Monday, November 12, 2007

Sacramento Regional Real Estate Trends for November 10, 2007

As I mentioned last week, there should be another market signal that would indicate an influx of bank-owned property coming onto the market:

Another way to track the "REO factor" as it relates to regular listings might be to look at weekly average time-since-last-sale for all listings. A downward trend could indicate an increase in REO inventory on the market since foreclosures are recorded as sales by the county assessor. I'll be exploring this angle in the near future.

Here's my first attempt at looking for such a signal:


After some thought, I realized that my source of resale data doesn't go back far enough to include all the current listings on the market. I think the SIT subcategory works well enough since it's guaranteed to capture all of the REOs that show up (assuming the banks price them lower than the repo price).

Anyway, as you can see, in Sacramento County the average days-since-last-sale for SIT listings had been increasing steadily until early October, when it took a nice drop. We know that SIT inventory has been steadily increasing during that time, so there must have been a quantity of recently transacted houses returned to the market:


This seems like an interesting way of looking at the data, and I plan on looking for other ways to refine it. If you have any suggestions, let me know.

As for the other trends, more of the same. It's still milestone watch for the market pain indicators, with total dollar-loss amounts in Sacramento County approaching $200 million. To put that in perspective, that's twice the annual police budget for the City of Sacramento. The decline in property value from these SIT listings alone will result in $2.2 million fewer property tax dollars collected:





The rest of the indicators continue to follow the typical seasonal patterns.





1 comment :

Anonymous said...

Max,

"I think the SIT subcategory works well enough since it's guaranteed to capture all of the REOs that show up (assuming the banks price them lower than the repo price)."

The problem with adding REOs to the equation is that it takes away value from your SIT index as a leading indicator of REOs and lender losses. Once REOs start getting added to the FIT mix the only way to get an indication of future REOs from your data will be to take the SIT data and try and back out the FIT data. If this starts happening it might be useful to break it down into "flippers in trouble", "long term sellers in trouble", and "total market in trouble".

The "long term sellers in trouble" would still provide an indicator for future REOs without the noise of current REOs.

Thanks for the work you put into this.

Regards,

Kerpowski