Friday, August 28, 2009

Ventura County Demand versus Inventory - August 2009

This is August 2009 Demand versus Inventory chart for Ventura County. Demand continues to be concentrated on the lower end "affordable" areas with inventory in those areas being drawn down. Inventory is being built up in many segments of the $500,000+ market. This is a supply constrained market and while inventory is being cleared on the low end the higher end discretionary sellers are still waiting to find a buyer. I think the headlines of median prices rising because fewer low end homes selling because of the inventory shortage will embolden the higher end sellers to keep to their price and just ensure they will not sell. It does not look good for higher sales moving forward unless some more inventory comes online.


Anonymous said...

i think you make a good point about the challenge of the "high end" market....

a real nagging question is:"aren't prices supposed to drop a lot once the market is swamped with supply?"

perhaps or perhaps not

to me it seems that the risk of a big price decline is a function of the mix of prime and alt a loans in a market. prime loans are experiencing about a 6% delinquency rate and alt a about a 25% rate. if a local market is funded with only prime loans then one should expect about 5% of housing stock to be puked onto the market as foreclosures. this may not be a big deal. if the local market is funded with only alt a loans then one should expect about 25% of the market to show up as foreclosures.

the devil is in the details

and the challenge seems to be that no one has the details....

Rob Dawg said...

500+ Active $1m+ and how many under contract? Ouch.

Effective Demand said...


It is all about discretionary vs non-discretionary supply, I agree.


Clearly some adjustment is needed, either in the number of people on market (they should realize there house isn't worth what they think and pull the listing) or price drops.

I just cant believe with 5% interest rates that people think things will get "better" from here. Imagine what this market looks like @ 6.5%

Anonymous said...

do you have any sense of what the price stratified inventory/sales ratio looked like during the downturn/inflection point of the early 1990s?

i don't

i know. for instance, that prices on the westside declined by about 40% from the peak to the trough

what i don't know is whether the inventory/sales ratio was high or low at the trough.

inventory/sales ratios are more volatile than inventory or sales figures alone...that's the math...the inventory/sales ratio is sort of like a PE ratio for a stock....when looking at most stocks, PE ratios are often quite high at market bottoms because the denominator (earnings) gets really, really small...with stocks it turns out that there is no way to create a better metric....some try to normalize earnings but all this means is that one uses a "higher" number at market bottoms and a lower number at market tops...

Richie said...

How does this graph show what the demand is?

Effective Demand said...


Contingent, Pending and Sales all show current and past demand.

Anon 2,

I dont have any stratified data from the early 90's, you can see things like months supply and sales.. but actual inventory broken out by price range I simply havent seen for back then.