Here are the April 2009 home sales from Dataquick. Sales came in at 724 which was down 6.7% Month over Month (MoM) and down 6.1% Year over Year (YoY). The YoY drop is somewhat significant as this was the first year over year drop in sales since July 2008. Median price came in at $340,000 which was up 4.3% MoM and down 23.6% YoY.
I think the slow sales volume has several reasons. Longer underwriting times for loans will mute the onset of the traditional buying season. Fewer homes in the affordable price ranges means fewer buyers buying. Buyers have zero additional pricing power in this market. And of course the economy will put a damper on activity as well. Sales traditionally drop from March to April so the MoM drop isn't a surprise but the YoY sales drop was a bit surprising. I don't think there will be another possibility for a YoY sales drop until at least the July report which comes out in August from Dataquick.
The median price is heavily influenced by mix shift. Since foreclosures drove volume in the slow winter months they accounted for a heavier percentage of sales. We will see the percentage of foreclosures drop over the next couple of months because there are more short sales and normal sellers as well as fewer foreclosures due to the moratoriums. Once (or maybe I could play devils advocate and say IF) the new wave of foreclosure supply hits the market the mix shift will put a downward slant on the median again. Prices are still falling, it really doesn't matter what the median is doing. If new supply comes on the market sales could be very very good. If supply is slow in coming on the market then sales will stay muted. It is that simple.
7 comments:
Great info again ED..thanks.. the downward trend continues ...when will the mid /high level wannabe sellers pull their heads out of the sand and price their homes realistically...their media inflated hopes of a mythic turnaround...just keep getting further and further away.
Watch out for the rental glut. When the Camarillo/Navy off-base housing project is completed the bit of rental demand will disappear. That will set up another round of investor selling into a very shallow pool of potential buyers.
Haven't seen a big rental glut yet. Lots of hunkering down and price cuts though.
Just got word from an ex Countrywide, now BofA employee that they are going to start listing many of the foreclosed properties in CA that have been sitting on the sidelines. Watch the MLS in the next few weeks.
Mike,
Thanks for the scuttlebutt. I look at the broker boards every weekend and keep reading "June/July" from the people there who are being contacted by the asset management companies.
We shall soon see if it is true. This isn't a horrible market to liquidate supply into. Demand is pretty good, supply has been worked down, interest rates are low and there is a tax credit.
ED,
I'm not sure about the demand. I get the feeling we are seeing 10 people put in 5 bids then 9 people put in 5 bids then 8 people... you get it. I think we are fast running out of end users. I also think a lot of the recent purchases are not end user transactions.
Rob,
I definitely think there is a multiplying effect right now due to the short supply of REO inventory. You have the same people trying to outbid each other when those homes come on the market. Also you get scenarios where people have bids on short sales accepted (waiting on the bank) and the buyers are out making bid on REOs. It isn't like they can buy both.
For normal inventory I'm seeing things like homes closing at 90-95% of list price. Not a sign of strength especially when you consider closing costs are most likely paid.
For REOs it is start low and hope to get it sold in a 2-3 weeks. If it doesn't sell in that time fram you start seeing amazing flexibility as far as price & terms they are willing to accept.
I don't think we are at the end of the buying pool. Since the rental pool is so large here. The potential number of buyers could be large but the price those buyers could buy at is not.
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