May Shoe Just DROPPED !

User Forum Topic
Submitted by latesummer2008 on May 17, 2007 - 6:18am

How much damage do people need to see? The first big shoe just dropped yesterday. APRIL was HORRIBLE !

Here are the numbers:

California Total # of Sales (-28.5%) Y.O.Y

California Total # of Sales (-12.2%) MONTHLY DECLINE !
(12 year LOW)

So. Cal Total # of Sales (-28.9%) Y.O.Y

So. Cal Total # of Sales (-11.8%) MONTHLY DECLINE !

Year over Year figures are the best figures to look at here. However, the MONTHLY DECLINES are ESPECIALLY TROUBLING, considering sales are SUPPOSED TO INCREASE through Spring, BEFORE Summer.

Market is dropping from a CLIFF, folks...

http://westsideremeltdown.blogspot.com

Submitted by latesummer2008 on May 17, 2007 - 6:40am.

SD and LA April Numbers are here. More Bad news I'm afraid. Or good news, depending on your point of view.

TOTAL NUMBER OF SALES (most important figure to analyze)

San Diego County (-13.5%) Year over Year
Median Price (-3.0%) Year over Year ($490,000)

Los Angeles County got Hammered (-22.2%) Year over Year

Orange County got Hammered (-24.7%) Year over Year

Riverside (-45.1%)and San Bernadino (-46.5%) BOTH, got Slaughtered !!!

Ventura (-11.7%) Year over Year

You can check the figures at Data Quick

http://westsideremeltdown.blogspot.com

Submitted by JWM in SD on May 17, 2007 - 8:51am.

Yeah, let's see the permabulls spin this one. This is probably why Lereah bailed when he did.

Submitted by an on May 17, 2007 - 10:25am.

Wow, Riverside and SB really got slaughtered. I'm in awed right now that volume can drop like that. Amazing.

Submitted by little lady on May 17, 2007 - 10:26am.

Yes but when will the BIG house decline in prices hit?

Im waiting with baited breath..........

Submitted by latesummer2008 on May 17, 2007 - 10:41am.

June Numbers will Worsen... Lending is tightening, ARMS resetting, RE FRAUD, Swelling Inventory etc., etc, etc...I believe we are at THE TURNING POINT where SIGNIFICANT PRICE DROPS will begin occuring ALL OVER THE SOUTHLAND. Once the MSM sinks their teeth into this, they will milk it all summer long, making it worse and worse and worse.

Can't spin the Month to Month figures anymore.
Can't barely spin the Median (B.S.) figures anymore.
Can't spin the Year over Year figures anymore.
Can't spin JACK !

Even Bernanke is now TRYING to do DAMAGE CONTROL with Subslime. He knows his ship is sinking..

CHECKMATE !!! NAR, CAR, NAHB, Mortgage Brokers, Banks, & RE Agents. GAME OVER...

http://westsideremeltdown.blogspot.com

Submitted by HereWeGo on May 17, 2007 - 10:59am.

I've believed for some time that Q2 2007 would be the opening act for the housing downturn.

Now the question is, how is the default risk truly distributed? How is the risk dispersed?

Submitted by kev374 on May 17, 2007 - 11:08am.

This is all inevitable however what we should be concerned is the fallout. These types of statistics cannot be good for employment and that affects all of us.

Submitted by LA_Renter on May 17, 2007 - 11:22am.

Thats exactly the way I see it Kev. I can tell you that I am seeing some anecdotal evidence of a slow down in my business which is not directly related to RE. My customers who are basically distributors are belly aching right now. I am talking with my peers in California and we are seeing a definite softening.

Those numbers are alarming and they should be alarming to each sector of housing. Basically the plankton of the housing food chain is disappearing. Regarding home prices falling I keep on remembering my statistical analysis class I took in college. Prices are always a lagging indicator. You will more than likely see the steepest price drops as actual RE investment bottoms and improves. Thats what happened last time.

Submitted by tech_junkie on May 17, 2007 - 11:38am.

Thats exactly the way I see it Kev. I can tell you that I am seeing some anecdotal evidence of a slow down in my business which is not directly related to RE. My customers who are basically distributors are belly aching right now. I am talking with my peers in California and we are seeing a definite softening. Those numbers are alarming and they should be alarming to each sector of housing. Basically the plankton of the housing food chain is disappearing. Regarding home prices falling I keep on remembering my statistical analysis class I took in college. Prices are always a lagging indicator. You will more than likely see the steepest price drops as actual RE investment bottoms and improves. Thats what happened last time.

 

That's an interesting point too. See, my concern is that despite how we all want home prices to come down to make then more affordable. A huge downturn isn't just going to impact the housing industry. Small Biz/Mid biz is going to get hit. Average people are going to get hit. So, unless folks are sitting on a wand of cash in assets that aren't depreciating as fast as the dollar and don't need to worry about working, most folks that can't afford homes in good times also won't be able to afford homes in downturns too.

 

Submitted by sdduuuude on May 17, 2007 - 11:41am.

Do you have any inventory info?

I know you think total sales is the most important figure, but I think it is the months of inventory - i.e.

inventory / sales.

Submitted by an on May 17, 2007 - 11:45am.

I'm sure Data Quick number will be different but here's a good site that track median price and inventory of many cities in the US: Linky. Base on this site, inventory in SD is up 2% compare to last year, 7.7% compare to last month, and 21.4% compare to 3 months ago.

Submitted by IONEGARM on May 17, 2007 - 11:51am.

"However, the MONTHLY DECLINES are ESPECIALLY TROUBLING, considering sales are SUPPOSED TO INCREASE through Spring, BEFORE Summer"

I disagree, about MoM, there are many seasonal variations (spring break, easter) reasons why April is usually less than march. YoY is still the best indicator, MoM is useless without a smartly made seasonal adjustment.

There is no doubt this spring selling season is incredibly weak.

Submitted by sdrealtor on May 17, 2007 - 11:57am.

First 2 weeks in May county wide numbers are down about 30%. After late reporters I'd expect to see volume is down 20%.

NCC is looking like it will be flat to down 10%.

Submitted by bubble_contagion on May 17, 2007 - 12:32pm.

SD RE sales from rereports.com

March 04: 2,366
April 04: 2,550

March 05: 2,179
April 05: 2,268

March 06: 1,880
April 06: 1,604

March 07: 1,489
April 07: 1,451

In the last two years sales have decreased from March to April and during 04 and 05 sales increased. Sales have been decreasing year-over-year during the last fours years while inventory increased by 400% when compared to March 04 (the absolute low). Still prices haven't budged much. Go figure....

Submitted by jg on May 17, 2007 - 1:10pm.

Using data going back to '88, sales of resale homes in San Diego have been, on average, 2% higher in April than in March.

So, an April drop is noteworthy.

May sales have been, on average, 2% higher than April. Peak is in June, which have been, on average, 10% higher than May.

Submitted by little lady on May 17, 2007 - 1:12pm.

"First 2 weeks in May county wide numbers are down about 30%. After late reporters I'd expect to see volume is down 20%."

Thanks, I can't wait till the fall! Do have any assumptions on what will happen then? I keep reading that it might pick up then. Though I find it hard to believe.

Submitted by ibjames on May 17, 2007 - 1:13pm.

I imagine the fall to cool off even more, school is starting, people usually do not want to move. They want to be in place before fall.

Submitted by 4plexowner on May 17, 2007 - 3:05pm.

Rumor has it that IBM is about to announce layoffs of 150,000 people in the US

The recent purchase of Chrysler is likely to result in significant layoffs

George Ure at www.urbansurvival.com is expecting the public's awareness of unemployment to jump significantly this summer and fall

Negative sentiment / worry over the job situation in this country is not going to help the housing market

Submitted by NotCranky on May 17, 2007 - 4:45pm.

Today my wife and I were discussing goals..I wonder to myself. Why did we end up on this topic.... What is the difference between a recession a depression and aramageddon? LOL. My ignorance at this point is not comforting!Time to get a good book or start talking with some really old people I guess.

Thanks for your work latesummer.
Does the late summer 08 imply that you are forcasting to buy then or that it is when you think the macaroni hits the fan?

Submitted by 4plexowner on May 17, 2007 - 5:29pm.

Rustico - read "Creature from Jekyll Island: A Second Look at the Federal Reserve", by G. Edward Griffin

This book should be required reading for all Americans and is definitely required reading for anyone who wants to understand how our economy works

Don't be intimidated by the size of this book - each chapter and section has an overview and summary - the author offers a quick reading guide that allows the reader to get an overview of this book in a few hours of reading

We need to get enough Americans to understand how the economy works so we can do something about it (abolish the Federal Reserve) - right now, most Americans think the Federal Reserve is part of the government and that the Federal Reserve has the best interests of Americans at heart - reality is that the Federal Reserve is a criminal organization that was legalized in 1913 by hood-winking the Congress

Read this book if you are really interested in understanding how our economy works

Submitted by NotCranky on May 17, 2007 - 5:36pm.

4plex,
Thanks I have tackled some difficult books on other subject matter. I guess I have half a brain for almost any topic. Is that a good enough starting point for this Recommendation of yours?

Submitted by latesummer2008 on May 17, 2007 - 6:47pm.

Late Summer 2008 is my prediction for the first buying opportunity on the WESTSIDE of LOS ANGELES. I will stick by that prediction. IMHO, I believe the price declines will be QUICKER and DEEPER, than most think.

Why ?

1)Market peaked in Late Summer 2005 (3 years time)
2)Once panic sets in it will be a BLOODBATH.
3)We will drag along the bottom for 2-3 MORE years (2011)
4)Late Summer 2008 will be the WORST of WORST, before bottom fishers start nibbling.
5)Different areas may start earlier or later, depending when their market peaked.

Any other predictions ?

http://westsideremeltdown.blogspot.com

Submitted by NotCranky on May 17, 2007 - 7:08pm.

Late, I am with you on your opinion here "IMHO, I believe the price declines will be QUICKER and DEEPER, than most think." I am in San Diego. Who do you think is influencng the opinion of "most people" Indeed who are most people?
Let me do a little whistle blowing...
What do you think the post "soft landing" mantra is for Realtor's?
I think it goes like this...

"Yes there are definitley some signs out there in the market of weakness,Its going to take a REAL LONG TIME, some areas will get hit harder than others, Inflation will mitigate a high mortgage some what. Interest rates are good and probably going to go up putting houses out of reach lending is drying up. The neighborhood you want looks pretty good you should be allright. Please be my next greatest fool."

It classic and predictable.Dress that pig up all the way down.

Are "most people" Influenced by this?

Submitted by Bugs on May 17, 2007 - 7:08pm.

It's bad, but you ain't seen nothing yet.

Sit back, pop open a cold one and relax, because (IMO) it won't get REALLY interesting til the end of the 3rd qtr 2007, possibly the beginning of 2008.

By then:

The last of the exotic financing programs should be officially declared extinct, and

The current batch of foreclosures will be listed for resale, and

The majority of the residential construction that's going to get done will be done, thereby putting those people out of work to much ballyhoo, and

The YTD statistics for volumes and pricing will make apparent to everyone that 2007 is going down worse than 2006; and more importantly, it will become clear that this is not a temporary blip and things aren't going to get better in 2008.

Submitted by sdrealtor on May 17, 2007 - 7:55pm.

Fall will cool off more but that is a seasonal thing that happens each year so the real question will be YOY comparisons. I expect what I have for the last 6 months. Stable to slightly decreasing prices through Spring, accelerating price declines in Fall/Winter (about 5% which is about $25,000 to $50,000 per year), lather, rinse, repeat.

I'd love to see it all happen quickly in a year or two as it would be far less painful. But I just dont see things that way, I see a long painful decline ahead continuing for at least 3 more years.

Submitted by PD on May 18, 2007 - 6:58am.

I think the declines are going to be faster and deeper than they have been. It is getting harder for people to get loans, which is the only thing that is going to slow down the GFs still buying (or force them to pay less).

Submitted by JWM in SD on May 18, 2007 - 7:20am.

It will happen faster & deeper because of the internet. Look at the attention these housing blogs are getting. Lanser at OC Register reached out to Ben Jones over a year ago. Anyone looked the RE Section at the OC Register site lately? Its all bad news all the time. He knew it was coming and that it was not just a bunch of bitter renters bitching about being priced out. The MSM is not going to let this go. They will latch onto it like a pit bull. Other MSM will follow the OC Register example as things become more obvious and J6Pack will begin to finally figure out what is going on...albeit 2 years too late.

Submitted by NotCranky on May 18, 2007 - 9:10am.

dupe

Submitted by latesummer2008 on May 18, 2007 - 8:52am.

Appraisal Problems R Next... As prices begin dropping, banks are going to want more money down. THEY KNOW houses are not worth the "Negotiated Value". 25% down will become the new norm for CLOSING transactions. If price declines become swifter, the amount put down or interest rate will increase. Banks will have there hands full of properties and don't want anymore.

This is the tip of the iceberg, ladies and gentleman...

http://westsideremeltdown.blogspot.com

Submitted by NotCranky on May 18, 2007 - 12:41pm.

The huge appreciation although it occurred over a long period of time, moved in large chunks over relatively short period of time. I guesstimate we are about to see a large chunk removed.Prices have some what stabilized due to seller's beliefs that it is spring so there is no need to worry.But as we all know not too much moved ,that creates tension. People are going to realize pretty soon that foreclosure activity doesn't reflect anything like the bottom and that it is in fact a very bad sign for the market.

Wait until we hear the story. "I just bought a foreclosure and now I am upside down and geting kicked out of my house."
That ought to do it!

As far as the Deeper goes in the "faster and deeper" I don't get that unless you are predicting a depression? it will go as deep as it takes to find support and then maybe, as some people have said swing a little past briefly.

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