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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Call it Crazy says
Let's start the Facebook campaign.
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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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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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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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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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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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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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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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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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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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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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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
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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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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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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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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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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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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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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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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
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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...
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robertoaribas says
But why should we even believe you, because you are a lying realt-whore SOB, yourself.
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dunnross says
There is really no point to call you stupid, you prove it every time you post!
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robertoaribas says
Of course, you didn't say that at first, you just said there were multiple offers.... had you said the other agents told you not to show it, that's a different situation...
robertoaribas says
I never said multiple offers were not possible, duh..... I know that everyone like yourself are clammoring for the shit houses at the bottom of the barrel..... it fits you perfectly!!
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elliemae's website
robertoaribas says
robertoaribas says
robertoaribas says
Weren't you recently complaining about how you were being treated? Maybe comments such as this is why you're being attacked.
Why don't you just ignore him (them)?
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I agree with elliemae. I thought the conversation was sort of civil Roberto, then you chose to start calling people names, and insulting them out of the blue. I'm not the only one who is pointing this out, so maybe you can ponder upon that for a second.
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yes, it was real civil, especially the part where I am called a lying whorerealtor, SOB, etc... fool etc, BEFORE I posted that...
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Markets generally do not go up or down in straight lines-more like waves. Lets see if this is the bottom or just a temporary reprieve before crashing through the massive barriers put up by the FED.
The FED has the biggest arsenal of any in this world-but bigger empires have crashed and burned and smaller ones have limped along in history. Twelve years ago at the height of the dotcom boom-none would have predicted we would be here-yet here we are. lets see where it goes from here. Coastal CA is still massively overvalued- in my opinion though.
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Goran_K says
Yes, on Facebook! IMHO the perfect morons paradise.
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FortWayne says
I think Wayne has it.
Structural problems will plague the industry for a long time.
Housing too expensive -> Can't qualify for loans -> Can't refinance -> Can't sell without coming out of pocket, etc
The banks also face a structural problem because of all the bad non-performing debt they own.
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Goran_K says
That could be another layer of why inventory is low. Besides the houses nationwide underwater, which is almost a third of houses with mortgages per the chart below, there is a whole bunch of houses that still have a little bit of equity, but are considered "functionally underwater". They would have to come out of pocket to sell, which keeps a lot more houses off of the market and inventory.
I haven't seen a lot written about the "functionally underwater", but some have estimated that it could be up to 50% of the current houses with mortgages.... one out of two!!
Being functionally underwater means you don't have approximately 15% equity in the current house to use to move. When you calculate selling costs (realtor commissions, attorney, transfer fees, etc.) then add in new down payment on new house and all buying and closing costs, this could be a big number. Traditionally, this is how families moved up to bigger houses, used equity from past house to purchase new house.
With home values down, how many of those 50% functionally underwater want to move for new job opportunities, want bigger houses, or need to move for other family reasons but can't without coming out of pocket to cover all the costs? Could be a huge number!!!
This could also be adding to the low inventory numbers.