July 2009 Resale Data Rodeo

Submitted by Rich Toscano on August 12, 2009 - 7:39pm

As discussed previously, prices on the whole rallied again last month:

I'm chalking the whackage in the condo size-adjusted median up to volatility (of which there is a lot, as the chart shows) rather than a trend change. This logic was also described in the last article on prices. All in all it seems that the rally endured for another month.

The plain vanilla median was directionally quite similar: detached homes up, condos down, but the volume-weighted aggregate up a hair.

My model of what the Case-Shiller HPI might look like when the July version finally comes out is below:

What's interesting here is that even considering the spring rally effect, this price increase is fairly dramatic. As of July, the HPI model was up 4.9% from the April low in the HPI. This is significantly larger than the biggest spring rallies of the 1990s bust (2.3% each in 1991 and 1994). Of course, this assumes that my proxy will be an accurate representation of the actual Case-Shiller HPI when it comes out... that remains to be seen.

An unusually large bounce isn't out of the realm of possibility considering how much demand there is in comparison to supply. Sales volume was once again healthy:

...and inventory, while up slightly from the prior month, was pretty tight:

...leading to a very low 4 months of inventory:

Contingent inventory amounted to about 29% of total inventory, so if we back out contingent homes there were fewer than 3 months of inventory for sale:

Yet as usual, against this scarce current inventory backdrop we have yet more homes piling atop the mountain of foreclosures each month:

The shadow inventory issue (most recently discussed here) looms large, its significance to be decided at a later date. In the meantime, there is little doubt that we are experiencing a significant rally in the San Diego housing market.

(category: )

Submitted by SD Realtor on August 12, 2009 - 11:30pm.

Stop it Rich... you are just talking nonsense.

Submitted by fredo4 on August 12, 2009 - 11:59pm.

No way would I buy now. Even if this really was the bottom of the market (which I really doubt) there's no way that I'm going to fight with ten other buyers over some crummy over-priced shack.
Instead of buying something now, we've decided to move into another rental house that we like better.
This feeding frenzy of buyers is just too weird.

Submitted by UCGal on August 13, 2009 - 7:36am.

fredo4 wrote:

This feeding frenzy of buyers is just too weird.

I have to agree with this. It doesn't seem rational at all.

Submitted by Arraya on August 13, 2009 - 9:14am.

There is no shortage of irrationality in the world. We're stocked up in that regard. However, we will soon have a shortage of willing and able buyers in the RE market.

Irrationality in markets manifests in euphoria or panic. We are in the euphoric state now getting ready to shift to panic.

The economy has been contracting for 2 years and incomes have been dropping for 1 year. This trend is not stopping tommorow.

Submitted by vonbeeler on August 13, 2009 - 9:31am.

Ummm. OK.
Who cares if it really is the bottom. Its attractive. Very attractive in some cases. These comments were the same comments I heard about equities back in March.

As far as my house I'm getting my tax advantage and building equity. I wish I was a buyer for another property.

Submitted by smshorttimer on August 13, 2009 - 9:51am.

As long as equity-building outpaces depreciation (if any).

So do people who take advantage of the 8K tax credit forfeit any right to bitch about bailouts? I cease being a net taxpayer by several thousand dollars* for 2009 if I buy a house in next few months.

Edit: *well, at least as far as fed/state taxes are concerned.

Submitted by jpinpb on August 13, 2009 - 9:49am.

vonbeeler wrote:

As far as my house I'm getting my tax advantage and building equity. I wish I was a buyer for another property.

Why aren't you? Ah. Maybe you can't b/c of credit or income or down?

That'll be the problem for many who have already purchased. And that pool will shrink, IMO.

Considering the money the government has thrown at this problem and the incentives/tax credits and that it is spring/summer and that banks are being subsidized, therefore not foreclosing, but rather letting defaults continue for sometimes a year, this increase does not surprise me. I expect that people will buy. That is the whole goal of the forces at work.

The question is, can it continue? I expect this winter to be somewhat different. Maybe it'll be the winter of discontent.

Submitted by BGinRB on August 13, 2009 - 10:04am.

vonbeeler wrote:
Ummm. OK.
Who cares if it really is the bottom. Its attractive. Very attractive in some cases. These comments were the same comments I heard about equities back in March.

As far as my house I'm getting my tax advantage and building equity. I wish I was a buyer for another property.

What is stopping you? Extract some of the existing equity and use it as seed money. It worked so well in 2005, why not do it again?

Submitted by sdduuuude on August 13, 2009 - 10:13am.

UCGal wrote:
fredo4 wrote:

This feeding frenzy of buyers is just too weird.

I have to agree with this. It doesn't seem rational at all.

Yeah, fredo - that's a good way of putting it. Sometimes it's the non-analyitical analysis that makes the most sense. I'm thrilled I'm not in need of a house right now. It is just too wierd.

I'm starting to think it will remain wierd for a while, too.

Submitted by vonbeeler on August 13, 2009 - 10:53am.

jpinpb][quote=vonbeeler wrote:

As far as my house I'm getting my tax advantage and building equity. I wish I was a buyer for another property.

Why aren't you? Ah. Maybe you can't b/c of credit or income or down?

quote]

Ah no and no. Never been an RE investor just an owner.
My point was that now is a good time to buy. For the doomsayers its usually never a good time until they miss the boat. Happens in every cycle.
No one can pick the bottom so if there is value and you need a home now is a good time. Will this winter be better? Who cares.

Submitted by Arraya on August 13, 2009 - 10:58am.

Really, this stuff is not magic.

Since wages AND employment are trending down there is NO 'mean' to revert to. San Diego is not exempt from this trend.

Read the above 10x if you have to.

Coupled with the fact that the USG is suppling 80% of the financing AND banks are playing games with inventory, means that you have nothing to gage where a bottom would be. Nothing, zero, zip... It is IMPOSSIBLE to discern.

At this point all positive analysis is incomplete or requiring devine intervention. If that is your bag, then go for it.

Submitted by vonbeeler on August 13, 2009 - 11:16am.

BGinRB wrote:

What is stopping you? Extract some of the existing equity and use it as seed money. It worked so well in 2005, why not do it again?

Never been an extractor but hey thanks for the great idea. Sounds familiar, Is Countrywide hiring?

Submitted by BGinRB on August 13, 2009 - 11:59am.

vonbeeler wrote:
BGinRB wrote:

What is stopping you? Extract some of the existing equity and use it as seed money. It worked so well in 2005, why not do it again?

Never been an extractor but hey thanks for the great idea. Sounds familiar, Is Countrywide hiring?

You are welcome. It is always good time for one to put some money where one's mouth is.

Re countryfried, research pennymac.

Submitted by sdcellar on August 13, 2009 - 12:22pm.

vonbeeler wrote:
...and building equity.
Really? This year? Next year? Over the next three? Ten? Clearly a speculative postion, but I'm curious to hear what you're speculating--especially since it's been put forth like a matter of fact. Perhaps in your case it's historical gain?

Submitted by bigmoneysalsa on August 13, 2009 - 12:24pm.

vonbeeler wrote:
For the doomsayers its usually never a good time until they miss the boat.

Wow. 2006 called and they want their cliched straw man arguments back.

vonbeeler wrote:
Will this winter be better? Who cares.

I don't know about you but if I bought a home and two years later it was worth 20% less than I paid, I would care a great deal.

Submitted by SD Realtor on August 13, 2009 - 12:47pm.

I think we will continue to be in a situation where there are no good fundamentals to grab hold of. Basic analysis of various indicators would suggest that what should happen is about the opposite of what IS happening.

So far it is hard to argue that the measures that the govt has took and will continue to take are not doing pretty much exactly what the govt hoped. No matter HOW DAMAGING they will be in the future.

Astute observers I think are just now starting to realize how manipulated the markets are and just how powerful the government is. We are now in an era where pretty much any legislation can and will be passed no matter what the population thinks. As damaging as the continued spending will be, I do feel it is more unrealistic to think that the walls are going to come crashing down. I stopped believing that long ago.

As always this is not an endorsement to buy. It is simply a statement that I have never lived in such a bizarre time. I have never seen our country in such a situation, nor have I ever trusted my government less. Meanwhile with all the unemployment and debt the stock markets chug towards 10,000, home sales are up, and our own leaders are claiming that they have effectively fixed things.

All that Rich is doing is pointing out the numbers. One thing that numbers do not do is that they do not lie as long as the data that they are extracted from is real data.

I would say that those waiting for big declines should strap in. Again, we are segmented and high end is where the biggest and best drops will be. Other homes in the 600k and less range have turned the other way if they are in decent areas.

Submitted by AN on August 13, 2009 - 1:24pm.

I'm waiting for a similar thread this December. It'll be very telling what's going on right now. What would the bear say if the run up continue through this Winter? What would the bull say if RE come crashing down this winter?

Submitted by vonbeeler on August 13, 2009 - 1:25pm.

sdcellar wrote:
vonbeeler wrote:
...and building equity.
Really? This year? Next year? Over the next three? Ten? Clearly a speculative postion, but I'm curious to hear what you're speculating--especially since it's been put forth like a matter of fact. Perhaps in your case it's historical gain?

So I guess when my mortgage is paid off I won't have any equity. OK.

Submitted by AN on August 13, 2009 - 1:36pm.

As sdcellar once said:

sdcellar wrote:
...but if you're going to spout questionable (as in none of us know) bullishness (especially here), be prepared to defend...

So Rich, you might want to stop spouting questionable bullishness.

Submitted by vonbeeler on August 13, 2009 - 1:38pm.

bigmoneysalsa wrote:
vonbeeler wrote:
For the doomsayers its usually never a good time until they miss the boat.

Wow. 2006 called and they want their cliched straw man arguments back.

vonbeeler wrote:
Will this winter be better? Who cares.

I don't know about you but if I bought a home and two years later it was worth 20% less than I paid, I would care a great deal.

Your not getting it.

Submitted by vonbeeler on August 13, 2009 - 2:31pm.

BGinRB wrote:
vonbeeler wrote:
BGinRB wrote:

What is stopping you? Extract some of the existing equity and use it as seed money. It worked so well in 2005, why not do it again?

Never been an extractor but hey thanks for the great idea. Sounds familiar, Is Countrywide hiring?

You are welcome. It is always good time for one to put some money where one's mouth is.

Re countryfried, research pennymac.

Nevermind, guess that one went right over.

Submitted by BGinRB on August 13, 2009 - 2:52pm.

AN wrote:
I'm waiting for a similar thread this December. It'll be very telling what's going on right now. What would the bear say if the run up continue through this Winter? What would the bull say if RE come crashing down this winter?

Just read the previous article (Ramsey Su), the employment reports and adjust for the % of mortgages in default.

Submitted by ibjames on August 13, 2009 - 3:02pm.

fredo4 wrote:

Instead of buying something now, we've decided to move into another rental house that we like better.

me too

Submitted by AN on August 13, 2009 - 3:17pm.

BGinRB wrote:

Just read the previous article (Ramsey Su), the employment reports and adjust for the % of mortgages in default.

I did, and still don't get what you're talking about.

Submitted by BGinRB on August 13, 2009 - 4:06pm.

AN wrote:
BGinRB wrote:

Just read the previous article (Ramsey Su), the employment reports and adjust for the % of mortgages in default.

I did, and still don't get what you're talking about.

I am looking at the aggregate sales - the chart says we are back at September or October 2008 levels. So, what is different today?
- The unemployment is up.
- High paying professional jobs are being lost or replaced by low paying/no benefits service jobs.
- NOD's (mortgages in default) are up.
- $7.5K no interest loan from the government turned into $8K gift.

Today's balance is not brought to you by organic supply/demand. The supply is severely constrained. There are houses where the initial NOD's are more than a year old.
There are now houses with the initial NOT's more than a year old.

And there are many reasons why servicers allow people not to pay their mortgages. One of them, they get to charge late payment and processing fees and they are first to collect if the property goes into foreclosure. It is you, the taxpayer, who will get to hold the bag.

What would to say if the government says that no house can be sold at PPSF price lower than the last month's median for the given zipcode? If the lowest offer on a property after 30 days on MLS is less than prescribed value the government will cover the difference.

Submitted by sdcellar on August 13, 2009 - 4:07pm.

vonbeeler wrote:
sdcellar wrote:
vonbeeler wrote:
...and building equity.
Really? This year? Next year? Over the next three? Ten? Clearly a speculative postion, but I'm curious to hear what you're speculating--especially since it's been put forth like a matter of fact. Perhaps in your case it's historical gain?

So I guess when my mortgage is paid off I won't have any equity. OK.

Sorry, but your money wasn't what immediately comes to mind when I think of equity. So, are you conceding that side of the "benefit"?

Submitted by sdcellar on August 13, 2009 - 4:19pm.

AN wrote:
As sdcellar once said:

sdcellar wrote:
...but if you're going to spout questionable (as in none of us know) bullishness (especially here), be prepared to defend...

So Rich, you might want to stop spouting questionable bullishness.

Oh yes, ha ha ha, that's a good one, you got me.

Or, at least you would have if you'd only posted this once or if you weren't confused about the difference between reporting data and the reporter's position on it. Did you read what Rich wrote? It didn't sound too bullish to me.

You do grok that you can be a bear in a bull market and vice versa, right?

Submitted by AN on August 13, 2009 - 8:51pm.

BGinRB wrote:

I am looking at the aggregate sales - the chart says we are back at September or October 2008 levels. So, what is different today?
- The unemployment is up.
- High paying professional jobs are being lost or replaced by low paying/no benefits service jobs.
- NOD's (mortgages in default) are up.
- $7.5K no interest loan from the government turned into $8K gift.

Today's balance is not brought to you by organic supply/demand. The supply is severely constrained. There are houses where the initial NOD's are more than a year old.
There are now houses with the initial NOT's more than a year old.

And there are many reasons why servicers allow people not to pay their mortgages. One of them, they get to charge late payment and processing fees and they are first to collect if the property goes into foreclosure. It is you, the taxpayer, who will get to hold the bag.

What would to say if the government says that no house can be sold at PPSF price lower than the last month's median for the given zipcode? If the lowest offer on a property after 30 days on MLS is less than prescribed value the government will cover the difference.


Once again, all that is great and good (I agree with most of it), but I'm saying it'll be interesting to see December's data. So, we have to wait another 4 months to find out what that data looks like. Who would have guess this July data 8 months ago?

sdcellar, I know you lack the ability to read the data and make your own analysis, but I'm only interested in the data. I like to make my own analysis. People can lie, data cannot.

Submitted by temeculaguy on August 13, 2009 - 9:54pm.

http://www.cnbc.com/id/15837671

realtytrac's head is seeing contradictory data that says foreclosures can increase and housing can recover simultaneously. It comes down to affordability, the 90% with jobs can buy half priced homes. If unemployment only went to 7%, if there were no bailouts or stock market crashes, if there was a soft landing last year and houses went down only 20%, would that make you bullish on R/E, it wouldn't do it for me. I'm bullish because of the bad news. I'm bullish because 50% off was the goal and it arrived. If unemployment hits 15%, I'll leverage everything and buy rentals because nobody else will and I'll get them for even less, at least in theory. Right now the best I can find on newer rentals under 100x rent multipliers is 30 cents on the dollar from peak. Right now, that has 10 people in line and is bid up about 10%, still a bargain at 40 cents on the dollar, but not my goal. No matter what happens macroeconomically, until those 10 bids stop coming in, it's not going down any more.

The realtytrac guy and Olick have traditionally been bearish and a notch below the main stream meadia. This winter is the last chance at the bottom, by this time next year, the main stream media will declare housing has bottomed and even more fence sitters will jump along with with their friends, they wont do it because they will make a killing, they will do it because they can afford it at current prices.

Submitted by AN on August 13, 2009 - 10:22pm.

TG, you better tone down your questionable bullishness, unless you already got your flame suit on. Don't you know, we're only in the 5th inning? We'll have another 50% decline before we hit bottom. Affordability means nothing, didn't you get the memo?

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