Tuesday, June 22, 2010


News headlines can leave you scratching your head. Like this one from the Press Enterprise.

"It was yet a different story in Riverside and San Bernardino counties, Kleinhenz noted, where last month sales dropped 25 percent from a year earlier despite the eagerness of buyers to take advantage of dual tax credits."

"Inland area sales down 25% from a year ago". Say what, Dataquick's May report has IE sales down roughly 7%, so how can another report have the sales down 25%. Reading the article it's hard to tell but this is actually just existing homes (no new homes). Still that's a pretty shocking number if it's true. Of course the Tax credit expired so that will have something to do with the drop in sales. But a drop of 25% is a scary number, it means the market is pretty damn BAD. With only a week left to close and still get the tax credit you have to wonder what the sales will be like next month.

Even with sales tapering off (when they should be climbing due to the summer buying season) I don't see the inventory climbing much. There's still a shortage of decent properties at decent prices. There's lots of mediocre or trashy homes priced way too high but few nice homes. REO's are still few and far between. The forecast "flood" of REOs so far has not materialized. Short sales are still the majority of the listings. Even with the Obamanomics plan to speed short sales they are still a royal pain in the butt to deal with.

So far this year nothing has gone as anyone expected. No flood of foreclosures when the moratoriums and workout plans ended. Rates didn't shoot up when the MBS program ended, in fact they've actually gone down (sure much of that was due to the stock market crashing again). And the expected flood of sales from the end of the tax credit also isn't materializing. It seems like we are experiencing "opposite day" (sorry for the sponge bob reference) but our opposite day is lasting a year........


Oldtimer said...

Here is my crazy theory. Home sales have been inflated these past couple of years because there were a lot more distressed homeowners that couldn't afford their homes.

Now we are getting down to the stubborn homeowners (some with equity, some without) and the newly distressed because of the economy. Meanwhile, families keep growing and shrinking, so organic sales will become a growing portion of the market.

BrianH said...

Here is my "full time in the trenches" update. So far this year we have acquired 16 properties. At this moment I have three active listings on the MLS in the Perris/MoVal area priced at 172k, 159k and 145k. The home at 172k is a awesome neighborhood/house and I have three offers after 8 days on the market, the one at 159k has two showings, zero offers after 6 days on the market and the 145k has one offer after 1 day on the market. These numbers are a little slower then what we experienced a couple months ago. When the tax credit was in full swing if we had a home on the MLS for more then 5 days there would be 15+ offers and we would have to switch it to hold status.

All in all it is still relativity strong all things considered just not crazy like it was a couple months ago. I have three homes that are not ready for market that will be priced in the sub 130k category and those are already sold via word of mouth with a couple eager and qualified buyers for each so that segment is still extremely strong.

It certainly feels a little less hetectic but in my opinion at these prices there are willing buyers, however my believe is the market is taking a little breather after the absolutely crazy run for the last year. Agents are fatigued, buyers are fatigued and everyone is taking a deep breath.

golfer_X said...

I see new home sales sank 33% when the tax credit ended. Of course Cali has the new state tax credit which is helping keep our numbers better than the rest of the nation. But you have to wonder what happens when that ends.

Brian, at your sales price I think you are going to see strong sales regardless of the credit. With interest rates as low as they are the payments on a house under $200k will be low enough to attract buyers. Hey, shoot me an email. I'm looking for someone to fix up a rental propery.