Monday, April 07, 2008

Sacramento Regional Real Estate Trends for April 5, 2008

What the selling season giveth, the end of month/end of quarter taketh away. Inventory fell this week by nearly the same amount it rose last week. In fact, almost all of the indicators took a breather, so I'm going to execute my Bloggers Prerogative and let the graphs speak for themselves.


Mike said...

Well, the graph seems to show our spring "Dead Cat Bounce" has not ended yet.

And I speak from the front lines. I've been actively making offers on homes. My fifth offer on a house last week has been rejected. And I offered full price this time!! There were multiple bids and I am sure some sucker made way over the asking price offer.

Anyway, I am seeing Bank Repos (Not including Short Sales) go pending within 1-2 weeks at most if priced right.

This spring bounce better end soon before I lose my patience.

... said...

Max - explaination - I got nothin' well I can see the Easter vacation dip, a little early this year and the post Easter listing surge, but...

Mike - At least your sense of "the best buys" is working as shown by the multiple offers. There is still stuff out there that doesn't get this attention.

... said...

Hey stat man, try this:

Antelope – Bank Owned (REO) vs Short Sale (SS) vs Clean Deals (I don’t have the time of capabilities to analyze the whole market but I can look at this little piece to get a sense of the market)

Inventory as of 4/7 320
March Closings 53 a 6.0 month supply.. pretty balanced now in supply vs sales overall but lets look at the make up.

REO Inv 73, Sales 36, # months 2.0
SS Inv 192, Sales 9, # months 21.3
Clean Inv 55, Sales 8, # months 6.9

These numbers are very similar to comments I made about January. With a 6 month overall market time, Antelope looks like the bottom was found.

Obviously REOs are the bulk of sales, almost 68% with very little inventory (2 months) but Clean deals are a very respectable 6 months inventory, by most indicators a balanced supply. Short sales are not holding up their end and as far as I can see it, just confuse people.

My affinity towards SS goes back a couple of months where Mrs Cash and I were looking at an REO and there was an identical SS a block away. The agent was out of town and said to call the seller. The Seller said “I’m not letting anybody in until next week and we’ll look at offers next month” Mrs Cash could not wait as the money was burning a hold in her purse.

Going further, if all those SS were actually REOs, I bet Antelope # months would be down significantly and sales would be higher. I wouldn’t be that concerned that those SSs becoming REOs will hurt the market further.

Perfect Storm said...

March sells are 200 homes less than prior year making this a spring "Dead Cat Trough" rather than a bounce.

National pendings are the lowest on record, news just came out.

Negative job growth and negative populaion growth.

Were right on track for a 50% decline by 2009.

Max said...

Marketplace did some interesting "color" stories this weekend on their "Marketplace Money" show that highlights some of the issues we've been discussing. (Thank you Lander! I recommend downloading the whole 1-hour podcast.) The frustration in Realtor Michael Freeman's voice when he complains about REOs "artificially driving the price down" makes the whole thing worth it.

Although the two local stories were focused on Elk Grove, there were some good regional takeaways:

- "Bargain" pricing of REOs is not forcing "regular" sellers to lower their price.
- That means there is still psychological dissonance in the market. ("Regular" sellers still think they can get their 2005 price )
- If that's the case, then we're nowhere near a bottom.
- Walkaways are still happening at a rapid pace.
- 50% of the EG market is "distressed" (but you already knew that)

If you have a spare hour, check out the show. See if you can spot the fake segment. (Hint: it has nothing to do with selling, has weird background music playing the whole time, and sounds like a talking points memo from the NAR.)

Max said...

Max - explaination - I got nothin' well I can see the Easter vacation dip, a little early this year and the post Easter listing surge, but...

Me neither. My unsupported theory is that we've reached inventory saturation. Realtors are quitting en masse, and those who are left have as many listings as they can handle. FWIW, I think the same thing happened last year in August or so.

... said...

There is one larger office closing but you would see the fix within a week.


Looking at some more comments on your previous post, I did some 1 month lag wags. Pending vs closings. about 50% from 1/5 pendings to Feb closings, about 50% from 2/5 pendings to March closings - about the right lag without doing too much work. I don't think its a 50% cancellation rate, I just think some of it carries into another month plus 25-35% cancellation.

My guess is APril closings will be 1900-2300.

56% of current REO listings are shown "pending", 28% of Clean listings and 16% of shorts are also shown pending - 4 counties. (Yea I have access to data if I try)

I look at inventory as "active" I know you take the bankers point of view that includes "pending" HA!

Looking at this, the market can easily handle the REOs as the REO selling engine is just getting reved up.

Lander showing the chart at about 1500 per month foreclosures, and REO pendings at 2760 currently, probably closing at close to the same rate as supply.

I could be wrong.

Deflationary Jane said...

I now have a public trustee service and the good stuff is now starting to hit the pipline. Let the investors load up on chaff and leave the meat for us >; )

Max said...

Lander showing the chart at about 1500 per month foreclosures, and REO pendings at 2760 currently, probably closing at close to the same rate as supply.

It makes sense. The banks might have finally gotten off their asses and calculated take up rates vs pricing for the local markets, and are pricing according to their comfort level. The builders have completely bailed out of the market, so we're left with "distressed" and recalcitrant. :)

So we're left with the question: Who's buying? Are they people with a lot of cash? Are there still loans being made? Is there a finite supply of these guys, or are we approaching a normal transaction rate?

Deflationary Jane said...


Just from the little bit of talking last weekend, it sounds like small timers picking up 1 or 2. I got the feeling the HELOCer were out due to financing contraints and the 401k crowd was in. I guessing these are people who are disgusted with their portfolios and bonds and have liquidated to get into RE again.

One of the people did say that much of it was from out of the area.

I've already seen 2 homes go inactive really recently only to hit CL before they've even closed, begging for renters. What does that say for their margins? ouch! Regardless, we're still back to shuffling the deck chairs and not population growth driven investment. But I do appreciate flooding the area with rentals from a greedy cheap renters perspective >; )

OK, so who besides me sees a problem with emptying the 401k to get into speculation again? **Hint** chapter 7

Mike said...

"So we're left with the question: Who's buying?"

Quoting a new home builder in I talked to couple months back. "Mostly Bay Area Folks." are buying. I am thinking mostly investors/flippers.

Also, I took a business trip while back to Los Angeles where a coworker there was telling me his cousin (who had good amount of cash from selling his business) was thinking about buying a block of homes in Elk Grove since the homes in Sac and in particular in Elk Grove was such a good deal.

So my guess is out of town "investors."

... said...

Mike, prior to the large run up, it has almost always been "mostly bay area buyers" that buy new in the Sac market and provide the growth because of equity.

The run up coupled with zero/low down no doc lending allowed a large % of locals to get into the market also.

Anonymous said...

Max, it could be as you say that the banks have finally gotten off their asses and Realtors quitting en masse, etc. but I have another slightly more "tinfoil" explanation for the moderated inventory levels.

IMHO, the US is being set up for GD2 by the IB's and the Fed. The Fed has engineering a panic into treasuries and interest rates are absurdly low considering the insane risk of default and collapse. Sure, the FCB's have had a big hand in this. What happens next is a massive treasuries and GSE bond collapse where interest rates spike and we are thrust into GD2 (similar to bond flight in 1930 and then collapse of 1931.) The Fed is also busy trying to sterilize as much of the bad debt as possible and stick the treasury with it before the collapse.

In this manner, the IB's get everything including trillions in foreclosures and mortgages from the imploded GSE's along with some cash due to bad debt being sterilized. What we are seeing here is a pullback of listings awaiting the giant IB looting operation. A couple of market watchers I've been following are calling for a complete bond market collapse in the next month or two and total GSE gut and massive 1930's style land-baron-grab making the IB's holders of mountains of foreclosures and mortgages for pennies on the dollar.

They will then feed these back to the peeps over a number of years for huge profits as RE recovers. This will create the massive washout bottom that is necessary and $50/sf will be common. Interest rates may go sky high during the initial period and that's where GD2 comes in. The Fed and the IB's and banking system survive in this scenario.

Anybody that bought recently will get demolished and be BK'd unless they can float a massively overpriced asset for years with no hope of re-fi or positive capital gains. JMHO, and we'll see in a month or two if this was right.

MACMD said...

Where are you getting your stats from? Do you create these graphs yourself? They're cool.

Max said...

It's a secret, patented process. Top secret, really. CIA, MI5 etc.

You don't want to know.

Anonymous said...

It's not a product for sale or anything? How do we know your data is accurate if you won't tell us where it comes from?

Max said...

I really don't explicitly discuss my data sources. What I do is not really appreciated by the "official" MLS folks, but they've been tolerating me for this log, so I try not to rock the boat. But, if you hang around long enough (or review previous postings) you'll get a general idea.

If you don't trust my data, I invite you to visit the multitude of sources on the web. You'll probably find that where we overlap, we agree more than disagree

Anonymous said...

DARTH, are you smoking that la la la?