September 2008 sales were 808 which is a 4.9% decrease from the previous month and increased 38.8% from September 2007. Median price was $385,000 down $15,000 (3.75%) from the previous month and down $160,500 (29.4%) from the previous year. This was the second worst September on record the "dramatic" sales increase is just in comparison to the span from September '07 to March '08 where the mortgage credit bubble popped and people had to start proving income. This caused a tremendous vacuum where sales dropped to never seen before levels and inventory climbed. We are now still in the adjustment period with prices, inventory and sales are struggling to find an equilibrium. Next spring season we should see slightly improved sales (March will be much better but the rest of the year shouldn't really knock peoples socks off), inventory should drop down to slightly elevated levels instead of the current high levels and prices will continue to fall.
I was relatively optimistic that 2009 could get very close to the bottom (close enough for those thinking to buy) as far as prices in Ventura. But with the passage of S.B. 1137 and delay it will cause foreclosures to come onto the market I think that will push off the "close enough" bottom to 2010 and the absolute bottom a couple years after that. Foreclosures and short sales will still drive the market but some of the pressure is relieved. I think the foreclosure peak is behind us, servicers will use this respite to perform triage and mod as many loans as they can get away with. Those that can't be saved will be allowed to short sale and if they refuse to work with the servicer, then foreclosed. This is merely my opinion and is backed up with no hard facts. I have heard some chatter regarding servicers (particularly Countrywide) working on an en masse mod program to be rolled out in December. Other servicers are working to get the option-arm reset loans off their books to mitigate that issue. Short sales will have the same pressure on the market as foreclosures but it won't show up in the official foreclosure numbers. This is one of the reasons why I think the foreclosure peak has passed, the servicers recognize that delaying the inevitable just will net them less. I am just not sure if borrowers will go the Short Sale route or choose the low-interest or principal reduction mod and that is why I am less optimistic as to next years sales being much higher or prices dropping as much as they have (percentage wise) in the last year.
3 comments:
The unintended consequence of stretching out foreclosures is to induce more people to stop paying. It also exposes the remaining marginal homeowners to a longer period of distress. Both conspire to push any bottoming into Q2 '10.
Yes, I have a sense the market is becoming illiquid again, buyers are conditioned to expect falling prices. As people start waiting around to see if various measures (Hope for homeowners, TARP, etc) they are waiting before taking the haircuts necessary to sell the homes.
REO sales are still fine but new REOs replacing the ones going off the market are slowing a bit. Short sales were looking promising but seemed to slow. Existing homeowners just can't keep up with the price drops.
I have yet to see value in the market, I've seen "deals" relative to the existing market place. And I see various investment groups working flips. But I don't see value.
Yes, I have a sense the market is becoming illiquid again, buyers are conditioned to expect falling prices.
Is that a bad thing? Not for people like me who were responsible and are now waiting for people who didn't deserve to be in a home to get booted out.
Do I sound harsh? Indeed I probably do. But it's justified IMO.
I don't agree with your assessment as far as the bottom callout is concerned. It all depends on the rate of descend would you agree? If so, where would you put prices at the bottom relative to say what we are at now? And relative to where the peak was? I'd be interested in knowing your thoughts on that.
I have yet to see value in the market, I've seen "deals" relative to the existing market place. And I see various investment groups working flips. But I don't see value.
I agree with you 100%. Most homes I've come across in my ventures to see open homes, etc..are substandard piles of crap at best. This is the SFV area I'm speaking of...spanning from Pasadena to the Valley.
Homes in LA are in general...for the lack of a better word....utter crap. It's insane what people are still asking for their homes, say in Glendale for example.
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