In other words – I keep trying to apply reason and sanity to a system that is manipulated in a way that I can never predict. I didn’t predict the government intervention in housing to the extent it’s happening. They’ve come up with so many creative, unpredictable ways to prop it up and reinflate – from overt stuff like the 8k incentives, to more subtle ways like free, unlimited credit to the banks which allows them to carry non-performing mortgages indefinitely.

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