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.


Anonymous said...

Max, I am so disappointed we have only 13,000 homes for sale. I don't want to go shopping for a new home until I have at least 18,000 from which to choose.

I know that 13,000 eclipses the all time record number of listings set in 1993 or so, but it hardly seems right to limit my choices. I will wait until spring....

(sarcasm off)

Rob Dawg said...

That's got to be a data artifact. I'll reserve comment until we get either a revision or subsequent number.

Anonymous said...

yea, even though this is a favorable thing, I agree with Robert that it may be a fluke.

Max said...

Here’s what I understand about the various listings databases:

There are two primary listing databases: IDX and MLS. When the concept of sharing listings between brokers and the public through the internet began to take off, (mid 1990s) there was huge resistance to the idea of a publicly searchable database. Forward-thinking brokers and agents struck out on their own by creating web sites for their own listings, and the NAR realized that they had no choice but to evolve their business or go the way of stock brokers and travel agents. Thus, IDX, or “Internet Data Exchange” was born. IDX databases were designed with the anonymous, internet searching public in mind, and contain very basic information about a listing.

MLS, on the other hand, is the internal database used by Realtor organizations. It contains highly detailed property information, including financial data and county tax records. MLS data is still highly guarded by the Realtor organizations, and access is only granted to members. Even then, members’ access is restricted to a certain number of searches per day, and data is kept in a form that makes it difficult to aggregate.

These days, IDX and MLS exist in parallel to one another, but aren’t always directly linked, leading to discrepancies between the two. For example, the IDX is updated on a daily basis with new listings from the MLS, but the IDX data manager must handle expired/changed/duplicate listings on his own. If that secondary process breaks down, the databases will diverge over time. Also, Realtors are allowed to exclude their MLS listings from the IDX if they choose (often with the adverse consequence of not being allowed to use IDX listings themselves).

There are also cases where the MLS managers set up their own web sites. (see for Sacramento). The MLS managers can include listings and parameters on their site that they don’t provide to IDX. In the case of Metrolistmls, pending sales and excluded IDX listings are included on their web site.

For myself, even though I am an independent source of aggregate data, I am still dependent on the IDX and MLS for my primary data. When they make changes, my data reflects that.

As far as I can tell, both the MLS and IDX data managers perform their secondary data handling procedures on roughly a quarterly basis. As some have noted, my inventory numbers have been running high when compared to other sources (Dataquick, Trendgraphix, Lyon etc), which I believe is in part due to the frequency of the source data cleanup. I believe my data source performed some sort of year-end database maintenance by clearing out expired and duplicate listings, thus bringing my inventory numbers down closer to the MLS values.

Remember folks, every source of inventory data has its quirks, and none can completely reflect the reality out there. My goal is to report trends, while keeping my data as close to reality as possible. When dramatic changes like this occur, like Robert says, it’s best to take a wait-and-see attitude.

Anonymous said...

Max, I have no reason to believe that Lyon/Trendgraphics or Data quick use a different source that you.

The numbers might be accurate, but its December and it doesn't really matter until mid Jan until the normal market pick up would start.

Anonymous said...

Max, very sobering data. thank you for your hard work.