Shiller starts at 1:45 of this video, and lays out two historical examples to counter the 2% to 3% improvements predicted by most professional forecasters:
Let’s look at the most recent stats for North SD County Coastal detached homes, under $800,000:
Status
# of
$/sf
DOM
ACT
343
$329
61
PEND
183
$312
42
SOLD
86
$306
55
SOLD “09
85
$285
62
The solds are those that closed between May 24 and June 23, and include the double-dippers, those that could have qualified for both the state and federal tax credit. The actives-to-pendings ratio was most noteworthy, given that those not closed by now could miss out on both tax credits, yet it’s still better than 2 to 1.
Over $800,000 (ineligible for federal tax credit)
Status
# of
$/sf
DOM
ACT
1,019
$639
108
PEND
186
$397
78
SOLD
99
$415
81
SOLD “09
78
$429
74
The above-$800,000 market is where the insanity continues, though the demand has been stronger than last year, comparatively. The silly season should be wrapping up over the next couple of weeks, and those sellers who really want/need to sell, will have to get off their price if they want to close this year.
Let’s keep a running tally of new pendings/contingents up to April 30th, to see if there is a last-minute surge to buy before the housing-tax-credit deadline.
Detached listings:
Listing Status
All SD
NSDCC
ACT
6,610
1,396
PEND
3,901
425
CONT
2,557
157
SOLD, Last 30 days
1,636/$252psf
221/$376psf
SOLD, Last 60
3,433/$248psf
417/$383psf
SOLD, last 90
4,782/$245psf
555/$383psf
A pricing convergence; the all-county trend is upward, while north coastal pricing is coming down. The Active-to-Pending/Cont ratio is cooking in both; 1.02 in the county, and 2.40 in north coastal.
Just the fact that so many more higher-end sales are closing these days is noteworthy, the NSD County Coastal sales of detached $1,000,000+ homes have increased 55% on a year-over-year comparison (and if you take out La Jolla, the others increased a total of 79%!)
Let’s chart the $1,000,000-plus market. Here are the number of active and pending detached listings, the 2009 and 2010 closed sales between Jan. 1 and March 10th, and the number of trustee sales YTD of SFRs that have a Foreclosureradar value of at least $1,000,000:
The ratio of active listings to pendings has been a decent gauge of the market’s relative health.
Here’s our scorecard, historically, of the ACT/PEND ratio:
0-2 Hot market
3-4 Regular market
5-6 Market in trouble
7-8 Too many choices
9+ Freefall
Here are the active and pendings listings:
Town or Area
ACT Reg
ACT SS
ACT Reo
ACT Total
CONT/PEND
A/(C+P)
Carlsbad
236
24
6
266
60/151
1.21
RB West
123
28
3
154
48/54
1.51
Carmel Valley
112
7
3
122
22/47
1.77
EncinitasCrdff
181
12
5
198
25/68
2.13
La Jolla
182
8
2
192
15/33
4.00
RSFDMSB
377
6
7
390
23/42
6.00
The market is smoking hot when actives-to-pendings ratios are under 2:1 in a number of areas. The restricted inventory is the cause, and now a primary market indicator. But if inventories start to increase, some pent-up demand may gobble them up – where does it start to balance (or tip over)?
Let’s rely on the numbers to tell us more about the current market activity, and use the comparison of actives-to-pendings help guide us to see what buyers think of current list prices.
Let’s break SD North County Coastal into two groups:
NW GROUP = Oceanside, Vista, and San Marcos
SW GROUP = Carlsbad, Encinitas, Cardiff, Solana Beach, Rancho Santa Fe, Del Mar, Carmel Valley, and La Jolla
Thge chart below includes contingents with pendings, like June’s does, because they’re off-market – you can’t go out and buy one today.
Active/Pending Listings + Ratios of Detached Homes
NW GROUP
Town or Area
Zip Code
A/P 9/08
A/P 6/4/09
A/P 10/8/09
9/08
6/09
10/09
O-side W
92054
166/58
63/67
67/66
2.86
0.94
1.02
O-side SE
92056
226/115
67/155
57/86
1.97
0.43
0.66
O-side NE
92057
319/143
85/277
68/217
2.23
0.31
0.31
San Mrcs N
92069
151/79
56/136
38/126
1.91
0.41
0.30
San Mrcs S
92078
196/56
78/124
64/127
3.50
0.63
0.50
Vista S
92081
125/34
42/84
43/83
3.68
0.50
0.52
Vista Mid
92083
168/54
45/110
28/115
3.11
0.41
0.24
Vista N
92084
232/60
88/105
73/92
3.87
0.84
0.79
Total
NW Grp
1,583/599
524/1,058
438/912
2.65
0.50
0.48
We’ve seen the ratio of actives to pendings be around 2:1 in a ‘normal’ market, so to see every area under 1.00 for the last few months is incredible. But the velocity has slowed down a little, and whether it’s seasonal or not probably doesn’t matter – the future hinges on the flow of new REO listings coming to market, and any adverse reaction to the fate of the $8,000 tax credit.
There hasn’t been much drop off since June, and these numbers look hot. But getting them to the finish line is tougher than ever. The escrow fall-out ratio is probably running around 50% these days, adding to the frustrations.
How are those short sales closing? It was about 3-4 months ago that short-sale listings had to be marked accordingly on the MLS, so their closings should be starting to show. Currently there are 2,116 detached short sale listings that are contingent/pending, and only 216 closed last month.
The tonier areas have fairly normal-looking numbers, but are weaker compared to the overall county ratios – the lower-end is what’s hot, the higher-end is not so much. Expect that the Y-O-Y number of sales will be reported lower in coming months – here’s the summary of the SW Group:
SW GROUP
Town or Area
Zip Code
A/P 9/08
A/P 6/4/09
A/P 10/8/09
9/08
6/09
10/09
Bonsall
92003
46/6
46/18
33/13
7.67
2.56
2.54
Cardiff
92007
48/7
41/10
38/10
6.86
4.10
3.80
C-bad NW
92008
84/32
78/26
70/33
2.63
3.00
2.12
C-bad SE
92009
219/54
128/114
114/111
4.06
1.12
1.03
C-bad NE
92010
55/14
42/29
18/25
3.93
1.45
0.92
C-bad SW
92011
113/32
111/39
58/55
3.53
2.85
1.05
Del Mar
92014
135/14
147/30
135/26
9.64
4.90
5.19
Encinitas
92024
198/51
199/77
152/52
3.88
2.58
2.92
La Jolla
92037
245/26
273/53
269/61
9.42
5.15
4.41
Poway
92064
175/48
138/105
114/90
3.65
1.31
1.27
RSF
67&91
263/18
374/17
322/31
14.60
22.00
10.39
Solana Bch
92075
66/11
82/12
64/13
6.00
6.83
4.92
4S/S-luz
92127
214/62
173/107
145/98
3.87
1.62
1.48
RB
92128
151/68
96/93
103/88
2.22
1.03
1.17
RP
92129
87/42
38/81
42/70
2.07
0.47
0.69
Carmel Vly
92130
193/49
214/65
202/61
3.94
3.29
3.31
Scripps Rch
92131
96/36
67/83
63/65
2.67
0.81
0.97
Dtwncondo
92101
472/169
517/256
440/306
2.79
2.02
1.44
Total
SW Group
2,860/739
2,764/1,215
2,382/1,208
3.87
2.27
1.97
SD County
All
11,741/4,082
6,096/6,609
6,630/6,482
2.88
0.92
1.02
If the lower-end is so hot, could it trickle up?
Only for those who sell and then buy, which would still take some decent equity appreciation to enable that to happen en masse. Not many possible move-uppers will be able to keep their previous home as a rental – the ‘anti-buy-and-bail’ guideline is still in effect, where you have to qualify for payments on both houses without rental income. Could there be enough renters to create sufficient demand? Looks like it so far, let’s check back in December!
We’ve been hearing about how the real estate market has hit bottom from a variety of sources, this today from the White House:
WASHINGTON (Reuters) – The U.S. housing market appears to be bottoming out, White House spokesman Robert Gibbs said on Friday after an industry survey showed sales of previously owned U.S. homes jumped 7.2 percent in July.
The White House, meaning your president, is telling you that the market “appears to be bottoming out”. All cheerleaders and media outlets are pushing the positive spin – could it work? Will it work?
Most potential homebuyers who are actively looking at houses aren’t going to read any further – because they are already willing to buy if they can just find the right house.
But will improving headlines cause them pay more for it?
I don’t think so.
The positive spin might get buyers (and definitely sellers) more excited, and bring in from the sidelines some new potential buyers, but I think the spin is a turnoff.
People don’t trust the spin-masters, and they tell themselves that they aren’t going to get fooled. Expect that the majority of potential buyers are going to stand pat, and be more willing to wait, rather than pay too much.
Keep your eye on the better statistics, and ignore anything you read in the mainstream media.
Compare the number of detached listings, and vs. those in some stage of foreclosure:
Town or Area
Zip Code
ACT
PEND
SOLD July 08/09
F/C List
Cardiff
92007
44
7
4/7
39
Carlsbad NW
92008
66
36
12/8
71
Carlsbad SE
92009
122
106
37/33
196
Carlsbad NE
92010
26
41
10/13
80
Del Mar
92014
145
22
15/10
27
Encinitas
92024
185
68
30/45
156
La Jolla
92037
296
48
18/27
89
RSF
both
350
31
17/14
35
West RB
92127
153
100
37/39
182
Carmel Vly
92130
216
75
53/42
89
We do need to make up some new measuring sticks though.
Acceptable limits?
More foreclosures than actives = trouble?
Foreclosures more than 5x last month’s sales?
Foreclosures in triple digits?
Let’s use 92010 as a guide, because it’s probably been the healthiest of the bunch.
If you have more pendings than actives, Y-O-Y sales are higher, and your foreclosures are about 3x actives, your favorite zip is doing OK.
My baseball coach used to say, don’t believe anything you hear, and only half of what you see!
San Diego County used to be one of the nation’s most overpriced real estate markets, as much as 40 percent above historic norms, according to the IHS Global Insight financial analysis company.
Yesterday, in a dramatic turnaround, Global Insight said housing prices in San Diego are 21.2 percent undervalued.
“It’s definitely coming back from the boom,” said Global Insight economist Jeannine Cataldi. The median price for a single-family home was $327,300 in the first quarter, the company said. Based on historic trends for household income, affordability and appreciation, the “normal” value should have been $415,300. That contrasts with the peak of the boom market, in the third quarter of 2005, when Global Insight found the median price of $506,500 was above the norm by $144,100, or 40 percent.
From the peak, local housing prices have fallen 35.4 percent, back to a level last seen in the fourth quarter of 2002, the company said.
This was the fourth consecutive quarter that San Diego housing prices were below what the company considers to be the normal price. It was the biggest gap since the second quarter of 1999, when the median price of $190,400 was $53,400, or 21.9 percent, below the theoretical norm.
This is the Redfin graph of sold $/sf vs list $/sf for San Diego. For some reason the two lines are no longer tracking. Can anyone help me figure this out? [Click for a clearer picture.]
