tag:blogger.com,1999:blog-8451517.post-3429044923846645482008-05-07T07:12:00.000-07:002008-05-07T08:46:46.527-07:00Pendings<span style="font-family:times new roman;">What's really notable about this <a href="http://www.realtor.org/wps/wcm/connect/c846030049a16a57bcfefe99c998c3aa/PHS050708.pdf?MOD=AJPERES&CACHEID=c846030049a16a57bcfefe99c998c3aa&CACHEID=cd72f88049a13b619f38dfa08f6fc5a7">pending sales report</a> is the regional pattern that showed up in both February and March. Sales in the west are stabilizing as sales in the south and the northeast continue to fall. For the last three months, the pending index in the west has run 93.8, 92.5 & 92.1. Compare that to the 07 average of 92.4.<br /><br />But in the west sales are coming at the cost of very rapid price declines. What's happening is that the foreclosures and other forced sales (REO, NODs, shorts, etc) are coming on the market in such numbers that they are the bulk of moving homes in many areas.<br /><br />These are two year list price trends for some CA MSAs (data from <a href="http://www.housingtracker.net/">Housing Tracker</a>, Apr 06 to beg May 08):<br /></span><blockquote style="color: rgb(0, 0, 153);"><span style="font-family:times new roman;">LA:<br /><span style="font-family:times new roman;">Low: </span>$445,333 -> $330,000</span><br /><span style="font-family:times new roman;">Med: $579,666 -> $450,000</span><br /><span style="font-family:times new roman;">High: $805,300 -> $675,000</span><br /><br /><span style="font-family:times new roman;">Orange County:</span><br /><span style="font-family:times new roman;">Low: $529,900 -> $375,000</span><br /><span style="font-family:times new roman;">Med: $694,833 -> $529,900</span><br /><span style="font-family:times new roman;">High: $973,333 -> $849,000</span><br /><br /><span style="font-family:times new roman;">Riverside:</span><br /><span style="font-family:times new roman;">Low: $349,600 -> $215,000</span><br /><span style="font-family:times new roman;">Med: $435,000 -> $299,000</span><br /><span style="font-family:times new roman;">High: $577,500 -> $410,000</span><br /><br /><span style="font-family:times new roman;">Sacramento:</span><br /><span style="font-family:times new roman;">Low: $344,833 -> $199,000</span><br /><span style="font-family:times new roman;">Med: $439,500 -> $305,000</span><br /><span style="font-family:times new roman;">High: $594,833 -> $489,000</span><br /><br /><span style="font-family:times new roman;">San Diego:</span><br /><span style="font-family:times new roman;">Low: $399,000 -> $289,900</span><br /><span style="font-family:times new roman;">Med: $537,666 -> $419,000</span><br /><span style="font-family:times new roman;">High: $749,946 -> $675,000</span><br /><br /><span style="font-family:times new roman;">San Francisco:</span><br /><span style="font-family:times new roman;">Low: $499,983 -> $349,875</span><br /><span style="font-family:times new roman;">Med: $654,663 -> $525,000</span><br /><span style="font-family:times new roman;">High: $891,325 -> $799,000</span><br /><br /><span style="font-family:times new roman;">San Jose:</span><br /><span style="font-family:times new roman;">Low: $599,966 -> $427,900</span><br /><span style="font-family:times new roman;">Med: $739,333 -> $575,999</span><br /><span style="font-family:times new roman;">High: $1,098,833 -> $799,000</span><br /><br /><span style="font-family:times new roman;">Santa Cruz (from Aug 06 to beg Apr 08):</span><br /><span style="font-family:times new roman;">Low: $599,000 -> $450,000</span><br /><span style="font-family:times new roman;">Med: $769,166 -> $685,000</span><br /><span style="font-family:times new roman;">High: $1,098,500 -> $1,049,000</span></blockquote><span style="font-family:times new roman;">Santa Cruz is small enough to make their numbers less reliable - total inventory is under 2,000. Generally you have to get over 4,000 before the data is reliable. Below that matched sales and true comps are the best measures.<br /><br />Here is the one year trend (Apr 07 to beg May 08):<br /></span><blockquote style="color: rgb(0, 0, 153);"><span style="font-family:times new roman;">LA:<br /><span style="font-family:times new roman;">Low: </span></span>$425,800<span style="font-family:times new roman;"> -> $330,000</span><br /><span style="font-family:times new roman;">Med: </span>$546,000<span style="font-family:times new roman;"> -> $450,000</span><br /><span style="font-family:times new roman;">High: </span>$749,600<span style="font-family:times new roman;"> -> $675,000</span><br /><br /><span style="font-family:times new roman;">Orange County:</span><br /><span style="font-family:times new roman;">Low: </span>$499,720<span style="font-family:times new roman;"> -> $375,000</span><br /><span style="font-family:times new roman;">Med: </span>$649,920<span style="font-family:times new roman;"> -> $529,900</span><br /><span style="font-family:times new roman;">High: </span>$921,780<span style="font-family:times new roman;"> -> $849,000</span><br /><br /><span style="font-family:times new roman;">Riverside:</span><br /><span style="font-family:times new roman;">Low: </span>$330,940<span style="font-family:times new roman;"> -> $215,000</span><br /><span style="font-family:times new roman;">Med: </span>$415,760<span style="font-family:times new roman;"> -> $299,000</span><br /><span style="font-family:times new roman;">High: </span>$544,920<span style="font-family:times new roman;"> -> $410,000</span><br /><br /><span style="font-family:times new roman;">Sacramento:</span><br /><span style="font-family:times new roman;">Low: </span>$309,124<span style="font-family:times new roman;"> -> $199,000</span><br /><span style="font-family:times new roman;">Med: </span>$399,720<span style="font-family:times new roman;"> -> $305,000</span><br /><span style="font-family:times new roman;">High: </span>$566,610<span style="font-family:times new roman;"> -> $489,000</span><br /><br /><span style="font-family:times new roman;">San Diego:</span><br /><span style="font-family:times new roman;">Low: </span>$389,400<span style="font-family:times new roman;"> -> $289,900</span><br /><span style="font-family:times new roman;">Med: </span>$509,780<span style="font-family:times new roman;"> -> $419,000</span><br /><span style="font-family:times new roman;">High: </span>$737,115<span style="font-family:times new roman;"> -> $675,000</span><br /><br /><span style="font-family:times new roman;">San Francisco:</span><br /><span style="font-family:times new roman;">Low: </span>$463,000<span style="font-family:times new roman;"> -> $349,875</span><br /><span style="font-family:times new roman;">Med: </span>$600,345<span style="font-family:times new roman;"> -> $525,000</span><br /><span style="font-family:times new roman;">High: </span>$825,780<span style="font-family:times new roman;"> -> $799,000</span><br /><br /><span style="font-family:times new roman;">San Jose:</span><br /><span style="font-family:times new roman;">Low: </span>$577,100<span style="font-family:times new roman;"> -> $427,900</span><br /><span style="font-family:times new roman;">Med: </span>$687,970<span style="font-family:times new roman;"> -> $575,999</span><br /><span style="font-family:times new roman;">High: </span>$910,590<span style="font-family:times new roman;"> -> $799,000</span><br /><br /><span style="font-family:times new roman;">Santa Cruz (from Aug 06 to beg Apr 08):</span><br /><span style="font-family:times new roman;">Low: </span>$577,200<span style="font-family:times new roman;"> -> $450,000</span><br /><span style="font-family:times new roman;">Med: </span>$749,200<span style="font-family:times new roman;"> -> $685,000</span><br /><span style="font-family:times new roman;">High: </span>$1,103,200<span style="font-family:times new roman;"> -> $1,049,000</span></blockquote><span style="font-family:times new roman;">The bottom brackets are dominated by the outlying areas (long commutes to work) and condo hell. Condo hell can best be described as being forced to pay HOA on all the vacant units. Condos are unique in that in bad markets, frequently the annual carrying costs rise sharply. Not a good thing, and it gets even worse when special assessments occur. Then the local board is faced with rent, and drive prices down, or don't rent, and drive fees up, which drives prices down.<br /><br />Here is a helpful table showing the price DECLINES by area and bracket:<br /></span> <table border="1" cellspacing="0" cols="3" frame="void" rules="groups"> <colgroup><col width="86"><col width="86"><col width="86"></colgroup> <tbody> <tr> <td align="left" height="18" width="86"><b><i><span style="font-family:times new roman;">MSA</span></i></b></td> <td align="left" width="86"><b><i>2 Yr Decline</i></b></td> <td align="left" width="86"><b><i>1 Yr Decline</i></b></td> </tr> <tr> <td align="left" height="17"><i><span style="font-family:times new roman;">LA:</span></i></td> <td align="left"><br /></td> <td align="left"><br /></td> </tr> <tr> <td align="left" height="17"><span style="font-family:Times New Roman;">Low</span></td> <td sdval="0.258981481273564" sdnum="1033;0;0.0%" align="right">25.9%</td> <td sdval="0.224988257397839" sdnum="1033;0;0.0%" align="right">22.5%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">Med</span></td> <td sdval="0.223690884060821" sdnum="1033;0;0.0%" align="right">22.4%</td> <td sdval="0.175824175824176" sdnum="1033;0;0.0%" align="right">17.6%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">High</span></td> <td sdval="0.1618030547622" sdnum="1033;0;0.0%" align="right">16.2%</td> <td sdval="0.0995197438633938" sdnum="1033;0;0.0%" align="right">10.0%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:Times New Roman;"><br /></span></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> </tr> <tr> <td align="left" height="32"><span style="font-family:times new roman;">Orange County:</span></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> </tr> <tr> <td align="left" height="17"><span style="font-family:Times New Roman;">Low</span></td> <td sdval="0.292319305529345" sdnum="1033;0;0.0%" align="right">29.2%</td> <td sdval="0.249579764668214" sdnum="1033;0;0.0%" align="right">25.0%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">Med</span></td> <td sdval="0.237370706342387" sdnum="1033;0;0.0%" align="right">23.7%</td> <td sdval="0.184668882323978" sdnum="1033;0;0.0%" align="right">18.5%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">High</span></td> <td sdval="0.127739427308023" sdnum="1033;0;0.0%" align="right">12.8%</td> <td sdval="0.0789559330859858" sdnum="1033;0;0.0%" align="right">7.9%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:Times New Roman;"><br /></span></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">Riverside:</span></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> </tr> <tr> <td align="left" height="17"><span style="font-family:Times New Roman;">Low</span></td> <td sdval="0.385011441647597" sdnum="1033;0;0.0%" align="right">38.5%</td> <td sdval="0.350335408231099" sdnum="1033;0;0.0%" align="right">35.0%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">Med</span></td> <td sdval="0.31264367816092" sdnum="1033;0;0.0%" align="right">31.3%</td> <td sdval="0.280835097171445" sdnum="1033;0;0.0%" align="right">28.1%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">High</span></td> <td sdval="0.29004329004329" sdnum="1033;0;0.0%" align="right">29.0%</td> <td sdval="0.247595977391177" sdnum="1033;0;0.0%" align="right">24.8%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:Times New Roman;"><br /></span></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">Sacramento:</span></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> </tr> <tr> <td align="left" height="17"><span style="font-family:Times New Roman;">Low</span></td> <td sdval="0.422909060327753" sdnum="1033;0;0.0%" align="right">42.3%</td> <td sdval="0.356245390199402" sdnum="1033;0;0.0%" align="right">35.6%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">Med</span></td> <td sdval="0.306029579067122" sdnum="1033;0;0.0%" align="right">30.6%</td> <td sdval="0.236965876113279" sdnum="1033;0;0.0%" align="right">23.7%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">High</span></td> <td sdval="0.177920525592898" sdnum="1033;0;0.0%" align="right">17.8%</td> <td sdval="0.13697252078149" sdnum="1033;0;0.0%" align="right">13.7%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:Times New Roman;"><br /></span></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">San Diego:</span></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> </tr> <tr> <td align="left" height="17"><span style="font-family:Times New Roman;">Low</span></td> <td sdval="0.2734335839599" sdnum="1033;0;0.0%" align="right">27.3%</td> <td sdval="0.255521314843349" sdnum="1033;0;0.0%" align="right">25.6%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">Med</span></td> <td sdval="0.220705791327702" sdnum="1033;0;0.0%" align="right">22.1%</td> <td sdval="0.178076817450665" sdnum="1033;0;0.0%" align="right">17.8%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">High</span></td> <td sdval="0.0999351953340641" sdnum="1033;0;0.0%" align="right">10.0%</td> <td sdval="0.0842677194196292" sdnum="1033;0;0.0%" align="right">8.4%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:Times New Roman;"><br /></span></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> </tr> <tr> <td align="left" height="32"><span style="font-family:times new roman;">San Francisco:</span></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> </tr> <tr> <td align="left" height="17"><span style="font-family:Times New Roman;">Low</span></td> <td sdval="0.300226207691061" sdnum="1033;0;0.0%" align="right">30.0%</td> <td sdval="0.244330453563715" sdnum="1033;0;0.0%" align="right">24.4%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">Med</span></td> <td sdval="0.198060681602596" sdnum="1033;0;0.0%" align="right">19.8%</td> <td sdval="0.125502835869375" sdnum="1033;0;0.0%" align="right">12.6%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">High</span></td> <td sdval="0.103581746276611" sdnum="1033;0;0.0%" align="right">10.4%</td> <td sdval="0.0324299450216765" sdnum="1033;0;0.0%" align="right">3.2%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:Times New Roman;"><br /></span></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">San Jose:</span></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> </tr> <tr> <td align="left" height="17"><span style="font-family:Times New Roman;">Low</span></td> <td sdval="0.286792918265368" sdnum="1033;0;0.0%" align="right">28.7%</td> <td sdval="0.258534049558135" sdnum="1033;0;0.0%" align="right">25.9%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">Med</span></td> <td sdval="0.220920748837128" sdnum="1033;0;0.0%" align="right">22.1%</td> <td sdval="0.162755643414684" sdnum="1033;0;0.0%" align="right">16.3%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">High</span></td> <td sdval="0.272864939440297" sdnum="1033;0;0.0%" align="right">27.3%</td> <td sdval="0.122546920128708" sdnum="1033;0;0.0%" align="right">12.3%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:Times New Roman;"><br /></span></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> </tr> <tr> <td align="left" height="62"><span style="font-family:times new roman;">Santa Cruz (from Aug 06 to beg Apr 08):</span></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> <td sdnum="1033;0;0.0%" align="left"><br /></td> </tr> <tr> <td align="left" height="17"><span style="font-family:Times New Roman;">Low</span></td> <td sdval="0.248747913188648" sdnum="1033;0;0.0%" align="right">24.9%</td> <td sdval="0.22037422037422" sdnum="1033;0;0.0%" align="right">22.0%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">Med</span></td> <td sdval="0.109425013586144" sdnum="1033;0;0.0%" align="right">10.9%</td> <td sdval="0.0856914041644421" sdnum="1033;0;0.0%" align="right">8.6%</td> </tr> <tr> <td align="left" height="17"><span style="font-family:times new roman;">High</span></td> <td sdval="0.0450614474283113" sdnum="1033;0;0.0%" align="right">4.5%</td> <td sdval="0.0491298042059463" sdnum="1033;0;0.0%" align="right">4.9%</td> </tr> </tbody> </table><br /><span style="font-family: times new roman;">As you can see, the declines are concentrated in the last year. That's because lending standards changed, causing resales potential to be limited. It is the change in lending standards (which is necessary and driven by rising defaults) which is causing the decline.<br /><br />As this wears on, the declines will continue and will work their way up the brackets. For one thing, the top brackets have a lot more loans like OAs that will reset later on, forcing a roll-out to the market. Declines of these magnitudes do make housing far more affordable and thus open up new sources of demand. So the rapid price declines will stabilize sales. Far more people can afford to buy at $250,000 than at $350,000, that's for sure.<br /><br />The market peaked in many areas earlier than 2006, so total losses for lenders will be higher than shown. If you have to foreclose and then sell, to the declines shown above you should probably add another 10% for starters.<br /><br />Aside from legal costs, there is the broker's fee, there's usually a 5% discount for foreclosures, and then there are the costs of utilities, vacant home property insurance, taxes, etc. It doesn't pay you to keep your REO smiling on the shelf. Last year it seemed like many lenders were letting these sit, hoping that the market would pick up later and that they could then move them without too much trouble. This year, that fantasy is seen for the fantasy it was.<br /><br /></span>MaxedOutMamahttp://www.blogger.com/profile/08011469804162511617noreply@blogger.com