The Short Sale Monitor

[sdrealtor]

Seasonally that is when it starts rising in earnest each year. If we dont see it starting to pour on in the next 30 days, it is unlikely to spike from regular sellers as opposed to the distressed market.

[sdrealtor]

Short sales 1,577 up significantly again from 1,482 last week.

Total SD County Listings 16,236 up from 15,892 from last week and finally on the rise though not as much as one would have expected.

I just checked back to the beginning of this thread (11/27/06 when I started using current methodology). Inventory is down about 10% from 18,070 to 16,236 while short sale activity is up over 50% from 933 to 1,577. As I hypothesized a couple months ago, the market is continuing its shift toward domination by distress sales. What that will mean is complex and time consuming transactions. It will not be easy to buy a home on an administrative basis as lender involvement typically adds at least two months to the process even for a clean offer from a well qualified buyer.

[sdrealtor]

First question? Is anyone out there watching this? I dont mind posting this information because I track it for myself but if no one is paying attention here, why bother? Please let me know.

This week soemthing very strange happened in the MLS. Approximately 1,000 active listings disappeared and I cant find them! Inventory dropped siginificantly this week and when I search for what came off the market this past week they aren’t there. Perhaps its a daylight savings glitch. We’ll have to see.

Bad news for bubbleheads these days as the market is going strong in desireable areas. I’m not saying prices are going up but they certainly dont look like they will be dropping to any degree this Spring/Summer!

Short sales 1,506 down significantly again from 1,577 last week!

Total SD County Listings 15,111 WAY DOWN from 16,236 from last week. Something funny is defintely going on with the MLS database. My only thought is that they cleaned up alot of old inventory that sold a long time ago but was never taken out of the database. Either way, inventory is not rising as the listings coming on are very balanced when comparing them with what is going off.

In the North County Coastal market that I watch closely, Inventory has actually dropped in the last 30 days while pendings are up. Carmel Valley inventory dropped 20% (177 to 143) while pendings are up 50% (50 to 76)! I don’t know what is happening in other areas but around me I see lots of strength. I spoke with several agents this morning who had more traffic at their open houses that they have EVER seen! I am seeing lots of offers flying around from well qualified buyers with 20% down and 800+ FICO scores.

[North County Jim]

Keep posting!

[Anonymous]

I too appreciate your analysis and information. I look at it each week after you have posted. Thanks very much.

[lendingbubblecontinues]

From what I’ve seen, inventory has been building for the last three weeks on ZipRealty from just under 16,000 to over 17,000 last night.

I think this is the last hurrah, sdrealtor. Even if there are only 15,111 listings right now, I am certain there are at least 15,112 “greater fools” left to buy them all.

Once the punchbowl is taken away from the Alt-A buying crowd, though, the game is officially over. In other words, check back with us in two months and let’s see if there haven’t been a tremendous number of “back on market” listings. After all, Fremont and New Century just went out within the last three weeks…let’s give that at least a little bit of time to work its’ way through the system.

I remain unconvinced that things are as “good” as you say they are…maybe they are, maybe not.

LBC

[sdrealtor]

Thanks for checking in folks, I’ll keep at it.

LBC,
I’m just reporting on what I actually see and hear. It may not be the same in other areas but these are facts not opinions. I remain bearish long term but I’m seeing lots of data that supports a soft landing this year. Next year…who knows?

[ibjames]

I watch this and also appreciate your input on things

[LA_Renter]

This is great info!

[LA_Renter]

SD Realtor,

Just curious, when talking to other agents what is their take on the recent headlines on the subprime problems? There has been a substantial amount of media recently which can only be viewed as negative for RE. Are you hearing any anecdotal evidence if the last few weeks has put some potential buyers on the sidelines. It seems to me that even the qualified high end buyer would wait a portion of the year out to see if they can get a better deal.

[JJGittes]

sdrealtor,
Good info. I too watch N. County coastal, mailnly 92011, 92009, and 92024. Seems like MANY houses have gone pending in the last month or two. In fact, just about every house that was built in the 90’s/00’s in a nice neighborhood that looked decent has gone pending. Prices seem to be down from the peak, but still pretty darn solid. I don’t know where we are going, but the areas I watch are not withering. Are you seeing the same?

[Bugs]

The MLS shows 1751 SFR/Condo sales for February 2007, vs. 1916 sales in February 2006. A good percentage of those were new units that wouldn’t have been marketed in the MLS a couple years ago.

I took the liberty to thumbing through a couple cities to see how many of the listings for closed sales mentioned they were bank owned or subject to short sale approval. Oceanside had 13 of these out of 113 sales. Vista had 4 of them out of 54 sales. Carlsbad had 4 out of 82 sales, and San Marcos had 6 out of 72 sales.

That doesn’t count the probate sales, the relocation company sellers or those couple that were stated as divorce sales, nor does it include any sales in the must-sell categories that were were not openly marketed that way.

I don’t think it’s much of a stretch to suggest that in some market segments right now these numbers indicate as many as 15% of the total sales in Feb. 2007 were in the must-sell category where the seller didn’t have the option of waiting for better days. Meanwhile, there are other market segments with no outward indication of forced sales.

The newer homes and the higher price ranges seem to have fewer problems at the moment, as far as the manner in which they’re being marketed, anyway.

Seeing as how subprime just got cut back, I reckon we’ll see a few of the current pending transactions fall out of escrow for lack of financing. But the real impact will come when the number of the must-sell transactions starts increasing because of the mounting pressures on the overleveraged of the homeowners. That will be in addition to the declines that heretofore have been attributed primarily to price declines and lost employment in the RE sectors.

It’ll probably take at least 6 months before the banks get through the foreclosure process and start closing REO sales resulting from the mauling of subprime. It’ll probably take another 6 months before that trend fully hits its stride. By then the market psychology will have already passed the tipping point and will take on a life of its own.

That’s why I think 2008 could wind up being as bad as 2006 and 2007 put together.

[sdrealtor]

Bugs,
I agree with everything you say and it is pretty much in line with what I’ve been posting the last several months. However, weren’t we all saying that 2007 was going to be the year while now we seem to saying look out for 2008. The longer this thing gets dragged out the more opportunities there are for something to save the the ship. I have been predicting a 30% nominal decline from the peak on this board for nearly 1 year. While nothing in either direction would surprise, I’m not ready to say that a 30% nominal decline is in the bag anymore.

[sdrealtor]

JJ,
That is my backyard and I am seeing exactly what you are. inventory is creeping down when it should be rising rapidly this time of year. Prices arent rising but they arent falling much if at all either.

SDR

[sdrealtor]

LARenter,
Most of the agents I speak with have been doing this a very long time and have given up trying to predict the market. they deal with what is in front of them. I guess that makes the sample of agents I speak with biased as its probably the Top 20% of agents. They along with me are dealing with mostly quality buyers or listings that attract quality buyers. Many of these people dont view housing as something to time beyond timing for their persoanl needs. They have equity from current/prior homes, cash reserves and good incomes. I’m sure there will be some fall out due to the subprime mess but I guess we dont see all that much of it in these parts of SD.

SDR

[Author]

Posts