Monday, September 24, 2007

Sacramento Regional Real Estate Trends for September 22, 2007

Some interesting trends seem to be holding up so far this month. For one thing, inventory remained steady at almost 18,000, while SIT inventory continued to climb:

Also, $200K-$300K inventory shot back up after a few weeks of decline, returning to its previous trend:

Asking prices continued to decline:

The flipper market share bounce-back may be peaking:

At this point, I would like to introduce two new graphs to the collection. I've been trying to dig a little deeper into the "Seller In Trouble" phenomena in terms of the overall market, and these graphs are the byproduct. The first depicts the total dollar amount lost in each county due to SITs, based on asking prices. The second looks at the average percent loss per SIT. I added the FIT values as well, for comparison:

Interestingly, except for El Dorado County, the performance of the SIT houses vs. the FIT houses is almost identical. This helps prove my overall thesis that a lot of buyers were behaving like investors during the peak bubble years, even though many were buying houses to live in.

Unsurprisingly, the exponential rise in SIT losses mirrors the rise in SIT inventory. Somewhat surprising, however, is the increase in the average loss per SIT over time. I would expect there is a natural barrier at 20% or so due to down payment amounts (either through a second lien or cash). Any break through that level would indicate that lenders have completely taken over the SIT market.

1 comment :

Bubble Sitter said...

Max, Fascinating work. It is probably important to remind readers that SIT losses are strictly defined as the old purchase price vs. the new asking price.

This defenition excludes: 1) actual selling price 2) selling costs, 3) carrying costs.

The true losses are much worse for most SITs.

The fact FITs have peaked and SITs are growing shows the level of denial for many investors. FITs transforming into SITs just means more people will be adding to the foreclosure rolls soon.

We appreciate your work!