Tuesday, December 26, 2006

Caption Contest Finale

8. We've gathered up this food for those who are mortgage slaves this Holiday Season.
7. "And after your ARM resets if you recycle this many cans, every single day, you'll have enough money to make your payment!"
6. "Everything grows to the sky."
5. The real estate market...its in the can. Now if we could open all these up, we might find it!
4. Realtors: We CAN do it in any market!
3. "Support your local realtor."
2. Toys for tots. Cans for Casey.
1. "Pyramids" they're not just for schemes anymore!

Thanks, everybody!

Sunday, December 24, 2006

Sacramento Regional Real Estate Trends 2006 Final

Inventory levels declined slightly to 12,900 listings after the big drop last week:

Many readers submitted comments questioning the validity of last week’s inventory plunge, so I tried to address them in this comment. If any readers have additional ideas, knowledge, or insight about the IDX/MLS relationship and their respective data management processes, I would love to hear from you.

Prices also stabilized somewhat over last week, with some divergence between median and average asking prices beginning to appear:

The overall year-end inventory decline is still occurring at most price levels:

and the remaining flippers continue their march into trouble:

To put the year into perspective, I would like to share some inventory data I've been collecting since June 2005. It is for Sacramento County only, but I think helps illustrate how exceptional 2006 was from an inventory point of view:

As you can see, the 2006 run-up completely dwarfed 2005 in both scale and breadth. Put another way, inventory levels in December 2006 are nearly the same as levels in August 2005.

For the true data junkies out there, here's the inventory change-per-day graph for 2006:

Both the weekly Saturday increases and monthly drop-off patterns are easy to pick out here.

From just these two graphs, it's easy to see why the latest drop in inventory is not a "hopeful sign" that buyers are returning, but just a seasonal pattern.

We broke 15-year-old inventory records, but prices remained high by any measure. We also saw flippers start to take their leave from the market, with those that remained getting further into trouble. Average and median asking prices began to drop as resellers and new house builders began to compete in earnest. I think it is safe to characterize the 2006 housing market as a market in transition, with many signs pointing to further price declines and more record inventory.


I think the big 2007 housing story will be the rising foreclosures and bankruptcies due to ARM adjustments. I also think at least one, or possibly two major mortgage lenders will collapse due to forced buy-backs and increases in default. Ameriquest is my top choice, but Countrywide, Washington Mutual, and H&R Block (Option One) are top contenders.

Finally, I would like to thank everyone who made this site a success: Agent Bubble, JR, Lander, Patrick, Gwenster, and all the other bubble heads. If it weren't for your encouragement and feedback, I would have quit a long time ago.

Let's keep it rolling through 2007!

Monday, December 18, 2006

Caption Contest

This photo was taken over at the K Street mall, and represents one of three CanTreestm displayed around town by the Sacramento Association of Realtors:

The CanTreetm is an annual PR & charity campaign, and "is SAR's most important and highest profile charitable event."

Seeing as how there are hundreds of CanTreetm celebrations all across the country, I thought we could do SAR a favor and create a distinguishing slogan that combines the spirit of holiday food giving with the challenges of today's buyers' market. Just post your slogan in the comments, and I'll post it on Christmas day as my gift to you.

Sunday, December 17, 2006

Sacramento Regional Real Estate Trends for December 17, 2006

'Tis the season for inventory reductions. Inventory dropped by a whopping 3,126 listings over last week, putting us at 13,303 as we approach year-end, and blowing away the year-end prediction I made only last week:

The drop was felt across all price ranges and all four counties:

As a disproportionate number of lower-prices houses were dropped from the MLS, the effect on asking price ranges was equally dramatic:

As previously discussed, this rapid reduction in inventory is due to the seasonal expiration and automatic delisting of houses from the MLS, not to any real change in sentiment as reported elsewhere. This is seen in the relative number of flipper listings, which is in line with previous trends:

Flipper listings have taken a dive as well, and those that remain are now deeper in trouble:

In my mind, nothing illustrates the dramatic turn the market has taken this year better than the turnaround in the flipper market. In April, less than 4% of flippers were taking an asking price loss. Now, that number is over 33%. The number of loss takers has grown by 448% since April (including today’s drop).

Next week I’ll do a year-end summary, including a final set of graphs and data tables. 2007 should make for an interesting year.

Sunday, December 10, 2006

Sacramento Regional Real Estate Trends for December 9, 2006

Inventory continued to drop approaching year-end. The accelerated drop seen last week has moderated, so the projection is still ~13,500 listings by January 1, 2007:

By price, you can see the inventory drop is happening at most levels, which is indicative of listings expiring:

Asking prices are beginning to stabilize as we approach the new year:

Since sales continue to drop, I would expect the asking prices to begin trending downward again in by next quarter. If new house prices are any indicator, the resellers will have no choice.

Speaking of those with no choice, flipper market share surged last week:

But overall flipper listings showed only a modest increase:

So, the relative desire to sell is greater with flippers than with the overall market. That conclusion is also supported by the increase in Flippers In Trouble. They simply cannot afford to lower their prices, and they cannot let their listings expire while they wait for the market to recover.

In other words, flippers are between a rock and a hard place.

Sunday, December 03, 2006

Sacramento Regional Real Estate Trends for December 2, 2006

Welcome to the slowest time of year for real estate. Inventory is dropping rapidly in the four-county Sacramento region:

I revised the end-of-the-year projection downward to ~13,500, due to the increased fall-off today. Note that this is the usual inventory pattern for this time of year, as all the 90 listings that began in October expire and are removed automatically from the MLS database. If 2007 is anything like 2006, we should see a 33% increase in inventory between January and March.

Despite the drop in overall inventory, the lower individual price levels continue to hold up:

Asking price trends continued pretty much unchanged, with the exception of a stabilization of El Dorado price per square foot, a the rebound in Sacramento’s:

Flipper market share trends continued their longer term trends, with the exception of Yolo County, which seems to be seeing an increase in flipper houses on the market:

The decrease in flipper inventory seems to mirror the decrease in the overall market, with flippers in trouble the only exception:

It looks like some flippers are taking Christmas off to reassess, leaving the market to those who cannot afford a holiday.

Friday, December 01, 2006

Update on Distressed Properties

Just over two weeks ago, I wrote an article on the situation with distressed properties in our 4 county area. In short, my stats revealed than 1 in every 15 homes fell under the distressed properties umbrella. I classified a distressed property as: short sale, bank-owned, foreclosure, or foreclosure pending.

Today's numbers reveal the following:

Distressed properties: 1,196
# of MLS listings: 14,358

We've now gone from 1 in every 15 to 1 in every 12. This trend could get very ugly very quickly....