Wednesday, August 22, 2007

Sellers In Trouble

I've been making progress on the statistics, with scary results:


Note that "Sellers In Trouble" include "Flippers In Trouble".

I went back and recalculated all the FIT data for the last 1.5 years using the criteria I discussed last Sunday. I then calculated a simple "Sellers In Trouble" count for each week as Agent Bubble recommended.

The SIT numbers have been increasing even as FIT numbers have begun to level off. (There was a 4.1% increase in SIT between August 11 and August 18.) Simply put, the pain is spreading.

20 comments :

Gwynster said...

very interesting... thanks for the early data snapshot

Anonymous said...

Do FIT become SIT after some period of time (e.g. two years)? If so, that might explain it. If fewer flippers are entering the market (obviously) and the old ones are unable to unload, then flippers levels off/goes down over time and SIT goes up.

Gwynster said...

There are still people looking to flip.

House down the street from me was bought in June 485K (reduced from 545k).

The young, early 30s owners were talking about raising their family there yada, yada, yada. He works in construction, she is a SAHM.

It is now being striped for a flip. My area, central Davis, just posted a -17.37% price decline and this unemployed kid wants to flip!

Only thing he's flipped is out of his mind.

smf said...

"House down the street from me was bought in June 485K (reduced from 545k)"

Why wouldn't he flip? He has $60K 'instant equity'!

There are plenty of stories out there about people taking advantage of 'low' foreclosure prices to then sell at a profit when the market comes back.

DrDoom said...

For Max or agentbubble...shouldn't we also be looking at a "months of inventory" graph? FIT and SIT are interesting but isn't it the inventory level relative to sales that is the driving factor? If prices continue to decline every house will eventually be a SIT. I have read that if MOI is above 6 months prices do not keep up with inflation. At about 9-10 months prices fall in real dollars. At 12 months it is probably a gusher. Will we see the MOI improve before the prices improve? What does the MOI look like over time?

Patient Renter said...

"There are plenty of stories out there about people taking advantage of 'low' foreclosure prices to then sell at a profit when the market comes back."

Except apparently they don't know that "when the market comes back" will be a long, long, very long time from now.

Gwynster said...

SMF

This kid has no income other what he's going to get out of the house. He's so screwed and doesn't even know it.

smf said...

Gwyn:

I wouldn't doubt it.

I am still shocked to hear people who are well aware of the state of housing that are still expecting prices to rise back to 2005 levels soon.

You can read it in auction stories as well, where people picked up houses on the cheap to resell at profit later.

MLS #70075020 is a good example. I think it was originally priced at $1.5m last year.

And even in THZB you still hear that 'investors' are probably coming back soon. Morons, this market was not full of investors, but speculators.

Gwynster said...

There was someone on the Sacbee comments complaining that his adjustable was going up to 2900 and how was he going to pay that on a 180k salary? omg the horror! These are the people that I truly want to B#slap.

Bubble Sitter said...

Max, excellent post and important data. SITs are a better characterization of the overall market than FITs.

Anon 8:22, You are exactly right. That is why Max did the SIT analysis. However, even FITs inventory is growing 2-3% a week and the losses are growing 6-8% a week.

Dr. Doom, Months of Inventory is available on Bubble Markets Inventory Tracking.

Rob Dawg said...

Why is John Lockwood talkng about the hot hot East Sacto market? Some kind of data blip?

DrDoom said...

bubble sitter, thanks for the reference to Bubble Markets Inventory Tracking. Under inventory graphs, tracking sacramento metro I found a graph of inventory and sales. However there wasn't a ratio as in months of inventory. Also BMIT is running 5 months behind on sales and 3 months behind on inventory.

In your comment to Anon you mentioned inventory is growing 2-3% a week (is that over stated?) and losses are growing (6-8% a week?). Shouldn't we also look at sales volume? Both Max and agentbubble seem to have the data available if they would add it to their graphs or charts. Sales should also be declining. Even when you take in account the seasonality, year to date sales appear to be declining at an annual rate of 25%+.

So what is going to happen? Is it a good guess that prices will continue to fall (for months or years?) until all the "want to sell" listing are pulled thus reducing the invetory levels? The selling market will then be left to the "have to sell" SIT, REO, etc. If so then we enter the next phase when total inventory declines but SIT's are still rising.

Comments?

Gwynster said...

Hmm just listed underwater in Davis
3019 PRADO LN, Davis, CA 95618
4/2.5; 2,217 sqft
MLS #: 70090257
List Price: $639,000
sales history
10/20/2006: $645,000
04/25/2005: $675,000
09/24/2002: $419,000

I smell a story here

AgentBubble said...

gwynster--44713 Garden Court in El Macero has been lowered again! It's now at $699K...Now a loss to the sellers...

Gwynster said...

Nice AB though not unexpected. The DQ numbers for Davis (95616 & 95618) were enlightening. Last I saw, they had the unit for rent when between listings but I guess they never found anyone.

The Daddy houses from 03 are starting to appear on the market and it's not looking good for those owners. Parents who thought they were brillant for buying a house for Johnny in 04 and after are hosed. I hope they realized that when they refied in any way on the primary residence, it became a full recource loan. When they try to walk away from the student house (can't sell and rents won't cover), the bank can and will go after both houses.

What's also interesting is how the rental market is developing. We go through a rush that starts in June and goes through August where everyone tries to get their leases nailed down.

Checking CL and the DE, I have never seen so many large 3 and 4 br homes for rent here! And the prices are all over the place. I think I under estimated how many people here are in trouble and trying to get their entire Piti covered by a tenant.

My LL tried to strong-arm my neighbors (2 vet Ph.D.s doing residency) so they said screw it and moved. Found a 3/1 in the Mace area for just a little more then our 2/1s. They're pretty happy.

Bubble Sitter said...

Dr Doom,

The FIT listings are increasing at 2-3% each week. FIT listings only. Each week I compare the current data to the prior data. The very first post had approximately 600 FITs and $20 million in losses? Now we have 1500 FITs and $110 million in losses.

FIT listings are defined as only sellers who purchased in the last 24 months, so many of the FITs fall of the list over time. The SITs are defined as any seller listing at a loss, regardless of when they purchased. SITs are a better definition of the true market conditions

smf said...

"Parents who thought they were brillant for buying a house for Johnny in 04..."

It is frightening to see how many people got involved in RE in the boom.

I would venture to say that first time owners who intended to live in the house long-term are the minority.

I have read and witnessed first hand these examples of people who bought RE.

1. Parents with a child going to university (intending to pay off the school with the increased equity)

2. First time owners who picked TWO homes, and hoping to sell one for a profit when they are ready to decide which home they liked better.

3. Speculators, that can range to people with great credit using subprime loans.

Did I miss other SITs?

Rob Dawg said...

"Parents who thought they were brillant for buying a house for Johnny in 04..."

That would be parents who bought in '92, '93, '94, '95, '96, '97, '98, '99, '00, '01.

Versus the people who made a little when taxes and room and board expenses and roommate income are considered for '02, '03.

See the problem? A dozen years of sound financial decisions that turned on a dime. If mine goes to Davis I'll buy one in '10. Just look at the trend in California college expenses. By '13 when she graduates or stays for grad school I fully expect board to be double what it is now. That pays for a really expensive house.

Albuquerque real estate said...

That's a pretty harsh blow to your kids college fund.

Celia said...
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