Monday, September 1, 2008 at 07:51PM
Last-Third of 2008
What can we expect for the last third of 2008?
Here are the closed sales between Sept. 1 and Dec. 31 for SD County detached and attached homes:
2003 = 14,511
2004 = 13,157
2005 = 11,885
2006 = 9,161
2007 = 6,126
2008 = ?
How much further can they fall? Let's look at the recent history, the last two months:
July closed sales
2007 = 2,285
2008 = 2,874
Wow, a 25% Y-O-Y increase, probably due to REO selling like hotcakes.
August closed sales
2007 = 2,332
2008 = 2,217
Late-reporters will add around 10% to the 2008 number in the next few weeks, so August should beat last year too - is it possible that the last third of 2008 will do the same, and improve on 2007's total of 6,126?
It will depend on the ability of the lenders to get their REOs on the market. We'll probably see the trustee deeds (foreclosures) exceed sales in August, a trend that should continue the rest of the year.
It's realistic that we could see last-third of 2008 totals look like this:
6,200 sales
10,000+ foreclosures completed (average 2,500 x 4 mo.)
The current inventory of 17,734 detached and attached homes has been picked over by the waiting buyers - 13,960 of the 17,734, or 79% have been on the market for more than 30 days.
Last year between September 1 and December 31 there were 18,958 properties listed too, so there will be plenty of choices - probably around 30,000 listings for buyers to consider (17,734 + 12,000 or so new listings to come this year).
6,200 sales/30,000 listings = 21% of inventory closes.
It's going to be a long, cold winter for pricing.
Jim the Realtor
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Reader Comments (10)
Depends upon whether the banks stop shooting each other. The margin spreads are widening on credit products that may wash out what few potential buyers are left. Tightened lending standards, while welcomed, does not mean taking 80 days to fund and showing up at the closing asking for 2001 tax returns.
"It's going to be a long, cold winter for pricing."
Probably a long cold winter for everything, period. Banks are the only ones to even attempt to price things right, the rest of the people have their head solidly in the sand.
There's a house listed in my neighborhood for $475K, down from $499 a couple months back. The flyer says: "FINAL REDUCTION! Owner will take property off market." Oh really. Well, that threat makes me wanna jump on it immediately for sure! Never mind the last comp for the same floorplan was $424K, in MARCH. I mean, what are these people thinking? Wake up!
The support service companies are quietly dropping but I don't think we've seen the worst yet. Escrow, title, etc. don't have models that work with their fixed overhead and foreseeable volume.
The local Volvo dealer just folded. They were on track to sell 100 vehicles this year with 28 employees. Mortgage broker type numbers.
Did I tell you about the mortgage broker in the OC? They were funding 100 loans a month for five years straight, and they just closed their doors about 60 days ago.
I was looking for title info this morning, so I called the biggest title company around, Fidelity. They closed their customer service branch for LA County, and are taking all requests out of their Orange County office. Admittedly, it's a job that could be done anywhere (looking up recorded documents) but come on, this is LA!
No Jim, you did not tell us all about the broker. No foam in the coffee I owe you. ;-)
If things get bad enough I can see the County Recorder's offices taking over most of the functions excepting selling and financing.
I'll be checking my Fidelity MMA right now so excuse me.
Tightened lending standards, while welcomed, does not mean taking 80 days to fund and showing up at the closing asking for 2001 tax returns.
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Did you actually see an exaple of this, Rob?
I saw it a little over a year ago in a "nobrainer" commercial purchase. A doctor outgrowing a rented set of suites.
Here's a not so simple question.
Given SD's household population, what's a healthy, neither robust nor tepid, sales volume look like per month?
In other words, given the number of households, what monthly housing turnover is necessary to maintain an economically viable and sustainable work-force and populace?
Rob,
Would that be Carlsbad Volvo closing? Or another location...
Jim,
Can you create a contest a guy like me could win some Padres Tix for SU Sept 14th? Hey isn't it football season? The AAA try outs the Padres are holding against the Dodgers in LA this series and for the rest of the season should really put some interest in the Chargers!
Oh sorry. Neftin Volvo in Ventura. I'm an interloper in the SD market but I'm drawn to the story because of all the parallels.
It won't be long before the big ticket retailers start dropping. That's cars, appliances, furniture, etc.