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Realistbear

Our Mirror Market Just Experienced Grid Lock

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http://realtytimes.com/rtmcrcond/Californi...go~bobcasagrand

Market Conditions for San Diego, California*

Reported by Bob "Robert" Casagrand, REALTOR

Updated September 12, 2007.
August 2007: San Diego Housing Market: single family attached and detached homes; Home sales continue to soften, sales of 2096 for August were 26% lower than last year and 53% lower than August 2003. The August Pending sales were only 1694 indicating that September sales will be in the 1500 range, If this sales outlook holds then Sept will be done 37% from Sept 2006, where August was down in sales by 28%. We seem to be in a state of increasing sale declines year over year. We started the year with Jan having a sales decline of 16% year over year increasing to Augusts' 28%. The declines appear to be in concert with the problems in the lending industry driving buyers out of the market. I do not know where the bottom of the demand curve is, but I expect declining demand to continue for some time. Even if the FED lowers the interest rates, I do not believe this will have a major impact on the demand. Our problem is not interest rate levels but whether someone can get a loan period.
Due to our price levels in San Diego, which is highlighted by the affordability index, buyers need to get the boutique loans in order to qualify to make a purchase. These loans are now the most difficult to obtain; thus, reducing demand.
The August inventory was 22,989 which gave us an 11 month supply. The months supply is an overall market average, depending on size of home this varies from a low of 8 months supply to a high of 14 months. This will also vary by condo or detached home. In fact condos now have a lower months supply than detached homes. Thru August we have had 55,205 homes listed with an additional 17,198 listed homes that carried over from 2006 giving us a total activity for all list status of 72,403. As high as this number appears it is actually down from 2006 by about 3,000 homes. Clearly fewer people are listing their homes for sale this year. The inventory levels are somewhat caused by the inability to sell due to reduced demand causing homes to stay on the market longer, sort of a piling on effect. The ratio of sold homes to all listing activity this year is 26%, by far the lowest in 5 years, compared to 2003 which had a 72% ratio. This year we have had 30,700 listings expire, cancel or withdraw from the market compared to 3,600 for 2003; this clearly demonstrates the difficulty in selling homes.
As a general statement prices are down year over year; however, to get a real feel for prices you need to look at prices by home size. I think a more accurate picture of prices is to look at price changes from peak prices by home size. I provide both of these stats on my website, www.bobcasagrand.com, much more effectively than here. One thing that amazes me is that for a market that is down over 50% in demand why prices have remained relatively stable, www.californiahousingforecast.com has an excellent post on what drives prices in a buyers market. Basically it comes down to we are trained to buy sticker prices and in this case the seller establishes the sticker price, combine that with what I call emotional buyers - "I love it, I can afford it, I gotta have it". They have an interesting take. I think the sticker price theory is supported by the fact that occupied homes list for more than vacant homes and bank owned homes list for less than vacant homes yet the sold price to list price ratio is virtually identical at about 96%. What we do know about prices is that we know what price it took to sell the homes that sold but not what it will take to sell the ones left on the market.
For more details than I can present here and for graphs of 5 year trends visit my website at www.bobcasagrand.com
These are difficult times for sellers and they need to be fully aware of the market trends in their neighborhood and how their home compares to their competition and price accordingly, time will cost you money. Buyers need to be knowledgeable about the market as well and be diligent and patient to be wi$e buyers.

The thing I like about Bob is that I think he is telling it "like it is" which is rare for an EA. If I decide to buy back into the SD market in a few years I will give Bob a call! I must admit that I am getting tempted again as a nice 60% drop in my old home area would mean you could buy a nice Ocean View home for around $500k instead of the $1m plus that was happening before things got rough in the spawning ground of the 2 Great Crashes.

Note how Bob suggest slooking behind the stats and how an index such as the ones the VIs push out here would not be acceptable to Bob.

___________________________

* http://www.housepricecrash.co.uk/forum/ind...ost&id=4113

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