WatchFor instance in Irvine, inventory is down about 18% month over month, but in that same period, sales dropped by nearly 22% as well (which is kind of what you would expect if you take inventory away in a market where demand isn't increasing).
Any boots on the ground experiencing higher competition for listings? How are some of the agents even making it? I'm guessing part-timers are probably suffering the worst.
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Los Angeles, CA
too bad - realtors made a killing until the crash so ...no sympathy here. The easy money is gone and now they have to work for a change by showing properties/waiting/hanging in there with the client. No sales done on the roof of a car right after the first showing.
Hope you saved money when it was easy easy easy.
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Mountain View, CA
bmwman91's website
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SubOink says
Yup. Sales is a tough job when market conditions are normal. Conditions are certainly abnormal now, and in a way that is bad for folks in the RE services field. During the bubble, wasn't something like 1 in 3 people in the US making money in some direct way from the RE industry? I had a lot of coworkers (engineers) that were taking calls during work hours because they were, "getting into RE," and playing-realtor on the side. It would be my assumption that they are all focusing more on their real jobs these days, and leaving RE sales to those that started out with it as their real job.
Low sales volumes + plethora of sales people = lots of unhappy sales people
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Laguna Beach, CA
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Wow, realtors are fighting bulk REO sales from Fannie/Freddie in California(mostly in a self serving manner since they are fighting to not be cut out of the transaction):
http://www.inman.com/news/2012/04/10/california-lawmakers-object-bulk-reo-rental-sales
But, dare I say I am on the side of the NAR/CAR here?
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Scottsdale, AZ
robertoaribas's website
right now in Phoenix, having a buyer is just about useless for an agent. There just isn't any inventory, and anything reasonable gets multiple offers, many of which are cash... I don't typically work with buyers, but right now even the agents I know who do almost nothing buy buyer's agency are having a hell of a time of it...
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Pleasanton, CA
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robertoaribas says
Wonder if the realtors in trouble on the income side should just sell their house for all cash. Easy solution. They could even get their own commission. No pity here.
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Looked at a duplex here in Portland this morning and asked the agent about this and he was frustrated. Its to the point where every viable property gets 8-10 offers, so instead of writing 1-2 offers to get a property, you have to write 10-20 in order to get one. On the selling side, you still have to drop your price pretty low to get people interested, and then you have to wade through 10 offers, then do the whole multiple offer thing and wade through their 'highest and best' offers again. It drags the process out over weeks and has got to be at least doubling (or more) an agents' work to buy and sell a property.
A friend at work's wife is a part time agent and she is horribly frustrated. She has written something like 100 offers over the past 3 months and only 1 actually went through to closing. After her companies' take, she got something like $400 commission. That's a lot of driving and writing for a measly $400.
Man, I miss last summer when you could walk a property in the am, and by close of business have the offer accepted by the bank.
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I just put this chart on another thread but it got me thinking. Another reason for low inventory is the sheer number of houses underwater (by this chart) but the home owner continues to pay the mortgage. They can't sell because they are underwater and move which is keeping a whole lot of houses out of inventory.
I have to believe that there has to be a lot of pent-up demand or people who would put their houses on the market if they could at least break even....
How many will decide to throw in the towel and strategical default before the end of the year to try and take advantage of the mortgage forgiveness act before it expires in December??
We could end up with a flood of inventory if they choose to finally dump their underwater houses to take advantage of the forgiveness act.
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How many people actually know the Forgiveness Act is going to expire this year?
It's not exactly a hot topic on the news waves.
I'm not saying it couldn't be a catalyst, but the laymen probably doesn't even know that it's set to expire, or of its existence at all.
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Goran_K says
Your right on that.... if the Forgiveness Act information makes it on Facebook, Dancing with the Stars, American Idol or NFL football, more might wake up to it, but most don't know it exists.
That might be why so many continue to pay their underwater mortgages (like in my chart) because they don't know about it. When they default next year they will get that nice 1099 from the IRS...... Surprise!!!
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La Jolla, CA
What's low inventory?
Below 2005/2006
Wealthy Regions... inventory climbing up.
For La Jolla, CA (San Diego Suburb), it's basically up slightly from June 358/372 now), down from 500+ a couple years back
Same for Rancho Santa Fe (31/36)
Pacific Beach is up (204/212)
Downtown too, (274/290)
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Laguna Beach, CA
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Call it Crazy says
Let's start the Facebook campaign.
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Laguna Beach, CA
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just someone says
I've heard anything under 6 months of sell able inventory. For instance in Irvine, my city, there are about 400 home on the market, and last month homes sold at a 200/month pace. That says there is a 2 month supply of homes, which is considered really low.
Not sure what it's like for La Jolla.
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Scottsdale, AZ
robertoaribas's website
In some cities, you can be underwater on the mortgage, and STILL paying less than rent. Why would you foreclose then?
Also, if people have survived over 5 years of being underwater, what makes you so sure they will suddenly give up?
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robertoaribas says
Because foreclosure starts and inventory is rising?
http://www.ibj.com/national--state-foreclosure-starts-on-the-rise/PARAMS/article/35991
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In terms of inventory, i think you also need to qualify what that means. There's a bizillion houses for sale here above $350k, none of which me or anyone else looking for an investment is going to touch. They just languish on the market forever.
Start talking about inventory where the cap rate is say >8% and its very slim pickings.
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robertoaribas says
How about loss of job/income or they have to move for other reasons.
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1) Answer; YES
There has been only one other time that we've had even close to this low of supply in the last 6 years in Irvine/Orange County in general and it was the middle of winter. (under 450 properties in Irvine)
It's the busiest time of the year and we have the lease amount of supply, hunderds of hours are being wasted with 10+ offers on every deal.
Irvine is competitive at nearly every price point, unless one is prepared to get in a bidding war and pay a premium to the most recent comparable sales it's useless to even try to purchase right now. That said, even in a more normal market circa 50% of buyers that start in Irvine that I work with end up buying outside of Irvine when they see how much more that they can get. Generally, those that buy in Irvine are 110% sure that Irvine is the only place for them and would not even consider living elsewhere, it's very rare that someone with any other mindset buys in Irvine because there are normally buyers to compete with that have this mind set.
Most markets, even outside of Irvine are extremely competitive right now due to lack of supply. I just had a listing in the low $200's that have over 50 offers including circa 20 cash offers. It's sad to see the affect that the market manipulation is having on the market and the people that just want to own a place for their family.
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robertoaribas says
To me this is a sign of a really bad market. What does it tell you when sellers of a product are more important than the buyers?
I think there are huge structural problems there with manipulative supply and demand side in this market and something is going to crash sooner or later. That kind of market can't sustain itself simply.
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Laguna Beach, CA
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Orange County Realtor Akason Realty Consulting says
Bingo.
20 cash offers tells me "investor speculation".
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I completely agree. The market manipulation is terrible.
That said, I think that there is less speculation in most markets, areas like Phoenix now have cap rates of circa 8%, interest rates are circa 4%, in my opinion, that's a nice return, circa 8% cap rates with leverage 15%+ cash on cash returns.
Buyers that buy properties with 3% cap rates and borrow money at 4%+ are speculating.
Even in some areas of OC, many of the cash buyers prefer to an asset returning 4% than to stay liquid at circa 1% or less. Is that a bad choice? Time will tell.
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Orange County Realtor Akason Realty Consulting says
I don't think it's a question of "bad choice" or "good choice", I think market conditions have investors chasing for the only choice. Unfortunately, history has shown us (most recently 2000-2006), investor lead speculation only leads to big crashes.
If the fundamentals were there for true price recovery (growing job market, wages, lower unemployment, etc), I'd say otherwise, but we both know they aren't there.
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Goran_K says
That's it in a nutshell!!!! Without strength in those areas, true recovery will be tough. Mini bubbles can be "blown" in certain areas like Phoenix, but without the foundation you mentioned above, these bubble can't last....
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Scottsdale, AZ
robertoaribas's website
Goran_K says
Yes, you should wait till unemployment is less than 2%, salary is growing 5% year on year, interest rates are still under 4%, the US budget is balanced all all of the debt has been repaid, gasoline prices are under $1 a gallon, global warming has been stopped, europe and in fact the entire world including Somalia are on a sound economic footing, there is no conflict anywhere including the middle east, AND we have an effective way to stop any asteroids from hitting earth, whales are plentiful, the pollution in the sea has all been cleaned up, HIV is cured, and we have an effective form of Viagra for women... then and only then is it safe to consider buying a home! (but only fro 1929 prices... otherwise you are overpaying!)
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Laguna Beach, CA
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roberto, instead of trolling my threads, shouldn't you be getting ready to buy an island in the Pacific with your $6,000 a month rental income?
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Laguna Beach, CA
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Call it Crazy says
Phoenix has only had rising prices since late last year, following a plunge of 3 years. The thing is, inventory is actually growing in Phoenix (up about 7-8% month-over-month, and sales are down about 3-4% over the same period.
That tells me that the Phoenix bull trap is starting to fade, but I suppose we'll see what happens to prices more concretely this winter.
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San Jose, CA
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robertoaribas says
Because there is a dead-cat bounce going on and people think that prices are going back to 2006-7. Once prices start heading south, again, the mad rush for the exits will begin. Also, 5 years of waiting is not that much. Many renters waited for 10-15 years before they bought. Many FB's will have to wait that long, before they give up and sell.
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San Jose, CA
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robertoaribas says
It should be pretty clear that this will not happen any time, soon, because most of those jobs are never coming back. There has been a dramatic change in the structure of the economy, where, in the global jobs marketplace, companies are becoming more profitable with less workers and outsourcing workers. In fact, since the 1980s we've seen job recoveries get slower and slower with every recession, and has greatly accelerated with the last recession, all because of this phenomenon.
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San Jose, CA
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Goran_K says
The fact that this was a bull trap and it is now over is more than obvious in places like Palo Alto, where asking prices are already down more than 20% since this summer.
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Scottsdale, AZ
robertoaribas's website
Goran_K says
Except that it isn't true....
Under $200K in Phoenix, there are 6300 homes for sale, and 5300 sold in the past 30 days... 1.2 months worth of inventory at current sales rates...
In an area of town where I own 3 homes, bought for 46K + 10 repairs, 85K + 5 repairs, and 76K no repairs, the inventory of similar homes UNDER $140K = 27, and 55 sold in the past 30 days...
So, I'm not seeing this slowdown you dream of, speak of...
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Laguna Beach, CA
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Roberto, what are the month-over-month statistics?
If you look at data points one by one, how can you possibly make any determinations about trends, or even a pattern?
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Scottsdale, AZ
robertoaribas's website
Goran_K says
Goran, month after month you find reasons in the data for Phoenix prices to drop... But month after month, prices despite your intense proofs that they are and will drop, keep going up...
3 months ago, in theat less than 140k search around my home, there were over 60 for sale. the next month, it dropped to 40. For the last month it has bounced between 20 and 30, and I mean literally bounced, there were 19 on it 3 days go, today, there are 27... So, you'll go running your mouth off sans brain about "how bad the 3 day trend is..."
Guess what? I phoned the agents for the first 10 on the list, and 8 have multiple offers already...
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San Jose, CA
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robertoaribas says
Keeping inventory off the market, creating artificial demand with ultra-low interest rates, selling houses for discounts to the speculators are all mechanisms which eventually will backfire on the banks. Latent inventory just keeps growing, and will eventually burst with a loud thunder. Except, this time around, there won't be any more investors with cash, to pick up the remains of the sick market.
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San Jose, CA
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robertoaribas says
Keeping inventory off the market, creating artificial demand with ultra-low interest rates, selling houses for discounts to the speculators are all mechanisms which eventually will backfire on the banks. Latent inventory just keeps growing, and will eventually burst with a loud thunder. Except, this time around, there won't be any more investors with cash, to pick up the remains of the sick market.robertoaribas says
Yes, except for, you won't sell now, because you are a greedy. You will wait until prices drop back below $46K on all your houses, and your rental incomes will cease, completely, and then sell at a big loss.
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San Jose, CA
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robertoaribas says
Yes, and of course the guy who has "de plus" brains around here, always believes what RE agents tell him.
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Scottsdale, AZ
robertoaribas's website
dunnross says
Yes. Agents are going to tell me they have multiple offers if they don't, because they don't want to sell the home and make a commission! Good thinking on your part! I'm really sorry for the genetic and environmental conditions that you've obviously had in life to leave you with this cognitive abilitydunnross says
Let's see: I have them rented for $1000, $1000, and $1100 a month, so I truly live in fear... prices are going up fast as hell, I'm making a great rental return which is what I bought them for anyways, to keep them forever as rentals... Oh no!
you really are the village idiot on patrick.net!
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San Jose, CA
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robertoaribas says
No, you are not living in fear now. If you did, you wouldn't be the egg-man that you will once be, after you buy 30/40 more houses.
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San Jose, CA
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robertoaribas says
It's pretty obvious that you have never heard of the cognitive dissonance theory, you fool.
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robertoaribas says
Could it be possible that the agents "tell" you they have multiple offers to get you to bid up the "bubble" and bid up the price so they can make even MORE commission???
No, that would never happen, right??? Agents can always be trusted to tell the truth!!
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Pleasanton, CA
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There is a simple formula in human nature.
increase money -> decrease honesty and integrity
If you want to deal with truly honest people then go to the volunteer shelters workers. If you want to find the truly dishonest then realtors are high up there on the list.
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Scottsdale, AZ
robertoaribas's website
Call it Crazy says
No, because I am calling to show the home, and they are saying "don't bother to show it, we already have multiple offers, many of them cash..."
You two really are the dim bulbs in the bunch, conspiracy, conspiracy, blah blah blah... you really have no idea what you are talking about ever.
there are 29 similar homes for sale, when over 60 a month sell, how slow do you nitwits have to be thinking that multiple offers would never occur given that ridiculous imbalance between supply and demand?
it is very hard to believe you guys were really conceived by the fastest sperm...