The Short Sale Monitor

[lindismith]

Yes, no question those that can wait to sell, will wait. But life has so many uncertainties, and we’ve all seen how much of our local economy has been driven by this housing market boom. A few more contractors, loan companies, real estate firms etc., affected, and people who think they’re ok will not be. The ripple effect will be huge. People stop eating out, getting their hair done, buying clothes etc., so the whole economy feels it. (And, just think what one divorce will do in every zip code!!)

Every week we’re watching those short sale numbers jump up. 2005 didn’t even have short sale figures. Listings would sell in a matter of hours! Now, listings are sitting, and sitting, and sitting. So, our sellers are different. We’re seeing people that need to sell, but unlike 2005, they can’t.

And, the buyers are all like me: they’re saying, ‘gee, things have really turned around. Exactly how low is this thing gonna go?’ In 2005 buyers were saying, ‘I’d better buy now or get priced out forever.’

So you’re right, no one knows how this will play out, but my money’s on further easy price declines. Buyers have nothing to lose by sitting out the market this entire year.

[sdrealtor]

Lindi,
Two quicks points. As we move toward short sales, the sellers become the lender not the “homeowner”. The lenders have the assets to ride this out for now, so the sellers aren’t as different as the homeowners of old with equity cushions.

Also, the buyers are not all like you. Many buyers are saying, prices have dropped to a level I feel comfortable with, the crash in prices has been overhyped, the economy looks good and I believe things are going to be OK. If they were all like you we wouldnt be seeing the healthy sales volume we are. Right or wrong, this is what is happening.

[lendingbubblecontinues]

healthy sales volume?..current buyers must believe that this is the final round of the “stupidest f*&king people on Earth” contest!! (They are certainly in the running to be crowned “champion”;-) C’mon sdr–you must pity these people a little bit, knowing that they are marching right over the cliff.

Meanwhile, D.R. Horton’s chief sees things a bit differently:

“‘We’re in the very early stages’ of the current housing slowdown,’ CEO Donald Tomnitz said.

[lindismith]

sellers become the lender

This may be true, but in 2005, the sellers were actually trading up and buying. Now they are most likely dropping out of buying altogether.

How healthy is the sales volume? How does it compare to ’06,’05 and ’04?

[sdrealtor]

LBC,
I’m just reporting on what I am seeing. Sales are happening at a good rate and have not shown signs they are deteriorating from last years volume yet. Only time will tell and so far the market has been surprisingly resilent.

SDR

[sdrealtor]

Update time

1,226 (about 2.5% higher) up from 1,196 last week.

Total SD County listings for attached and detached properties are 15,535 up from 15,460 barely a blip from last week. Inventory is leaving the market as quickly as it comes on. In my sub-market pendings have climbed 10% for the 2nd week in a row and active inventory is flat.

Everything I am seeing points to a much slower decline this year than last. As of today, I believe it will likely take at least 3 more years to get to the bottom if not longer. Any significant downward movement from here will require a significant increase in distress sales (which most here, myself included expect) because “casual sellers” dont seem like they will budge unless they become “must sellers”.

[no_such_reality]

sdr, we would expect most sellers to hold tight now. Human psychology is messed up that way.

A seller may have bought years ago at $100,000 or $200,000 and be able to sell today for $600,000 but they won’t. In their mind they don’t see the $400,000 they’re making, they see the $100,000 more they should make by selling at peak or waiting for prices to return to peak

[sdrealtor]

Update time

1,262 (about 3% higher) up from 1,226 last week.

I hate to throw out BULLISH news but the data is what is. Total SD County listings for attached and detached properties are 15,392 DOWN from 15,535 last week. That figure is also lower than it was 2 weeks. This comes at a time when inventory is generally increasing at a pretty good clip! Unless we start piling on the listings, prices could even actually creep back up a bit in the Spring. Inventory is leaving the market faster than it comes on. In my sub-market pendings have climbed faster than listings for the 3rd week in a row.

The market is transitioning toward stagnancy dominated by distress sales. As a future buyer, I would not be looking forward to buying in that kind of market either. The challenge with distress sales is that they are quite complex relative to ordinary transactions and the property is usually taken over in very rough condition. If my expectations continue, its not going to be a fun market for buyers or sellers. Buyers will get beaten up properties requiring alot of work upfront and sellers will be disgusted at missing out on the peak.

I expect no more than a 5% reduction this year and wouldn’t be surprised to see flat or even slightly increasing prices.

[JJGittes]

If it goes down another 5%, in my view that will be a solid 10-15% (maybe even more) drop from the 2004-2005 peak. Factor in 2-3 years of 3% inflation, and that it a real decline of 15-20% from the top. Yeah, it could just be the tip of the iceberg, but it ain’t bad from average buyers’ points of view and it could result in some activity.

[little lady]

"I hate to throw out BULLISH news but the data is what is. Total SD County listings for attached and detached properties are 15,392 DOWN from 15,535 last week."

 Wow! That is good news for me, I hope it stays that way for a little while!

[Anonymous]

We have been tracking real estate short sales in Southern California in the San Gabriel & San Bernardino area since 9/25/06 and have seen a continued increase.

Here is some of the stats we have gathered in that time:

9/25/06 – 118 active
10/2/06 – 138 active
10/5/06 – 147 active
10/6/06 – 154 active
10/23/06 – 179 active
11/7/06 – 204 active
11/13/06 – 215 active
01/08/07 – 268 active
2/14/07 -195 active

I remeber the late 1980’s early 1990’s when 51% of all homes sold in Orange county were short sales. I truly believe with the current mortgage credit bubble which will cause elimination of the “stated income” (aka liar loans) loans for salaried individuals, we will see a dramatic increase in short sales nationally.

[sdrealtor]

Short sales 1,363 up from 1328 (2.6%) from last week.

Total SD County Listings 15,717 up from 15,695 still relatively flat for the year.

Market continues to w relative strength. I thought I was begining to see inventory increase and then that rally fizzled. I just dont know when it will start piling on if at all.

[sdrealtor]

Short sales 1,398 up from 1363 last week.

Total SD County Listings 15,868 up from 15,717 last week and still relatively flat for the year.

While it isnt showing up in the numbers yet, I am starting to see more coming on the market. Not sure what is happening to counter the uptick in listings that I’m sensing. The truth is, I havent had much time for RE lately with my other businesses taking lots of my time. The funny thing is I seem to get 1 to 2 new clients every week looking for properties that I just dont have the time to deal with right now. Overall, i’m pusihing them to be patient to see hwat the market reaps the next couple months.

I also just spent a week back East and had some interesting thoughts/observations I hope to get to soon. Oh yeah, It was cold, it snowed and I’m glad to be back home.

[sdrealtor]

Before this weeks update I want to clarify one thing. The count we are tracking is the number of listings with the words “short sale” in them NOT the number of short sales which cannot be tracked. Due to limitations of the data, it includes listings that say “not a Short Sale” and double counts listings that say “short sale” in more than one of the fields I am searching. With that said, its the best we got and provides a useful way of watching distressed property sales increase.

Short sales 1,482 up significantly from 1398 last week. Probably the biggest single increase in a week since we began following this.

Total SD County Listings 15,892 essentially the same as 15,868 from last week and still relatively flat for the year.

Here is some data from my submarket. The number of pendings as of the 1st week in March is essentially the same as last year. However, detached home inventory is down about 13% and attached inventory is down 33% from last year. If we are going to see inventory spike dramatically it has to start in the next 30 days.

[startingout]

Thanks for the update sdrealtor.

I’m not a real estate guru or anything, so I don’t quite understand why if inventory is going to spike it must happen in the next 30 days. What would prevent it from spiking 40 days from now?

Thanks in advance.

[Author]

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