Monday, October 20, 2008

Sept numbers, the spin doctors are hard at work.

The Sept numbers are out and they are fabulous. Well, compared to the worst year in history they are fabulous. If you remember, last August is when the subprime market really went into full crash dive mode. The sales numbers crashed down to the lowest recorded levels. Even the difference from August to Sept was shocking in 2007. The sales went down something like 22% in just that one month period. Consequently the sales numbers for the next 6 months or so are going to look absolutely stellar.

Looking at the numbers and doing some math here's what you need to remember from this report. Disregard the fluff, Remember these key points.

1) Sales numbers are the 2nd worst since they started keeping records.
2) 70% of the sales in Riverside are foreclosures.
3) Prices are STILL dropping. The median drop from August 2008 to Sept 2008 is -4.1% in Riverside and -4.7% in San Bernardino!

So here we go with DataQuicks Sept report.

Southern California home sales shot up by an unprecedented 65 percent last month from the dismal, record lows of a year ago, when a credit crunch slammed the brakes on home financing. September sales also posted a rare gain over August as price cuts lured more buyers. Foreclosure resales rose to half of all transactions.

A total of 20,497 new and resale houses and condos closed escrow in the six-county Southland in September, up 5.8 percent from 19,366 in August and up 64.6 percent from 12,455 in September 2007, according to San Diego-based MDA DataQuick, a real estate information service.

Last month's sales were the highest for any month since December 2006 and the year-over-year gain was the highest for any month in DataQuick's statistics, which go back to 1988. However, last month's sales were still the second-lowest for any September since 1996 and were 17 percent below the 20-year sales average for that month.

This September's huge annual sales increase stems from the extraordinarily weak activity in September 2007, when sales were at a record low for that month. The year-ago sales plunged after the credit crunch that struck in August 2007 made "jumbo" mortgages for higher-end homes more expensive and harder to obtain. Sales were already hurting from the subprime mortgage industry meltdown earlier in 2007, which undermined demand for entry-level homes.

"The pitifully low September 2007 sales numbers weren't tough to beat. More impressive was that this September's sales volume bucked the seasonal norm and rose above August. Steep price declines, especially inland, have improved housing affordability quite a bit and may keep sales levels well above the record lows we saw late last year and early this year. It will depend on the severity of this economic downturn," said John Walsh, MDA DataQuick president.

"You have to view last month's sales in the proper context," he cautioned. "They represent escrow closings, which reflect purchase decisions made in mid-to-late summer. That was before the dramatic worsening of the nation's economic crisis in recent weeks. Over the next few weeks our sales data will begin to show how the meltdown in financial markets this fall has impacted housing demand."

I am impressed that they even mentioned the reason for the great "looking" numbers and I'm even more impressed by the candor in that last paragraph.

Bargain shopping continued to fuel the Southland market last month, with sales typically rising the most in areas where prices have dived and foreclosures have soared.

Fifty percent of all existing homes that closed escrow in September had been foreclosed on at some point in the prior year. That's up from 45.5 percent in August and 12.6 percent in September last year.

At the county level, such foreclosure resales ranged from 36.8 percent of September resales in Orange County to 68.9 percent in Riverside County. In Los Angeles County foreclosure resales were 39.1 percent of all resales; in San Diego 47.3 percent; San Bernardino 63.1 percent and in Ventura County 44.0 percent.

The high level of foreclosure resales helped push the Southland's median sale price down to $308,500 in September, the lowest since it was $305,000 in May 2003. Last month's median was 6.5 percent lower than $330,000 in August and 33.2 percent lower than $462,000 in September 2007. The September median stood 38.9 percent below the peak $505,000 median reached in spring and summer of last year.


Market said...

I have watched an REO since December. Went to trustee sale twice. Came on to the market in September. Went to RE office to ask for listing agent. Another one said she wasnt there but she could answer questions. I asked a few and went on my way. 2nd lady has emailed me a few times with other listings, but told her i'm only interested in the one. I tried to contact listing agent again, and 2nd lady sent me a nasty email "I feel duped, YOU had me under the impression that I would be your agent". She has done NOTHING but answered a few questions and now she expects me to be committed to her to get 3% just because the listing agent wasnt in the office!

dgelz said...

The lady you "duped" has probably been living off spaghettios for the last year. Don't take it personally...she's just hungry. Or perhaps her 750i BMW needs new tires. Maybe she has a boat payment due. Her 3 carat diamond ring may need a new mounting.
So how does it feel to keep this poor lady from the things she rightfully duper!?

charlesbrownell said...

Think of all the mortgage brokers out thee who made big, big money from the fees on the subprime borrowers.

They probably thought it was going to go on forever just like the real estate brokers.

But at least the brokers didn't knowingly make loans to people they knew couldn't repay the loan.

How many years until the real estate market recovers?

dgelz said...

"But at least the brokers didn't knowingly make loans to people they knew couldn't repay the loan."

I doubt they would care either way. The loans are insured, so what do they risk losing? What did anybody risk losing by giving out loans to people who couldn't afford them? Nothing.
Its guys like you and I who are bailing them out. I love helping out my fellow Americans.

On another note. I was at the L.A. Fitness in South Corona yesterday and almost felt like keying a black 500 series Mercedes I saw parked in the lot. According to the decals on the car, this guy/gal has started a business promising people that they can "Make a FORTUNE off of other people's forclosures!" This was posted on all sides of the car. It seems we can still "Get Rich Quick" even though its at the cost of others' misfortune (not all forclosed homes are a result of flippers).
The economic state we're in right now is a direct result of greed, and the outlook looks grim as it shows no sign of going away regardless of our current situation. Why are there so many dirtbags out there?

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Market said...

I was really aggravated. I told her off in an email back and said what exactly had she done? I found the house, I researched the comps, I went to the auctions, I've visited other homes for comparison, and what exactly did she think I owed her for? She didn't respond.