Sunday, September 17, 2006

Sacramento Regional Real Estate Trends for September 16, 2006

Another week, another set of colorful graphs. Four-county inventory remained flat week-over-week:

It is not just the cool weather telling you we have started fall early. This trend was also seen in market activity:

Pending listings remained very low at 5.3% of market. There was nothing going on this week, inventory-wise. On the flipper scene, however, the trends we saw all summer have continued on. As promised last week, I broke out the flipper distributions for Placer and Sacramento:

What we are seeing here is a gradual inversion of the April 15 distribution (green bars). Back then, 95% of flippers expected a profit of some kind, with 70% wanting a profit over 10%. As the market has slowed, almost 20% of flippers have been forced into the loss bin, and those asking for large gains are diminishing.

Curious to me are those flippers still asking for, say, a 50% gain. They can’t not be aware of the slowing market. Either they owe more than 100% of the last sale price, or they are way more optimistic than the majority of their flipper brethren. Whatever the reason, I doubt they’ll be selling anytime soon.

On the price level inventory front, we are definitely seeing declining inventory in the upper price ranges, coupled with rising inventory in the lower ranges. The change is subtle, but it’s there:

Flipper market share trends continued unchanged this week, with a gradual reduction in flipper positions coupled with an increase in the flippers in trouble levels. The only exception was El Dorado county, which saw a slight increase in flipper levels over last week:


mkellerm said...

Both of these blogs have great content - keep up the good work! I have one question about your definition of a "flipper". One of the criteria in your May 19 post was that the resale cutoff was two years; does this mean that some listings (those that last changed hands in the summer of 2004) have moved from the flipper to the non-flipper category between May and August?

Max said...

Good question.

I have been using a strict two-year cutoff for the flipper definition, so it is possible that a listing designated as a flipper house in the past could be removed from the FIT list and still be on the market. My original reasoning was that it was virtually impossible to say for certain after two years of ownership that a house was being sold by a flipper, or just because the owner was moving etc. This definition is highly conservative.

A more nuanced approach would be to define a flipper house as one that is:

a) currently offered for sale
b) was sold once before in the last two years from the time it was first offered for sale

This would most certainly result in an increase in the flipper percentages. When I get some time, I’ll look into revising my stats.

Thanks for the suggestion.