San Fernando Valley home sales report - July 2010

San Fernando Valley Single Family Home sales for July 2010 came in at 589 which is down 9.24% MoM and down 20.94% YoY. This is the tenth straight month of YoY declines and the WORST July on record for Single Family Home sales. The median price for single family homes came in at $399,000 which is up 3.64% MoM and down 0.25% YoY. Residential inventory is officially up YoY but inventory is still light. The market is completed stagnated, the administration is keeping the motivated inventory generally off the market and there is no market clearing event so sales and buyers choices will continue to be horrible going forward. New pendings last month were at levels suggesting August will come in at or slightly below July which would make for the worst August on record.

Condo sales came in at 216 which is down 17.56% MoM and up 6.40% YoY. Median price for condos came in at $220,000 which is down 4.34% MoM and down 3.50% YoY. The only strength in the market is in the condo space and I think that is due more to the amount of motivated supply (whole condo projects going defunct). Condo pendings aren't strong going forward and are at levels suggesting that August sales will look very much like July.

Based on July pendings (green line) the predictor (red line) suggest slightly lower sales for August.

I predict the NAR will be going hat in hand to Congress for another tax credit soon (probably after the elections). With sales this bad they will try to get another handout.

Ventura County July 2010 Home Sales

Dataquick reported home sales for Ventura County for July 2010 today. Home sales came in at 749 down 10.5% YoY and down 15.8% MoM. The median sales price came in at $370,000 down 5.20% YoY and 3.6% MoM. Volume was in range from what I predicted at the beginning of the month. This amounts to the worst July since back for when I have records as far as sales volume. Right now August is looking weaker but with closings weighted towards the end of the month anything can happen. I highly doubt we'd see even July level volume in August though. If you follow the weekly inventory reports for Ventura County you can see the contingents have fallen but then leveled out as sellers respond with price cuts. It looks like a long slow slog from here on out.

Ventura County Loan To Value Chart - January through June 2010

Note: The above chart can be clicked on and enlarged.

I haven't posted the loan to value charts in awhile. This one is for the period between January 2010 and June 2010.

The chart is simply purchase price on the left with loan to value ratio across the bottom. The different color coding indicates the type of loan (Conventional, FHA, Private Party or VA).

You can really see various underwriting guidelines come into play. That arching blue line going from top left sloping down right is the effect of the conforming loan limit on the conventional market. The solid line at 80% LTV is the effect of traditional underwriting guidelines with no Mortgage insurance. At 75% LTV that line usually indicates 2nd home purchases and the like. The blue line at 90% LTV most likely shows conventional loans with mortgage insurance. Then there is of course the absolutely massive wall of FHA financed properties.

I think the high LTV FHA high balance FHA loans are extremely risky. These are people who can't save and have high consumption. Their prospect for higher income is low but lower income is high and it isn't like they have shown a propensity for saving for a rainy day. Also FHA loans are underwritten to extremely high DTI ratios (as high as 47% front and 57% back end).

California Shadow Inventory Report - Q2 - 2010

There was a point in time where various housing bloggers were talking about "shadow inventory" as houses taken back by the bank and purposely kept off the market. According to these bloggers this horde was supposed to be released en masse and flood the market. It was a great, sexy story and I never saw any making much effort to prove or disprove if it was actually happening. Since trustee sales are a matter of public record I went and matched up all trustee's deeds that never made it to the MLS and it turned out to be a trivial sum when you accounted for turnaround time for eviction, trashout, bpo's, and all the other stuff that happens before the houses hit the market. This data was not well received by those bloggers espousing that version of the shadow inventory opinion but they have since changed their tone to the "other" version of shadow inventory. The other housing bloggers talk about "shadow inventory" in the terms of number of delinquent borrowers... this is a very very large number. But in terms of houses foreclosed but not on the market, it is very small. In short, If there is going to be a tsunami that floods the market it will be trivial to see coming before it hits.

This is a simple graph to show the accumulation (or lack thereof) of REO inventory. When the blue line is above the green line REO inventory could be accumulating. I say "could be" because the green line is merely the number of homes sold during the quarter that were foreclosed in the past 12 months, so investors trustee flips would be captured in the data as well. I think the blue line will elevate somewhat but the two lines will stay pretty close as it makes little sense to foreclose and not market the home.

I am very doubtful of the tsunami theory simply because the government has said it is not what they wish to happen and they have gone to great lengths for it not to happen. What we will have instead is stagnation in the market for a very very long time.

As you can see with the above graph, there was no great accumulation of REO's during Q2.

Short Sale & Foreclosure for Ventura County - July 2010

Here are the sales for Ventura County for July 2010. Sales are still very low, with late reporters I expect the official Dataquick numbers will be down 10-15% at around 730 sales. This continued stagnation in the market is the same boring story, less supply due to government intervention trying to keep prices high at all costs. Watching the weekly inventory reports for Ventura County you can see supply building but contingents and pendings have stopped falling rapidly due to continued price cuts by sellers. The current level of demand is still extremely low reminiscent of January/February demand levels but when the sellers get the price right the homes fly off the market.

Short Sale & Foreclosures for the San Fernando Valley - July 2010

Here is the sales breakdown for the San Fernando Valley for July 2010. The SFV has a lot more late reporters as a percentage of sales and so it is a bit tougher to discern right now just how weak sales will ultimately be for July. It appears that sales should be down 10-15% YoY when all the late reporters are counted. These sales levels are extremely weak historically.