November Resale Data Rodeo

Submitted by Rich Toscano on December 7, 2008 - 9:03pm

The size-adjusted condo median rebounded a bit from October's freefall, but this month it was single family homes' turn to get whacked. The single family median price per square foot was down a gruesome 6.1% between October and November:

It's pretty clear that actual home prices aren't falling that fast... at least part of the drop is surely caused by the previously discussed shift of buyer preference towards cheaper properties. Adjusting the median price to account for square footage helps to filter some of this type of distortion out, but certainly not all. I assume that the Case-Shiller data for November will show that prices did indeed drop, but not so precipitously as seen above.

On that note, my Case-Shiller proxy is probably a bit on the dire side due to the above, but here it is for kicks:

The plain-vanilla median behaved similarly to the size-adjusted version:

Note how the median condo price has dropped in half from the peak. Pretty incredible.

Moving on, volume was interesting. Sales had been quite robust in recent months, but they really took a hit in November. The graph shows that a drop of this magnitude is not a seasonal thing because nothing like this happened in the prior two years.

Inventory was down again...

...but the drop in sales led to a higher months-of-inventory figure:

October was the month that people truly began to panic about the economy. Many people have lost jobs, but many more are worried about potentially losing their job. This can't possibly be a positive for housing, as most people wouldn't commit to buying a house if they thought they might imminently lose their job. People getting spooked in October could have had an effect on closed sales as early as November.

People certainly haven't stopped worrying as of yet, so if buyers are pulling in their horns due to economic uncertainty we could see lower sales numbers for a while yet. (Wacky government schemes notwithstanding). Meanwhile, increased job loss could lead to even more must-sell supply, including in the higher-end areas that escaped relatively unscathed from the subprime implosion.

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Submitted by peterb on December 8, 2008 - 10:37am.

Thanks, Rich. Nice work. It would be interesting to see the housing inventory from 2003 to 2005 as I think the MLS averaged about 5000 listings. I still remember when it shot up to around 14000! I think it was June of 2005. That's the moment I knew the game was about to end.

Submitted by fredo4 on December 8, 2008 - 12:49pm.

Rich-
Is there a graph with a breakdown of high, medium and lower end detatched houses between Oct. and Dec.?
Fredo4

Submitted by Rich Toscano on December 8, 2008 - 1:14pm.

fredo4 wrote:
Rich-
Is there a graph with a breakdown of high, medium and lower end detatched houses between Oct. and Dec.?
Fredo4

Nope, that's part of the case shiller index which lags by 2 months.

Peter, unfortunately I don't have inventory going back that far but I know it got ridiculously low just before i started piggington in Spring 04 -- it got down to like 3,000 or something and then pretty steadily rose into 05 as you say.

Rich

Submitted by DWCAP on December 8, 2008 - 2:18pm.

In a longer term sense, like say 1990-2008 or so, what is the normal level of inventory for San Diego? At todays sales levels, 2004's 3000 inventory is only 1 months inventory. But 2007s inventory is skewed just as bad at nearly 20k.

So, maybe this is a question for one of the agents on here, but could anyone venture a guess at a normal AND healthy markets inventory level should be? You know, non bubble leveles? Somewhat educated guess are totally acceptable as I doubt this is actually knowable.

Submitted by SD Realtor on December 8, 2008 - 10:50pm.

I think a more important (or useful) measure is the active/pending ratio. If you have a ratio of 3 or 4 then I would say you have a steady market

Submitted by CA renter on December 9, 2008 - 12:34am.

We sold our house on the weekend of lowest inventory (purely dumb luck), and remember it was around 3,400, IIRC. It was unreal. I believe inventory availability was measured in days, not months, at that time. Active/pending ratios were about 1:1 or better...the lowest they could get.

Advertised in the paper (FSBO), and the phone started ringing at 5:30 a.m...and did NOT stop, both lines going the whole day. We listed on the MLS with Jeff Karchin (flat fee MLS listing) when he called early that morning, because I thought it would take a while and the price he charged was well worth it, for an MLS listing.

Didn't need it, as it was sold within an hour. The buyer brought their contract, pre-filled, with them. As they were signing papers at the kitchen table, people were literally running through the door, panting, asking if it was still available.

That's when I knew we were going to rent, come he*L or high water. Nothing about the market from 2001-2005 made any sense. Ends up we didn't run out of land after all. ;)

Submitted by CA renter on December 9, 2008 - 12:55am.

I'm also seeing condos -- especially in the better areas like 92009 and 92024 -- selling more briskly lately. No stats (perhaps the SDRs could comment), but just eyes on the ground...

Looks like specuvestors, too. They probably think these are good rentals, which might be the case, if we don't see rents fall.

Of course, they will be competing with one another, and they (investors) are heavily into the low-end SFRs, too. I'm guessing rents have probably peaked for now, and we will start to see rents declining from here on out. It's all about the jobs and the economy now, IMHO.

Submitted by peterb on December 9, 2008 - 9:50am.

Inventory is a very useful tool as an indicator to market behavior. Actually any measurement that changes 300% or more in a short period of time should get everyone's attention. These aborations are how massive changes are initially indicated/forecast in actual data. See public and private debt growth in the last 5 years as a recent confirmation of this concept. This can be used to a lesser degree on more stable statistics like unemployment or credit rates, etc...

Submitted by DWCAP on December 9, 2008 - 3:48pm.

SD Realtor wrote:
I think a more important (or useful) measure is the active/pending ratio. If you have a ratio of 3 or 4 then I would say you have a steady market

SO, (just trying to get a handle on this) would it be fair to say that in November there were ~2400 pending (sales in November had to be pending in November.) and an inventory of roughly 15500? That would give us a ratio about 6.5-1.

Submitted by SD Realtor on December 10, 2008 - 1:42am.

CAR I didn't have any condo activity in November so I couldn't tell you. Conversations with physical inspectors seem to indicate a pretty busy November but I didn't ask for which types of homes. I like Rich's data but I feel like regional info based on zips is much more revealing. Places that have been slammed are really brisk while higher end places are still quite slow.

DW each night I keep telling myself I will run through a few zips to post some sales stats and/or active pending stats but by the time I put the kids to bed and get some more work done I am to burned out. I will try to post some zips for you. To me an active/pending stat for the county is kind of meaningless you know what I mean? It may be 12 to 1 in Solana Beach and 3 to 1 in Mira Mesa. I can say at least for Scripps the inventory stinks right now.

Submitted by fcepstein on December 10, 2008 - 7:54am.

More great data, thanks.

I've seen a lot of foreclosed houses still on the market, but with recent sales within the last few months. I have assumed it was the bank buying back the home, but am not sure.

Perhaps this explains the increase in sales over the last few months. Not a true sale, but a deed transfer while the home remains vacant and on the market.

Submitted by Rich Toscano on December 10, 2008 - 12:00pm.

fcepstein wrote:
More great data, thanks.

I've seen a lot of foreclosed houses still on the market, but with recent sales within the last few months. I have assumed it was the bank buying back the home, but am not sure.

Perhaps this explains the increase in sales over the last few months. Not a true sale, but a deed transfer while the home remains vacant and on the market.

Deed transfers are not reflected in the above numbers... these are all bona fide MLS sales to homebuyers.

Rich

Submitted by DWCAP on December 10, 2008 - 11:12pm.

Sd_R, you are one of the hardest working men of piggington. Please spend 15 more minutes with the kids than playing with any numbers. If I really wanted the info I could do more. But I dont do it, and that says it all.

I totally agree about the localality of it all. But then again, everything is connected too. :)

See you all next week, my ass is going SKIING!!!

Submitted by stockstradr on December 12, 2008 - 6:08pm.

This can't possibly be a positive for housing, as most people wouldn't commit to buying a house if they thought they might imminently lose their job.

So true.

Take my family, for example. Fear of potential job loss in 2009 is the only reason we are not buying a home NOW. We have started searching for SFH, but fears about worsening economy have kept us from putting in offer.

Submitted by CA renter on December 13, 2008 - 2:10am.

SDR wrote:

CAR I didn't have any condo activity in November so I couldn't tell you. Conversations with physical inspectors seem to indicate a pretty busy November but I didn't ask for which types of homes. I like Rich's data but I feel like regional info based on zips is much more revealing. Places that have been slammed are really brisk while higher end places are still quite slow.
----------------

Thanks, SDR!

Yep, things are still moving. It's weird, you get these spurts in sales, and then nothing for a while.

Definitely seeing things move quickly IF they are priced well. No shortage of buyers just yet.

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