UCLA Anderson Forecast and Current Real Estate News

[Steve Beebo]

lendingbubbleco:

You make some excellent points – but one thing you have to keep in mind is that most homeowners, and most people that own second homes or investment properties, did not purchase their properties at the top of the market. If they did buy property at the top of the market, say last summer or fall, they most probably traded up and sold another property at a huge profit.

If someone did buy multiple investment properties last summer, they will probably take a big loss on paper, and I don’t feel too sorry for them, but let’s say someone bought a property in San Diego, Arizona, or Florida in 2004, 2003, or earlier – they have had huge profits, and even if prices fall 20 or 25%, they’re still going to be money ahead if they have to / want to sell this year.

[sdduuuude]

Yeah lots of variables to consider, many of which relate to when you bought.

Loan-to-Value (%Equity)
Are you paying PMI?
Are you itemizing deductions?
What is your total payment?
How much would it cost to rent your place now?
Will you have to move for any reason in the next 3 years?
What is the state of your career
What are your property taxes?
What is the pain/cost of moving?
Can you sell it without realtor fees?

I’m sure there’s more.

Be careful of the question you ask – The question isn’t – in 5 years, will they have made money on the house (i.e. sales price vs. purchase price). The question to ask is: In 5 years, will they be more ahead if they sell, rent, then buy or more ahead if they stay put?

It is a difficult, personal analysis and it involves the risk of not knowing how cold the market will get.

[Anonymous]

Let’s give you a chance to pick up the slack that powayseller left behind. You can enlighten us with actual stuff going on, since she was, as some said, just rephrasing what is out there on the internet.

Let’s take advantage of having you as a realtor on this blog. I have so many questions for you:
1. why is there 5000 pending? Is this unusual?
2. What is happening with sales volume at your office?
3. we read sales volume is down 20% from last year and you wrote somewhere your income is better than ever and we wonder how you are able to increase your sales at this time?
4. is it true that sellers don’t want to lower their prices? how do you get more transactions when sellers hang onto prices?
5. What is the most important metric to forecast the future of the market?
6. What kind of buyers are you working with and how are they affected by rising interest rates?
7. Are people trying to refinance out of ARMS and get FIXED rates now? Can they qualify?
8. Foreclosures are up 60% and have you dealt with any foreclosures yourself in San Diego? What are the stories behind these foreclosures?

I am very interested in what’s going on in the streets. But I don’t know any realtors I can ask.

[North County Jim]

I don’t want to speak for sdr but I’d sure like to see question #3 go away since it was the basis for much of the poison that’s been bandied about recently.

For the record, I’ll take sdr at his word that he’s having a great year thus far.

Because there are thousands of agents out there in the county, there surely must be a number of agents doing better than they did last year, even with a shrinking commission pie. I doubt sdr and John Lundin are the only two agents doing better.

Additionally, there’s probably fewer agents out there. A reduction in the number of agents will offset the declining volume for the survivors.

I have no problem with your other questions.

[sdrealtor]

Sorry but this is gonna take alot more than 500 words and you’ll have to refer back and forth to get the questions.

1. Lots of pendings are actually closed already. Every few months Sandicor sends a message out to agents asking them to update their closed listings. Alot of this comes from Open Listings (i.e. FSBO’s posted on the MLS), Onesy/twosy a year realtors, lazy realtors, more sellers accepting contingent offers and longer escrows being accepted. It really isnt an unusually high number.
2. Sales volume is down and some long time agents are feeling pain. Many have been through this before. Listings are coming in strong and since I work with alot of good agents that are capable of getting price reductions as a group we are probably better off than most. We keep hearing about lots more to come on the market.
3. Each agents piece of the pie is so small that a few milion dollar sales can make your year. Heck, I know people that have recently cashed checks deep into 6 figures for a single transaction. Barry Sanders always had great production on a lousy Detroit Lions team.
4. Some sellers are hanging on because it is a big disappointment to wave good bye to something you thought you had but never really did. Good agents provide their clients the data to connect the dots, the encouragement to do so and have the credibility to get them. Some agents try to buy masrket share by promising clients the moon which hurts them and their clients in the long run. My clients tend to be well educated and I make sure they have the data they need to make good decisions. They have lots of equity and are truly motivated to sell (i.e. relocating). They put thier trust in me and it is a heavy burden to carry. If you havent read my post on the “Rich is the man” thread you are missing out on a window into the life of a realtor trying to do the best thing for his clients. It was written from the heart.
5. To me it is volume and I follow/track my market areas religiously. Inventory, pending and closed sales. I ran some numbers to today and they were pretty scary. The question that seller’s will begin asking is not how much I can sell for but rather can I sell at all.
6.The buyers I am working with currently are bringing huge cash positions 30 to 50% down or even all cash) and high stable incomes. Rates dont affect them as much directly but they worry what effect rates will have on prices as weaker buyers are impacted. They are picky as to what they want and expect to negotiate hard. I’ve created some comps in the last year that havent made the neighbors happy.
7.Hopefully they are but I dont have much to do with this. I’m very fiscally conservative and birds of a feather tend to flock together. I don’t beleive I have any clients that are at risk unless they foolishly refinanced out of a good loan they bought with. Cant control that.
8. Foreclosure rate was so low because anyone in trouble could refi out for the last several years making % increases of little value. I’d look at the foreclosure rate and volume as a better measure as 2 is a 100% increase over 1. No personal experience but have heard of several. Typically they are recent homebuyers that were represented by poor agents. They typically overpaid even considering the high prices and had very risky financing. Others pulled out equity to finance lives they couldnt afford. Appraisals done recently that I find hard to beleive got past underwriters. You will be hearing the phrase short sale more and more.

Lastly, in PS’ last post I found the part about the agent coming up to her and saying “You did the right thing. You will be able to buy it back in 3 years for 25% less. Call me.” quite humorous. Some agents have no scrupples. I’m surprised she didnt tell him to @%$&* off.

[Anonymous]

With pending 5000 that’s about 2x the sales of one month. That seems like a big number. What was the pending number for this time last year?

What is the sales price/list price ratio for sales that you see? What is the % reduction in list price and sales price?

I am anxious to get into the market myself. My wife really wants a house. Just waiting for prices to drop to my income haha… When will that happen?

[Anonymous]

Sorry to start any flame wars but you san diego realtor are showing his ignorance. Cat’s got your tonue mr. realtor? Schmooze your way around with a few stories but someone asks you for data and you melt away. You’re a big talker who’s too stupid to analyze data. Hey, am I the only one who sees through this guy? What really pisses me off is that most of you are fooled by this idiot.

[sdrealtor]

Fortunately I have a thick skin that your nonsense rolls off. I’ve been very busy and havent had time to crunch numbers. As for being too stupid to crunch numbers tell that to the unversities where I earned degrees (bachelors and masters) in finance, accounting, economics, finance and marketing specifically (market research).

My preference is to write off the cuff now but rest assured I can run statistics as well as anyone. My problem with statistics comes from spending hundreds of hours analyzing homes sales data on a micro-level. Around every corner there is a problme or unique aspect to nearly every data point. I tend to relie on the intuition I get from being around real estate everyday. I has kept me 6 months to a year ahead of the market and I have satisfied clients that would agree as well as people who didnt listen only call back later wishing they did in both the boom market and the cooling market.

If you don’t like what I have to say, don’t pay attention. I promise I wont be offended. BTW, I may be a poor typist prone to errors but you did a pretty good job butchering the English language above yourself.

[sdrealtor]

Here’s one area where Rich deserves alot of credit and which I have heard no one mention. Rich said the speculation was much higher than the 18% stat for SD that came out a few weeks ago. He postulated that people buying primary residences with risky financing in hopes of future gains were speculating.

I heard from a colleague, the Anderson folks said that prices were fine until late 2003 and then got wacky. They atributed the gains of 2004 and beyond to speculation. Those who have been on this board a while may have heard me saw that things made sense to me until 2004 began and that I thought that’s where we had to go back to. So now you’ve heard it from 3 sources of varying credibility. I think prices will go back to Fall 2003 levels plus 5 to 10% for more reasonable appreciation. In my area that would be about 20% off current levels.

[lostkitty]

Some of us are just ignoring him as Rich suggested. This whole site has been considerably less interesting since powayseller stopped adding so much information to it. I used to feel like I learned something everytime I logged onto the site.

[Anonymous]

In the time to write your post you could instead answer the question. But you don’t know. You have no idea about the pending and your own sales/list price ratio. With your best year ever you should be overflowing with knowledge of data or stories of your sales. Oh maybe because you don’t have any sales this year! sdrealtor stands for So Dumb Realtor. Hahhahahahahahah Go away dumb realtor. Or save face and answer the questions.

[hs]

“This whole site has been considerably less interesting since powayseller stopped adding so much information to it.”

Totally agree!

[sdrealtor]

Rockyroad
The questions you ask are very good ones but nearly impossible to answer. I have historical data for a couple ZIP I can look up and will provide next time I am in my office but country wide cant be done without pouring over thousands of listings it would take over a month.

For example, you could look at the closings for last year and identify the ones that went pending but you would miss out on the opnes that went pending during a period of time and subsequently fell out. As for % price reduction, you would have to go over every single listing and enter the original price in a spreadsheet. Then you would have to go back and search under the property address to see if it was listed before at a higher price. Throw in range pricing (i.e. seller will entertain offers between 750 and 900) and it gets downright messy.

Sales price to listing price ratio…same problem. Things have been reduced, relisted and range priced so much that these stats have lost alot of their value. Answer this question, when a property is originally listed in a range of 999 to 1.15 then gets reduced to 95 to 1.099M and sells at 1M what is the % price reduction? what is the sales price to list price ratio? Answer..one big mess for anyone trying to calculate anything meaningful.

The truth is that we dont know where the market is right now re: prices. You start somewhere and adjust based upon what the market is telling you (showings? offers? others reducing etc.). My listings have been closing within 2% of where I told my clients they would. In general they have wanted to test the market a little more and while some have sold in less than 2 weeks some have taken longer to be willing to get the price right. Hope this answers you concerns as to why I cant provide the data you ask for. If not…I really don’t care…skip my posts.

Anyone who has MLS can verify this including Rich.

[sdrealtor]

Here’s some data that might help. Its the best I could do in a minute or two. Last April, 4113 properties went into escrow and made it to closing. As of now, there are 3,194 properties that went into escrow during April and have closed or are still in escrow. Not all of these will close. You can probably be pretty safe in saying that pendings are down 30% in April over last year.

[sdduuuude]

The insight-to-insult ratio on your post is awful – in fact, it is 0-to-100. You asked him 8 questions, all of which he took time to answer. People posting on this forum aren’t your personal analysts, there to answer your every question to your liking in a timely fashion. I thought the answers to all 8 questions were excellent. You asked for “actual stuff going on.” Sometimes that just doesn’t come in the form of data.

Just because you see through him doesn’t mean he isn’t trying to help, and it doesn’t give you the right to berate him when he spent time trying to answer.

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