(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.
3 comments:
let me post a first commnt on your blog.
the demand supply statistics you have shown is so loated for mumbai market,you just cant believe.
a 600 sq ft flat is selling more than 1 crore(20833),which is above salary of 99% of indians.I dont even know who they are selling to.
Thanks EffectiveDemand. Havent seen those stats spelled out so clearly before. I have been ranting about the absurd expectation of the high end homeowners in the area for the last few months and finally have an article to link to ;-)
If you look at some of the beach area homes for sale in the Oxnard and Ventura beach areas you will see that most owners who are selling and had purchased within the last 3 years believe that there houses have appreciated quite a bit. I see a home that sold in early 06 for $550k, up for sale for the high $700's right now. I cant even believe realtors take the listings. Desperation I suppose. I want to be a fly on the wall of all of the homeowners when the realize they arent all millionaires.
Howdy Mike,
I'm going to work on the chart a bit and try to make it more descriptive without (hopefully) being too technical.
I might try adding inventory into the graph as well but as the data sets get larger they get harder to get.
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