Thursday, November 27, 2008

Corelogic: 27% of California homes with mortgages underwater

Here is a edited graphic (click to enlarge) from the CoreMortgage Risk Monitor showing the number of homes with mortgages underwater by state. California is estimated to have 27% of homes with mortgages underwater and another 4-5% with homes nearing being negative equity (defined as the total mortgage amounts being with 5% of the homes price). More information can be found in the newsletter as well as full listing of all states.

Tuesday, November 25, 2008

Back on Market for San Fernando Valley October 2008

Graph of Total Sales, Total Back On Market (BOM) and monthly Pendings:
Back on market as percentage of current pendings and previous months pendings:

Back on market as a percentage of the average of the previous 3 months pendings average:
Total Back on market came in at 439, down 1 from 440 the month before and up 219 from 220 the year before.

Pendings for October 2008 came in at 1180, down 120 from 1305 the month before and up 574 from 606 the year before. Fallout is still very high and if pendings slow down even a little we will see a dramatic drop off in sales.

Saturday, November 22, 2008

Weekly Active/Pending counts SFV & Ventura - 11/22/08

I'm going to post the weekly inventory counts for Ventura County and the San Fernando Valley as more time goes by this data set will become more useful.

San Fernando Valley:
Active 4223
Backup 351
Pending 1390

Active 1414
Backup 106
Pending 449

Ventura County:
Active 2439
Contingent 598
Pending 710
Release from Showing 296

Active 783
Contingent 194
Pending 204
Release from Showing 70

Someone at Wells Fargo gets it..

From the latest edition of Wells Fargo Financial Market Strategies newsletter:

For a year and a half, the U.S. Federal Reserve, the U.S. Treasury, the FDIC, the White House, Congress, etc., have been immersed (and almost obsessed!) with a push to prevent home prices from dropping, and my question all along has been the same: Why? If everybody agrees, and today nobody can deny it, that the U.S. suffered a home price bubble, then what is the problem with allowing home prices to drop? If home prices are "bubblish," why not allow them to drop to more reasonable levels? The more we do to prevent home prices from dropping the longer this crisis will last.

While this has been on and failed, monetary and fiscal policymakers have forgotten a very important fact: it is employment that will keep this economy from following a "debt-deflation" spiral (see below). Thus, the conclusion is that the U.S. government, in full force, should be trying to put a floor under employment destruction rather than under home price destruction. At this time, nothing should be off the table for fiscal policymakers, because the consequences of a debt-deflation spiral could be worse than any fiscal deficit created by a strong stimulus package. The plan should be two tiered: one, a medium- and long-term infrastructure investment and two, a
short-term jobs/work program that would include education subsidies for retraining of displaced workers.

Thursday, November 20, 2008

San Fernando Valley October 2008 home sales report

The official October 2008 numbers are out. Home sales (SFH) came in at 745, a 13.22% increase MoM and 110.45% increase YoY. Last year at this time we were in the depth of the secondary mortgage market shutting down causing a historic low in sales. Now that prices are adjusting downward sales are picking up a bit though still historically weak. Median price came in at $410,000, up 4.46% MoM and down 30.51% from last year. Median prices are down over $245,000 from the peak.

Condo sales came in at 234, a 10.90% increase MoM and 82.81% increase YoY. Median price came in at $225,000, down 13.46% MoM and down 40.79% from last year. Condo median prices are down over $190,000 from the peak.
There was a significant number of late reporters last month so I will update my short sale and REO percentage chart to reflect the current numbers (Update, This is incorrect my stats didn't reflect the recent changes incorporated in the site I use). Looking at current closings for November we are approximately running 1/3 behind the previous month (no adjustment made for late reporters). The banks and sellers could have rushed to close the deals in October because of the market turmoil and that might have pulled forward closings from the next two months. We also have the holidays starting and demand will be weak just based on seasonality alone.
Pendings also weren't released yet, I will have pendings and Back on Market ratio charts up this weekend.

Tuesday, November 18, 2008

Ventura County October 2008 Sales

The October 2008 report from Dataquick was released today. Sales were flat month over month at 802, down 6 (-.75%) from the previous month. Sales rose 264 (49.10%) from the year before when we were in the depths of the mortgage crisis. Median price was down $10,0000 (-2.5%) to $375,000 from the month before. Year over year the median price dropped $160,000 (-29.10%) from $535,000. Sales are stronger but not strong. They are only driven by a continued presence of motivated sellers, if those get removed from the market sales will slow considerably.

Saturday, November 15, 2008

Weekly Active/Pending counts SFV & Ventura - 11/15/08

I'm going to post the weekly inventory counts for Ventura County and the San Fernando Valley as more time goes by this data set will become more useful.

San Fernando Valley:
Active 4235
Backup 374
Pending 1387

Active 1421
Backup 116
Pending 444

Ventura County:
Active 2467
Contingent 600
Pending 698
Release from Showing 300

Active 765
Contingent 195
Pending 214
Release from Showing 70

The SFV MLS converted over to a new database which incorporated listings from several participating MLS. I have attempted to adjust the collection methods appropriately to keep the counts in line.

Friday, November 14, 2008

Short Sale & Foreclosure for San Fernando Valley & Ventura County - October 2008

Here are short sales and foreclosures as a percentage of total sales for October 2008.

Here is the San Fernando Valley:

Here is Ventura County:

October has been the best month of the year for sales. Dramatically so for the SFV relative to other months. Though sales are still weak historically. But as we can see from the charts it is because the banks are continuing to stay motivated and move inventory. I think REO activity is higher than the stats suggest (maybe as much as 3-4%) because there are agents who simply do not know how to set the REO flag in the MLS. It seems much more of an issue in the San Fernando Valley. However the reports come out next week for sales as a whole, this part of the State is trending upwards at the expense of price. We will see if the wholesale loan modification talk has any effect on the market. Anything that affects the continuing downward movement in price will stop and most likely reverse any sales growth we have seen so far. Sales have only been so "good" because the sellers (mostly banks) are continuing to cut price until they get an offer.

Saturday, November 8, 2008

August 2008 Ventura County Loan to Value Chart

Here is the Loan to Value scatter chart for Ventura County for homes and condos sold in August 2008. The upper pink line represents the current conforming jumbo limit and the lower pink line represents the new conforming jumbo limit starting January 1st. The loans in between these two lines won't be closed without either a higher down payment or seller price concessions. The yellow shaded area represents the area in which mortgage insurance is tightening that I detailed in my previous post. FHA or banks taking seconds will be the only option available to borrowers in this area. You can see that FHA is definitely gaining in popularity with fewer blue dots (representing conventional loans) populating this area compared to previous months. Credit is still tightening and only price concessions are keeping sales volumes up. If those price concessions slow due to things like foreclosure moratoriums or loan modifications sales volumes should drop considerably in response.

Weekly Active/Pending counts SFV & Ventura - 11/08/08

I'm going to post the weekly inventory counts for Ventura County and the San Fernando Valley as more time goes by this data set will become more useful.

San Fernando Valley:
Active 4280
Backup 385
Pending 1386

Active 1471
Backup 122
Pending 432

Ventura County:
Active 2474
Contingent 589
Pending 681
Release from Showing 306

Active 784
Contingent 174
Pending 235
Release from Showing 71

As an update to the previous post estimating SFV sales, It appears that October will be the best month of the year for SFH in SFV. October has 31 days and had 5 fridays this last month (more homes close on Friday), in addition both the Short sale and REO numbers increased as a percentage of solds (especially in Ventura). The banks are staying motivated.

Friday, November 7, 2008

FHFA announce conforming limits, Ventura County adversely affected.

On January 1st, 2009 the new max conforming limit for the country will be $625,500 down from the current jumbo conforming max of $729,750. I think this change will hurt the mid to mid-high end of the market a lot. Ventura County it is a bit worse in that the FHFA decided that the max conforming limit will be $598,000. These conforming limit changes combined with the guideline changes from October and the new ones coming online in January (Freddie Mac will only allow a max-DTI of 45% on the vast majority of its loans) will significantly affect effective demand moving forward. This isn't even addressing the economic issues facing these areas which will affect demand. Just assuming the pool of available buyers remained normal demand would fall. Only price declines can solve the issue of finding an available buyer when loan demand is contracting.

Sunday, November 2, 2008

CAR Forecast for 2009 already obsolete?

This is the forecast for 2009 by the California Association of Realtors given out at the CAR Expo on October 15th. Note the median price is forecast to be down 6% to $358,000 for 2009. August's median price was reported to be $350,890 and September's median price was reported to be $316,480. Now it is absolutely the case that mix shift makes up a huge part for such declines but at no point do they justify how the mix shift will change or depreciation will stop. In fact their latest Economic Trends article has the following sentence, "The September median price was last in the low $300,000 range in early 2002, and there is no sign that home prices will soon flatten out". So why, when faced by the one crowd whose job it is to educate and prepare for the upcoming season do they sugar coat the price decline issue? It is really unfortunate that they can't bring themselves to be realistic as good information will be one of the things that will help this situation normalize.

Saturday, November 1, 2008

Weekly Active/Pending counts SFV & Ventura - 11/01/08

I'm going to post the weekly inventory counts for Ventura County and the San Fernando Valley as more time goes by this data set will become more useful.

San Fernando Valley:
Active 4354
Backup 400
Pending 1380

Active 1504
Backup 115
Pending 434

Ventura County:
Active 2480
Contingent 591
Pending 710
Release from Showing 309

Active 805
Contingent 183
Pending 232
Release from Showing 65

Preliminary October 2008 San Fernando Valley Home sales

Here are my preliminary calculations for San Fernando Valley October 2008 sales and prices. For single family homes (SFH) I estimate sales will be around 720 and median price coming in around $405,000. Sales could be even higher, I lowered my sales estimate based on two factors, One - The changes in underwriting guidelines on Oct 1st means that more sales were weighted towards the beginning of the month and Two - I've been consistently overestimating sales. SFH sales look like they will be at or above the best level of the year. This would rank as the third weakest October on record for SFH sales. From a seasonality aspect 10 out of the last 24 September to October periods have shown an increase so that fact that sales will probably beat the previous month isn't a very big deal. For condos, I estimate sales will come in around 195 and median price will be around $240,500. The medians can shift a lot on low volume so I could easily see a median up in the $250,000+ range by the time the late reporters come in.