Tuesday, June 30, 2009

Ventura County Trustee Sales for June 2009

Here are the trustee sales graphs from January 2007 through June 2009. Investor activity is still significant and I know of a couple organized groups working the trustee sales pretty hard. There is at the very least a temporary lull in inventory on the low end that investors are rushing to fill. The tax credit, sub-5% interest rates (I don't think the sub-5% interest rate effect on demand can be overstated) and seasonality have created tremendous demand. Supply is being constrained by the now expired moratoriums and the expectations of many homeowners who would normally short sale thinking they will get a loan modification. With the increase in REO inventory and the servicers working through the loan mod requests to accept or deny borrowers the inventory situation should improve going into the second half of the year.


Rob Dawg said...

I am not a pessimist at this point but I think a seasonal demand drop and bank REO dump and rising rate environment are setting us up for a seriously dysfunctional Q3.

Effective Demand said...

If I put on my bullish hat here are the positives I see going into the summer:

A lot of demand wasn't met during the Spring due to constrained supply, I don't think that demand went away. If supply in the affordable ranges increase, sales will as well.

Interest rates have come back down a bit. 5.25-5.375% is par.

Trustee sales increasing, meaning more supply will come on line soon.

If I put on my bearish hat:

The economy continued deterioration will eat into demand. State furloughs, decreased state & local spending (somewhat offset but increased federal spending), increased taxes, layoffs etc.

Renters could just give up and re-sign a lease and try again in a year.

Buyers are highly rate sensitive, if they rise it removes large swaths of buyers from the market.


Overall I'm bullish on sales volume going into Summer due to the increased supply because of trustee sales. If anything short circuits that supply (i.e. more government intervention) then I will turn bearish.