Fallout.

This is the Back On Market ratio compared to the previous 3 month average pendings. There is clearly a high amount of fallout happening and I think once offers slow even a little we will see sales fall faster than normal. I think the high amount of fallout is for many reasons, the moving target that is today's mortgage market, the lack of quality of the inventory on the market (more likely to find inspection issues), the number of POORLY managed short sales on the market (many agents are in a "let's throw it up on the market and see what sticks" mood, it's either laziness or inexperience). I tried getting data before February 2007 since that is where my data ends and I have an inkling that the fallout ratio for the few years before that was in the sub 20% range. Finacing fallout was much less due to the ability to qualify anyone so you are left with personal and inspection reasons for the deal falling apart. The few data points I could find support this 20% fallout thesis but I don't have enough for it to be cut and dried.

Jim the Realtor has seen the same thing with his REO listings (all in multiple offer situations) in his San Diego market and his comment is, "And it's only going to get tougher the next few months." I agree wholeheartedly.