Saturday, January 31, 2009

Weekly Active/Pending counts SFV & Ventura - 01/31/09

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. I have broken out the Short sale and Foreclosure (REO) inventory to better track demand. Eventually the data will either turn into tables or graphs but right now I am putting it out there so others can find and use it for there own purposes.

San Fernando Valley:
Single Family Homes
Active - Total 3458
Active - Short sale 1291
Active - REO 471
Backup - Total 345
Backup - Short sale 142
Backup - REO 84
Pending - Total 1207
Pending - Short sale 448
Pending - REO 500
Distressed active / Total active = 50.9%

Distressed pending / Total Pending = 78.5%

Active - Total 1145
Active - Short sale 567
Active - REO 187
Backup - Total 89
Backup - Short sale 43
Backup - REO 22
Pending - Total 386
Pending - Short sale 116
Pending - REO 195
Distressed active / Total active = 65.8%
Distressed pending / Total Pending = 80.5%

Ventura County:
Single Family Homes
Active - Total 1979
Active - Short sale 489
Active - REO 245
Contingent - Total 586
Contingent - Short sale 369
Contingent - REO 95
Pending - Total 617
Pending - Short sale 111
Pending - REO 356
Distressed active / Total active = 37.0%
Distressed pending / Total Pending = 75.6%
Release from Showing 270

Active - Total 704
Active - Short sale 207
Active - REO 139
Contingent - Total 191
Contingent - Short sale 130
Contingent - REO 40
Pending - Total 174
Pending - Short sale 36
Pending - REO 93
Distressed active / Total active = 49.1%
Distressed pending / Total Pending = 74.1%
Release from Showing 66

Wednesday, January 28, 2009

Updated 2009 CAR forecast.

January 2009 Forecast:

December 2008 Forecast:

October 2008 Forecast:

Back in November 2008, shortly after the California Association of REALTORS® (CAR) gave its forecast for sale for 2009
I asked if it was already obsolete. Merely looking at the monthly home sales reports the CAR gave clearly indicated that the forecast wasn't matching, and in the case for median price, was in fact exceeding the recent past data. This wasn't data modeling or doing anything fancy just a simple comparison of A vs B and seeing something didn't add up. It is clear that when faced with a large crowd of their peers the CAR simply couldn't break the news that 2009 is just going to be another bad year for prices. If you look at the above graphics, the October and December forecasts are nearly identical (minor change in interest rates) but all of the sudden the January 2009 forecast reduces the median price by $58,000 (a 16.2% reduction from original forecast) and increase in sales for the year by 35,000 (7.8% increase from original forecast). If they just made this forecast as their original forecast at a time when the most eyes and ears were on them they might have actually prepared their members for the year ahead. But instead they release it later after it was clear the original forecast bore no semblance to the reality of 4 months ago much less the future.

Tuesday, January 27, 2009

More on December San Fernando Valley home sales - 2008

Here are the various Back On Market (BOM) measures for San Fernando Valley home sales. Each kind of tells a slightly different story, BOM as a percentage of sales is falling, BOM as a percentage of current pendings is flat and BOM as a percentage of last months pendings is rising. The SRAR chooses to use BOM as a percentage of sales as what they track. They all were around 37% last month. A healthy chunk of aren't able to close.

Total sales (SFH + Condo) were 922 last month. Total pendings for the month came in at 914 and BOM for December was 342. January will definitely be better than last year but clearly not be as good as December '08. That is normal seasonality of January and February being the slowest months of the year. If we use history as a guide, we should start seeing pendings and New listings pick up after the Super Bowl.

Sunday, January 25, 2009

Weekly Active/Pending counts SFV & Ventura - 01/24/09

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. I have broken out the Short sale and Foreclosure (REO) inventory to better track demand. Eventually the data will either turn into tables or graphs but right now I am putting it out there so others can find and use it for there own purposes.

San Fernando Valley:
Single Family Homes
Active - Total 3522
Active - Short sale 1296
Active - REO 512
Backup - Total 334
Backup - Short sale 145
Backup - REO 71
Pending - Total 1192
Pending - Short sale 437
Pending - REO 498
Distressed active / Total active = 51.3%

Distressed pending / Total Pending = 78.4%

Active - Total 1172
Active - Short sale 574
Active - REO 198
Backup - Total 89
Backup - Short sale 42
Backup - REO 23
Pending - Total 380
Pending - Short sale 116
Pending - REO 199
Distressed active / Total active = 65.8%
Distressed pending / Total Pending = 82.8%

Ventura County:
Single Family Homes
Active - Total 2010
Active - Short sale 502
Active - REO 253
Contingent - Total 581
Contingent - Short sale 365
Contingent - REO 111
Pending - Total 609
Pending - Short sale 115
Pending - REO 354
Distressed active / Total active = 37.5%
Distressed pending / Total Pending = 77.3%
Release from Showing 272

Active - Total 709
Active - Short sale 203
Active - REO 144
Contingent - Total 192
Contingent - Short sale 129
Contingent - REO 44
Pending - Total 170
Pending - Short sale 38
Pending - REO 90
Distressed active / Total active = 48.9%
Distressed pending / Total Pending = 75.2%
Release from Showing 60

Wednesday, January 21, 2009

San Fernando Valley December 2008 home sales report

The official December 2008 San Fernando home sales have been released. Single Family Home (SFH) sales came in at 691 which was up 9.16% Month over Month (MoM) and 73.62% Year over Year (YoY). Median SFH price came in at $353,000 which was down 5.87% MoM and down 34.26% YoY.

Condo sales came in at 231 which was up 16.08% MoM and 75% YoY. Median price for a condo was $225,000 which was up 2.27% MoM and down 31.82% YoY.

As we have seen previously distressed sales are in control and driving the market lower. The banks were clearly motivated in this last month of 2008 to get deals closed. Sales are still weak but are mildly improving as prices drop.

I'll have more on San Fernando Valley's December sales later this week.

Monday, January 19, 2009

Ventura County December 2008 Sales

Dataquick released figures for Ventura County today. Sales volume was 876 which was up 20.2% Month over Month and 48.5% Year over Year. Median price was $338,000 which is down 4.79% Month over Month and 35.60% Year over Year. Dataquick notes that 55.7% of Southland sales were foreclosures, similiar percentages as seen in my previous breakdown of distressed sales. Currently Dataquick doesn't give short sales percentages but we see they are a rising force in the marketplace.

I think the banks and servicers got motivated at the end of the year to clear as much inventory as possible. The reason I say this is because in my weekly pending counts I never saw a surge of pendings or contingent transactions. It looked like there was a rush to close as many pendings deals as possible before the end of the year. Any strength in sales volume is tempered by the source of that strength, falling prices because of distressed sales. Sales volume is still very weak relative to history. If the distressed sales ever slow, sales will slow right along with them. While affordability has improved that doesn't mean homes are affordable.

Saturday, January 17, 2009

Weekly Active/Pending counts SFV & Ventura - 01/17/09

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. I have broken out the Short sale and Foreclosure (REO) inventory to better track demand. Eventually the data will either turn into tables or graphs but right now I am putting it out there so others can find and use it for there own purposes.

San Fernando Valley:
Single Family Homes
Active - Total 3574
Active - Short sale 1314
Active - REO 522
Backup - Total 317
Backup - Short sale 135
Backup - REO 75
Pending - Total 1140
Pending - Short sale 441
Pending - REO 474
Distressed active / Total active = 51.3%

Distressed pending / Total Pending = 80.2%

Active - Total 1210
Active - Short sale 584
Active - REO 204
Backup - Total 90
Backup - Short sale 42
Backup - REO 23
Pending - Total 372
Pending - Short sale 112
Pending - REO 197
Distressed active / Total active = 65.1%
Distressed pending / Total Pending = 83.0%

Ventura County:
Single Family Homes
Active - Total 2021
Active - Short sale 505
Active - REO 288
Contingent - Total 567
Contingent - Short sale 356
Contingent - REO 110
Pending - Total 594
Pending - Short sale 118
Pending - REO 341
Distressed active / Total active = 39.2%
Distressed pending / Total Pending = 77.3%
Release from Showing 265

Active - Total 701
Active - Short sale 210
Active - REO 148
Contingent - Total 182
Contingent - Short sale 124
Contingent - REO 40
Pending - Total 170
Pending - Short sale 36
Pending - REO 90
Distressed active / Total active = 51.0%
Distressed pending / Total Pending = 74.1%
Release from Showing 61

Thursday, January 15, 2009

Upcoming foreclosure auctions.

Here is a summary of upcoming foreclosure auctions coming to the Southern California area:

Zetabid: Saturday February 28th & Sunday March 1st. New auction company backed by the Los Angeles Times, GoDove and Catalist Homes. They will soon have their first Southern California auction after being quite slow getting out of the gate. I think the servicers were letting them cut their teeth in the markets with massive oversupply like Florida and Arizona to see if they should give them a shot locally.

Southern California 7 day foreclosure auction starting January 17th and running through January 28th. Site claims 1500 homes to be auctioned but many are still on the market so if they get an offer they get pulled from the auction.

Hudson & Marshall:
A smaller foreclosure auction from February 25th through March 1st with homes scattered all over Southern California. They may be still adding inventory so check back as we get into February.

Kennedy Wilson:
They claim 20 homes will be auctioned on February 14th & 15th but no additional information is available yet. They also appear to be handling the Los Angeles County tax auctions.

From what I have seen of the inventory the quality is very bad. In general the sales are good enough in most places in So. Cal. to absorb inventory coming on the market. So anything making it past the MLS listing to these foreclosures auctions are of even lesser quality than those seen on the MLS. Starting bids are lower now but since these auctions are still reserve auction that doesn't have a whole lot of meaning. If absolute auctions (no reserve) ever start up locally that would be an amazing thing.

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

Ventura County:
Here are the updated numbers for December 2008 for the San Fernando Valley and Ventura County. Foreclosures posted their highest volumes for the year. I think the servicers have bulked up their asset management divisions to deal with the inflow better. This will mean less of a loss for them going forward as they can cycle through inventory faster instead of it sitting waiting in the wings to be processed and brought to market. The discretionary seller will be increasingly pushed aside unless they are willing to compete with the distressed market. I perused pendings in a couple markets to see if there is any difference in composition going forward and based on my initial observations it looked like more of the same for the foreseeable future.

Wednesday, January 14, 2009

If red was good we'd be doing alright..

Private mortgage insurance provider PMI released their Winter 2009 report today. For the Los Angeles MSA they predict a 99.8% chance that home prices will be lower two years from where they are today. Many mortgage insurers have tighter guidelines for California, Nevada, Arizona and Florida than they do for the other states, even those other states they classify as declining. Based on the above picture you can see why the insurers and lenders are extra cautious. On page 8 of their report they show how good their model is relative to their back testing from 1985 forward.

Foreclosures back on the rise.

I've postulated a few times that I thought the lenders would be proactive with the lull S.B.1137 provided in getting ahead of the foreclosure problem through encouraging short sales or using loan modifications. Despite the facts to the contrary from other states whose foreclosure moratoriums did nothing to alleviate the issue.

It should be noted I am often wrong and usually spectacularly so, so you really shouldn't be listening to anything I say. Needless to say this looks to be one of those many times. Here is the Foreclosure Radar foreclosure chart for December 2008:

Now conceptually the servicers could be doing all that junk I just said once the borrower defaults because that is when they get maximum leeway with their investors. But right now I think it is much safer to say I am wrong and then let the data prove drove any changes in that forecast. If I don't see a significant rise in Notice of Trustee Sale or Foreclosure sales in the next 3 or 4 then I'll raise the matter again.

Monday, January 12, 2009

Updated Credit Suisse Mortgage Reset Chart

This is the Credit Suisse chart from November 2008 forward. Hat tip to the North County Times and Jim the Realtor in San Diego.

Sunday, January 11, 2009

Bethany Mclean on Meet the Press

Here is a quote from today's Meet the Press:

MR. GREGORY: I want to quickly touch housing, Bethany. A lot of people believe that the economy will not begin to recover until housing prices truly bottom out. Should the government be in the business of either trying to bail out homeowners or reversing the slide in housing prices? Is that really a way to cleanse the economy?
MS. McLEAN: Well, I think the scary question here is what's the right level for housing prices, and can we--should the government be involved in determining that? One of the big issues with housing is that the, the price of a house has so radically outstripped the growth in income in recent years, and if you don't get that back into whack and you try to hold housing levels--housing prices at a level that is artificially high, I don't think you fix anything over the long term. You may address a short-term issue, which is that the continued decline in housing prices is going to be traumatic, but I think you've pushed the issue off for another day.
Ms. McLean also had another gem on the current Keynesian conventional wisdom infecting Washington.

MR. GREGORY: What's your big question about the stimulus plan?
MS. BETHANY McLEAN: Will it work, and how do we pay it back? We've gone from a few years ago the conventional wisdom was the economy's just--going to be just fine, housing isn't a problem. A couple of years ago it was the subprime problem is contained, this is only an issue of bad mortgages. Now the conventional wisdom is let's spend our way out of it. So as someone who's always a little bit terrified by the conventional wisdom, I'm terrified by that large question: How do we pay it back? What happens if it doesn't work?
I hope more people are thinking along the same lines.

Weekly Active/Pending counts SFV & Ventura - 01/11/09

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:
Single Family Homes
Active 3558
Backup 328
Pending 1139

Active 1244
Backup 86
Pending 352

Ventura County:
Single Family Homes
Active 2029
Contingent 558
Pending 609
Release from Showing 270

Active 715
Contingent 178
Pending 165
Release from Showing 57

Thursday, January 8, 2009

Fannie Mae tests short sale program

Tonight the WSJ reported that Fannie Mae is testing a new short sale program by preapproving the short sale price before an offer is made. This is a very significant development and would go a long way in reducing the time the housing crisis takes to ultimately finish. What is currently happening is a homeowner would put a house for sale on the market and wait for an offer not knowing whether the listing price would be approved or not for a short sale. Once an offer is made the servicers looks at the sellers hardship package relative to the offer and works with all the investors and the potential buyer to see if an agreement is reached on the offer on the table. The negotiations can take some time (8.1 weeks on average for the article) and ultimately come back that they won't accept the sale at the price in question. During the time the buyer could pull the offer and go elsewhere but because the wheel was set in motion the investors come up with a price they agree on and let the seller know that a short sale has been preapproved at a certain price.

These preapproved short sales can close very quickly, as fast a normal house or foreclosure. What Fannie is proposing to do is preapprove the short sale before an offer is made, turning the transaction into a normal real estate transaction for the buyer. The advantage to an investor of taking a short sale in a down market is that it reduces exposure to the downward market. Instead of waiting 120+ days to foreclose plus normal marketing time in a depreciating market the investor gets their money out sooner and will ultimately get more as a result. As agents start to realize that short sales are closing quickly and with little hassle they will be much more widely marketed instead of being shunned by some agents and buyers as being too difficult and uncertain to deal with. This recognition that it is better to get ahead of the market and replace weak borrowers with strong borrowers at market prices will reduce the number of foreclosures but rationalize the market sooner rather than later.

From the article:
While mortgage holders still take a loss with a short sale, they don't have to take possession of the home and find a new buyer. An analysis by Clayton Holdings Inc., which tracks mortgage loans for investors, found that short sales result in average loan losses of about 19%, compared with an average loss of 40% for homes sold after foreclosure.

If this program catches on it will be a very positive thing for reducing the duration of the housing bust.

Wednesday, January 7, 2009

More on Demand vs Inventory for Ventura County

(click to enlarge)

This is a chart of demand versus inventory. I think because of slow processing times for loans and short sales overstates demand a bit at any one point in time. Right now we are at or near a seasonal low for inventory. Demand is clearly concentrated at the low end and based on sales this year which were at or near all-time lows for their perspective months throught the year we have further to fall. Based on volumes alone I think the low end will still decline significantly. Another thing is clear the above $600,000 market has a lot further to fall and should bear the majority of the price declines through this next year.

This is the Inventory and Demand broken up in deciles and the delta for each point in the market.

Tuesday, January 6, 2009

Ventura County home buying frustration.

(click to enlarge)

Here is an example of the huge divide between demand and supply. The chart above demonstrates the current count of single family homes either currently pending our under a contingent contract in Ventura County relative to their list price. The chart doesn't display any homes above $1,650,000 but those homes are factored into the data.

Here is the above chart broken down in Deciles, So 40% of pendings are below $319,900 and 80% of pendings are below $500,000. 90% of pendings are below $659,900.

Looking at inventory, 44.6% of inventory is above $659,900. So those 44.6% of sellers are fighting over a very small slice of demand. There is a clear mismatch between what the buyers can afford and what the sellers are asking for their homes. The median price home on the market is nowhere near what the median buyer can afford so many are choosing to sit on their hands instead of buy. The median buyer would have to either overpay for a median house or accept a lower quality house. It is clear in 2009 where the majority of price declines will be hitting and even potential 4.5% mortgage rates doesn't change the math very much. As we have seen with other charts the distressed sales are the ones finding the market. And it is clear the market is well below where a lot of sellers think it is.

Sunday, January 4, 2009

Weekly Active/Pending counts SFV & Ventura - 01/04/09

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:
Single Family Homes
Active 3561
Backup 345
Pending 1136

Active 1239
Backup 92
Pending 340

Ventura County:
Single Family Homes
Active 2017
Contingent 576
Pending 591
Release from Showing 270

Active 704
Contingent 178
Pending 173
Release from Showing 56

The large drop in Active inventory is due to many listing contracts using the end of the year as a convenient expiration date. There was a large number of expirations on December 31st as a result. This isn't generally distressed or motivated inventory but wanna-be sellers with unrealistic pricing expectations.

Preliminary December 2008 San Fernando Valley Home sales

Here are my estimates for December 2008 sales for the San Fernando Valley, Single Family Home sales look to come in around 730 and median price of approximately $365,000. Condo Sales are estimated around 230 and median of $225,000. The holidays could mean we have a larger than normal number of late reporters, I will know more about that in a couple of weeks.
The strength in the market was completely based on distressed sales. We may have had a quarter end where banks are trying to maximize the number of sales and book the losses into a "kitchen sink" type quarter. Or a more pessimistic view might be that the banks see things getting worse and worked to drive volume to keep from being overwhelmed. The economy and continued credit tightening are the significant negatives for the market. Low interest rates and continued liquidity in conforming mortgages is about the only positives right now.

Saturday, January 3, 2009

San Fernando Valley foreclosure and short sales contine to climb - December 2008

Here is the preliminary numbers for the San Fernando Valley for December 2008. Short sales and foreclosures are almost 70% of closed sales matching a similiar trend we saw in Ventura County in December. Closed short sales and foreclosures are at high for the year. So while we may hear about "strong" December sales it is only because distressed percentage of sales is very high. If any sort of program comes out that reduces distressed inventory and slows price declines it will have a dramatic effect on slowing sales.

Fannie Mae increases loan price adjustments

Back in August I talked about how Fannie & Freddie were increasing the costs of the Loan Level Pricing Adjustments (LLPA) and Adverse Market Delivery Charge (AMDC). Basically, these are risk based pricing adjustments meant to compensate Fannie/Freddie for the additional risk they are taking with some loan features. Fannie has just announced a new LLPA matrix which will significantly increase the cost of some mortgages.

Here is an example of the changes made just for FICO & LTV (page 2 of the announcement). Note, this chart is the difference in adjustments between the previous guidelines and the new guidelines effective April 1, 2009:

You will notice significant increases for FICO's below 700 even with relatively low LTV's. In some places where you see very low LLPA difference in a risky area is because the previous adjustment was already very high (1.5%-3.0%) and the new adjustment is only a small increase. Basically Fannie is saying they have previously adjusted (mostly) properly in this area and don't need a large adjustment more.

Here is chart for Cash out refinancing (COR) .

These adjustments are CUMULATIVE. So someone has a high LTV, low FICO, Cash out refinance they will get hit very hard by the pricing adjustments.

Fannie has also significantly increased fees for many Condos (.750%), Interest Only (.250-1.000%) and Investment properties (1.750-3.750%).

Here is an example they give in their announcement how pricing would increase,

Example 3: 30-YR FRM IO, Purchase, Condominium, Credit Score = 690, LTV = 80%
If purchased prior to April 1, 2009
From Table 1: AMDC = 0.250%
From Table 2: Representative Credit Score LLPA = 1.000%
From Table 3: FRM IO = 0.000%
From Table 3: Condominium = 0.000%
Total: 1.250%

If purchased on or after April 1, 2009
From Table 1: AMDC = 0.250%
From Table 2: Representative Credit Score LLPA = 1.500%
From Table 3: FRM IO = 0.750%
From Table 3: Condominium = 0.750%
Total: 3.250%

So the borrower in this instance would have to pay either 2% more in points or have their interest rates adjusted such that they pay the addition through yield. There are several more examples at the end of the announcement to get a feel for how the pricing will have changed.

These risk based pricing adjustments show that credit is still tightening and becoming more expensive. FHA and VA are unaffected by these announcements since they have their own underwriting and pricing requirements. The NAR is protesting these increased fees, though I can't remember them protesting the complete lack of underwriting and underpriced risk adjustment during the housing bubble.

Friday, January 2, 2009

Ventura County October 2008 Loan to Value chart

(click to enlarge)

This is the October 2008 Loan to Value chart for Ventura County. Here is a summary of what the chart is telling us from last months post on the topic:

The left axis represents the purchase price of a home and the bottom axis represents the LTV of the loans on the homes at purchase. So a dot at $300,000 and 80 LTV would mean that a borrower put $60,000 dollars down on a $300,000 home and the loans on the home total $240,000. The higher the LTV the more aggressive the loan is considered to be. By click on the graphic you will notice the almost solid red line at around 97% LTV. This represents FHA singular dominance in the aggressive lending arena. The shaded blue area represents where private mortgage insurance is bring eliminated for conforming loans (Loans under $417,000). The shaded green area represents where private mortgage insurance is being eliminated for "Jumbo conforming" loans (those under the jumbo conforming limit which was $729k and is being lowered to $598k January 1st, 2009). In these two shaded areas the blue dots (conventional) should disappear by early 2009 and only red dots (FHA) should remain. The pink line represents the old jumbo conforming limit and the green line represents the new jumbo conforming limit. The loans in between these two lines will most likely not be made after January 1st. Or if they are made they will be made at much higher rates than those under the limits shown.

I should also note that October 1st 2008 was the deadline for locking Seller Funded Down Payment Assistance loans for FHA. This was the last major easily available source of 100% financing. While I think FHA will continue its significant presence for a long time the requirement of even a mere 3.5% down coming from the borrower will have a dampening effect on the market. Lower prices and lowered expectations (buying less house) by borrowers with little down payment will be the result of this change. With the jumbo conforming limit dropping, slow economy and lack of move up buyers being generated in this market means that it is the higher end turn to experience the brunt of the depreciation in 2009. The low end will still fall of course but we could see the bottom end dropping 15% while the top end drops 25% as an example of what I think could go on this year. The desire to purchase high end properties is always there, what isn't there right now is the ability to do so.

Ventura County short sales & foreclosures 70% of closed sales - December 2008

These are preliminary numbers for December and the totals could change by 10-15% in the next few weeks but the ratios should be about the same. It is amazing that 70.92% of sales were distressed in some manner. And of the remaining 29.08% there was a high number of vacant, relocations, trust / probate, and investor owned sales. I estimate that only about 15% of closed sales in December were by sellers who owned their home and were currently living in it. I think the banks were trying to clear the decks as much as possible to put the losses in 2008. If the banks could push this level of volume during January and February I will be impressed. If they are able to it will clearly be a matter of pushing price and crowding out discretionary sellers.