Wednesday, March 07, 2007

Agent Bubble Sales Data Graphs: February 2007

February 2007 sales data surprised to the upside. Many of us (including myself) expected a continuation of the downturn, both in y-o-y performance and dollars per square foot. Not so, says the data. Average $/sqft increased to $234 from $227, sales volume held steady at 807 units sold, and average priced paid (not median) went up from $377K to $390K.

I think these numbers are explained in the type of house that sold last month. Although we saw an increase in price paid for all size levels, there were less lower-priced houses sold and more expensive houses sold. It's been noted anecdotally that higher-quality houses in better neighborhoods haven't seen as large a downturn as we've been seeing in the broader market. Maybe one of you out there can add some data to this argument...

Also, I'm sure we can expect a front page headline from the Bee when they release this story. Keep in mind that even though prices went up, sales levels remained extremely low. With sales this low, volatility will cause prices to skew dramatically in both directions.

We'll see if the Bee headlines do the same. :)





Hat tip to anon1137 for guessing correctly.

20 comments :

anon1137 said...

Wow, so it's not just E. Sac, but county-wide. Actually, I only thought sales volume would be up, not prices. Don't know what to think about this - a dead-cat bounce? or a demographic trend: a continuation of BA migration? or BA commuters (I've noticed more trains, more commuters on Amtrak). Can't deny that we have full employment, low interest rates.

Max said...

Personally, I think we're still seeing residual sales from before credit got tight. My bet: March will surprise to the downside.

Perfect Storm said...
This comment has been removed by the author.
Perfect Storm said...

Sales volume is still way down and these homes were financed before the credit crunch. Plus if the housing market is getting better why are so many mortgage companies going bankrupt?

No this disaster of a housing market has a very long way downward to go.

Yes the Bee will post the story, median rises sq foot increases. I noticed realtors only think median means something when it goes up, I think median means something from peak to floor.

anon1137 said...

Max - I can't make these two statements mesh:

" . . . there were less lower-priced houses sold and more expensive houses sold."

and,

"I think we're still seeing residual sales from before credit got tight."


So you're suggesting that subprime borrowers are buying these expensive homes? I thought subprime borrowers buy low- to mid-priced homes. In E. Sac, I think it's physicians, surgeons, dentists, and other medical professionals scooping up all the >$1M homes, taking advantage of low interest rates and an aging population that's going to make their industry grow by leaps and bounds in the next 20 years.

Perfect Storm said...

Subprime funded lots of loans $500k plus.

Max said...

Max - I can't make these two statements mesh

You're kidding, right? I think you'll find that ease of credit and amount of credit are two different things. The "fog a mirror" approach to lending was taken at all price levels. If you want proof, have a look at the Flippers In Trouble site. The very first one is a $900K house going for a $200K loss.

Darth Toll said...

Probably this is some pent-up demand whipped up by a ridiculous NAR campaign and a year of frustrated bubble-sitters. In some ways, I can't really blame people for jumping in after waiting for a long time. It's incredibly frustrating watching a slow-motion train-wreck unfold and at some point you just want to get on with life. The NAR plays upon these fears and frustrations and sucks fresh meat in all of the time.

Having said all of this, these recent buyers have just caught a very sharp falling knife. Many of these same houses will wind up on the flippers-in-trouble page within a year or so and many of these buyers will likely regret this purchase for the rest of their lives. This is still way too close to peak bubble prices to make any fundamental sense at all. A 10-15% discount from 100% over-valued peak bubble pricing isn't good enough. In some ways, this new group of knife catchers will be an even sorrier lot than those that bought in 2005 or early 2006, because it should have been obvious at this point that it's a terrible time to buy, and not as obvious a year or two ago. Also, 2007 will likely turn out to be the complete downward credit death-spiral as witnessed by the implode-o-meter, with much better REO pricing later this year and next year.

Oh well...can't save them all I suppose.

Darth Toll said...

Oh, and just to properly frame the debate in terms Realtwhores can understand, 807 units sold represents a 10.5 month inventory supply. Pretty pathetic, really.

Sippn said...

AB - is the "I don't have football to watch bounce" (no niners or raiders in playoffs) that started about 1/1 with pendings.

Zip realty showing higher final price to asking price ratios (99%) etc

DT look over in John Lockwoods blog for a zip by zip analysis of # months inventory - show where the problems are (too much inventory fed by builders IMHO) and where the action is.

Anon 1137 - in east sac its always those buyers plus a few with the UC med school moving there from Davis.

anon1137 said...

Max: I would think that most buyers in the market for an expensive home have pretty good credit. Not to say that they wouldn't try to buy as much house as they could, maybe using piggyback and adjustable rate mortgages, but I doubt that a large proportion of them need to use subprime financing.

This is just one tidbit I found from a quick i-net search:

Because home prices are flat or falling in many of the poorer neighborhoods where subprime loans are most common . . .

reference:

Subprime mortgages cause for worry
http://www.delawareonline.com/apps/pbcs.dll/article?AID=/20070305/BUSINESS/703050307/-1/NEWS01

As you and others have said, then next couple months will show if this data was a statistical fluke or something else. Very interesting, though. One more comment - things never go up or down in a straight line - there's always a half step back now and then (example: the Bush administration).

Sippn said...

OFFICIAL NON POSITIVE COMMENT

I don't think this elevator is going back to the top floor.

Lander said...

"OFFICIAL NON POSITIVE COMMENT"

LOL

Max said...

OFFICIAL NON POSITIVE COMMENT

I think we're converting him. :) Little by little, sippn is coming to the dark side.

Anonymous said...

With all the auctions going on, selling 600K houses for 450K, you would think that February numbers would look OK.

Anonymous said...

Sippin always has astute and timely comments, whether you agree with his views or not. His "OFFICIAL" comment is a riot for this blog.

In regards to the sales numbers, two words:

Mortgage Fraud

I can easily show you 100 deals done in the and closed February which had 10-20% cash back mortgage fraud. New Century was the worst offender. It is pathetic, but it is finally over as the sub prime lenders crater. Many deals were over $1 million.

It is almost like the lenders notified all their "favorite originators" and said, time to get the last one in under the wire.

Amazing stuff. I am sure the FBI will have a field day pulling the records from sales in February 2007. There is a new industry in its infancy now....bounty hunters working on contingency to recover damages from borrowers, brokers, and loan officers...........paid by wall street firms to get the money.....coming soon to a neighborhood near you.

"The mortgage market continues to make headline news this morning as hedge funds that invested in many of the securities collateralized by subprime loans are now reporting significant losses. This is as a result of rising delinquencies and foreclosures. And here is something you should probably be aware of—interesting new businesses are cropping up. These firms are offering to help mortgage lenders recover monies lost as a result of misrepresentation in the loan file, or actual fraud. They are taking these cases on a contingency basis, meaning they get paid a percentage of what is recovered, and are going after real estate agents, loan officers, appraisers, and yes, even borrowers. In addition to this, a couple of large investors have offered to contract the services of their special investigations units for similar activities."

This will really shake up the market.

Sippn said...

Thank you fan, check is in the mail.

Gwynster said...

Even I alternate between wanting to hug Sippin one momment and toss my drink in his face the next >; )

Damn does we're in a a relationship now? LOL

Call me crazy but I'd miss him if he were gone.

Sippn said...

Yes gwyster, that would make you the bartender.

Jeff said...

Kinda hard to keep prices going higher when subprime is collapsing and mainstream lenders like Countrywide just ended all zero down loans. http://tinyurl.com/358prk
sippin, maybe that elevator ride put some sense back in you :)