Sunday, July 09, 2006

Sacramento Region Home Listings Inventory for July 8, 2006

Some interesting new trends could be developing here in Sacto. First, we’ve had another huge drop in pending sales as a percentage of the market:


The big drop is probably due to pending listings not being renewed in the MLS after the end of the month. Note that a similar event happened at the end of April. It’ll be interesting to see if pendings can recover…

The bigger story this week is that it appears that we may finally be seeing a faint trace of an inventory top for the four county region. This trend has become very pronounced in both Yolo and Placer Counties, but the accelerating growth in Sacramento has worked to offset the slowdown:


If we take a quadratic approach to the trend and go back into May, the slowing becomes apparent:


If inventory levels follow this new path, we should see a top by mid August, with flattening and the eventual Fall and Winter drop.

I should say that right now, I’m not ready to make the call for a big slowdown yet, for two reasons. Last year, July was the most volatile month for inventory in Sacramento County. All of the usual weekly trends were present, just exaggerated:


In fact, the linear correlation for last July was worse than the linear correlation for our four-county graphs this year. Also, August 2005 had the biggest inventory run-up of any month since I’ve been keeping records:


So, I’m not ready to make my call yet, but I am ready to adjust my population-adjusted record date out to July 15, and my market growth projected date to August 5. We shall see.

4 comments :

John in Rocklin said...

Your stats on the flipper inventory in Placer County is amazing. Per your definition of "flipper in trouble" (ie, listed price below acquisition price), many flippers who are in trouble, do not yet show up in your data. I wrote before about the JTS commmunity off Caledon in Lincoln (go to www.jtscommunities.com and find The Estates at Lincoln Crossing, then find the Community Map to see the neighborhood.) Then do a listing search for Hillwood Loop in the MLS or a real estate web site. There are about 66 homes built on that street, supposedly all sold (except 3 builder models). There are 27 on MLS for immediate resale on Hillwood. I don't think these homes show up in your fippers in trouble, but I will tell you this: 136 homes in the subdivision, with only 6 or 7 are occupied, the rest are up for re-sale or falling out of escrow with the builder. This is going to be a bloodbath. $600,000 to $980,000 homes in West Lincoln is way over market. It is going to get ugly and I would not doubt we will see lawsuits against the builder, who is also the sale agent, also the lender, and who knows, may order the appraisal and in some cases, received incentives from the escrow agent. Hmmm. It is fascinating. John in Rocklin.

Max said...

Yeah, one big weakness in my flipper stats is new home flips. I've been trying to get Sac County home completion stats but the permits department is giving me the runaround. They want $75 for one week of stats. :) Oh, and the person in charge of the data is buddy-buddy with the local RE MLS folks.

Anybody out there done an FOI request with Sac County?

Garth Farkley said...

Max,

Please correct me if I'm wrong but doesn't the pending figure reflect homes in escrow prior to closing? That has always been my understanding. That just means that signed contracts aren't keeping pace with new listings, right? The pendings are falling because buyers are waiting it out.

Garth Farkley said...

As the saying goes, this isn't inside baseball. It's inside the baseball itself.

I love it.