California Shadow Inventory Report - Q4 - 2010

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 a drawdown in REO inventory in Q4. The net drawdown is about ~2000 homes. Sales were ultra low but homes taken back by the bank were even lower. I am sure this is no coincidence. REO inventory sells very well and the robosigning issue slowing down trustee sales had to have an impact in Q4.

Ventura County December 2010 Home Sales

Dataquick reported home sales for Ventura County for December 2010. Home sales came in at 761 down 15.1% YoY and up 27.4% MoM. The median sales price came in at $355,000 down 1.4% YoY and down 5.3% MoM. This is still more of the same, horrible sales and a stagnant market. Nothing is really changing much on the demand or supply side so it's just a grind.

Ventura County November 2010 Home Sales

Dataquick reported home sales for Ventura County for November 2010. Home sales came in at 592 down 20.6% YoY and down 3.5% MoM. The median sales price came in at $375,000 up 2.7% YoY and up 5.6% MoM. Slowing sales and rising median is an indication of the low end falling away while the high end volume holds up a bit better. Volume is the better indicator for the health of the market and volume has been horrible. At the same time inventory is restricted and so we just have this stagnant slowly grinding lower market.

Ventura County October 2010 Home Sales

Dataquick reported home sales for Ventura County for October 2010 today. Home sales came in at 619 down 29.6% YoY and down 9.2% MoM. The median sales price came in at $355,000 down 2.7% YoY and down 4.0% MoM. This was in line with the prediction I made at the beginning of the month for closed sales. Currently Novembers pace is running basically flat to slightly raised. These sales numbers are horrible and are only beaten historically by the sales numbers that were posted after the subprime and Alt-A market imploded and most of the lenders weren't geared up for FHA or Conventional back in the fall of 2007. Prices will continue falling with a sales pace as anemic as this. It is a post tax break sugar rush let down but the question becomes where the demand will come from? The best case scenario is everyone looking towards spring and hoping there is some level of pent up demand waiting for the first of the year to buy.

California Shadow Inventory Report - Q3 - 2010

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 Q3 but the spread between the two lines was at its greatest point in 5 quarters. The accumulation is about ~8000 homes. If resales stay this low and foreclosures stay this high it could be a worrying trend but as prices fall sales will pick up to absorb the excess inventory. And of course the robosigning issue could put a damper on REO supply as well.

Ventura County September 2010 Home Sales

Dataquick reported home sales for Ventura County for August 2010 today. Home sales came in at 682 down 13.0% YoY and down 5.1% MoM. The median sales price came in at $370,000 down 0.5% YoY and flat MoM. I noted in my early month estimate that my normal model predicted sales of 700-720 but due to changes in the underlying data used for estimates I thought closings would come in lower and that was what in fact happened. Currently October is running at 20% below September closings month to date so this horrible performance is continuing. To put these numbers in perspective the last time numbers were worse, 2007. Countrywide had just imploded and all that was left was FHA (which few were equipped to underwrite at a large scale) and the GSE's had a $417,000 limit. Additionally prices were much higher as were interest rates so the gap between buyers and sellers was much much wider. But right now we have a $729,000 loan limit, 4% mortgage rates and lower prices and sales are anemic. Prices are still too high.

Ventura County August 2010 Home Sales

Dataquick reported home sales for Ventura County for August 2010 today. Home sales came in at 719 down 9.7% YoY and down 4.0% MoM. The median sales price came in at $370,000 down 1.5% YoY and flat MoM. Volume was lower from what I predicted at the beginning of the month. The anemic volume continues and looking forward to the weekly inventory pending and contingents it doesn't look like the malaise will end anytime soon. Prices will continue under pressure as a result.

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.

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.

Ventura County June 2010 Home Sales

Dataquick reported home sales for Ventura County for June 2010 today. Home sales came in at 890 up 5.5% YoY. The median sales price came in at $384,000 up 5.20% YoY. Volume was stronger than I predicted at the beginning of the month, late reporters as a percentage of sales was much greater than normal. The possibility of the tax credit running out really caused quite a rush in closings. Rising median is due to mix shift due to the low end running out of inventory the most plus some seasonal strength in the mid-level houses as those sellers have been cutting price to compete for buyers. As far as sales volume this was the high water mark for the year, the question is just how far we fall from here.

Ventura County May 2010 Home Sales

Dataquick reported home sales for Ventura County for May 2010 today. Home sales came in at 815 up a paltry 2.3% YoY. The median sales price came in at $380,000 up 7.00% YoY. This report was exactly in line with the prediction I made at the beginning of the month. Rising median is due to mix shift due to the low end running out of inventory the most plus some seasonal strength in the mid-level houses as those sellers have been cutting price to compete for buyers. Considering the Federal tax credit expiration and the ability to double dip and get the California credit too this is a surprisingly weak report.

There is a very strong possibility June will be weaker than people are thinking, current conventional wisdom is that June sales will be still be up YoY. We shall know with quite a bit of clarity in 2 weeks if that is true but it is looking very doubtful at this point.

Ventura County April 2010 Home Sales

Dataquick reported home sales for Ventura County for April 2010 today. Home sales came in at 789 up 9.0% YoY. April has averaged 1,159 over the years so as you can see this April is significantly below average. The median sales price came in at $382,000 up 12.40% YoY. This report was exactly in line with the prediction I made at the beginning of the month. Rising median is due to mix shift due to the low end running out of inventory the most plus some seasonal strength in the mid-level houses as those sellers have been cutting price to compete for buyers. I've noticed a lot of price cutting by sellers the last few weeks and the weekly report for contingents and pendings is looking awfully light. There was a big rush right at the end of April for closed sales that registered late, I think Dataquick will pick those up in the May numbers because they go off of recorded deeds. We will see a historically weak but stronger than the year before May and June but July is starting to look pretty weak based on the data I am seeing.

California Shadow Inventory Report - Q1 - 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. I have been assured by people much smarter than I that this is "better". It very well could be better for some but it is worse for others and this choosing of who wins and who loses is fine if you win and a kick in the nuts if you lose. One can guess which side I am on.

Ventura County March 2010 Home Sales

Dataquick reported home sales for Ventura County for March 2010 today. Home sales came in at 739 down 4.8% YoY. The median sales price came in at $375,000 up 15.0% YoY. This report was exactly in line with the prediction I made at the beginning of the month. Slowing sales as low inventory continues to restrict sales. Rising median is due to mix shift due to the low end running out of inventory the most plus some season strength in the mid-level houses as those sellers have been cutting price to compete for buyers. I think the people rushing to buy before the April 30th tax credit deadline getting similiar "deals" like the cash-for-clunkers buyers rushing to buy before that expired got... overpaying for limited inventory. We will see a bump in sales over the next few months related to the tax expiration, though it is an open question whether they can even beat the previous years weak numbers, and then slowing YoY moving through the rest of the year.

Ventura County February 2010 Home Sales

Dataquick reported home sales for Ventura County for February 2010 today. Home sales came in at 580 up 6.4% YoY. The median sales price came in at $350,000 up 7.0% YoY. This report was exactly in line with the prediction I made at the beginning of the month. Slowing YoY sales due to constricted inventory, the second worst monthly sales on record. The market is in an artificial state, low sales and high prices because that is exactly the stated goal of the various government agencies. This month I added in the YoY change graph, as the year progresses I think we will see a shallow decline in solds as the low inventory state has shown no sign of abating. Median YoY changes are highly dependent on mix shift (especially in this small of a market) so I don't have much of a prediction there.

Ventura County January 2010 Home Sales

Dataquick reported home sales for Ventura County for January 2010 today. Home sales came in at 530 down 8.3% YoY. The median sales price came in at $360,000 up 7.5% YoY. This report was exactly in line with the prediction I made at the beginning of the month. Slowing YoY sales due to constricted inventory, the second worst monthly sales on record. The market is in an artificial state, low sales and high prices because that is exactly the stated goal of the various government agencies. It is amazing to think that their goal is to keep housing unaffordable but that is exactly what is happening.

Just to add to the insanity, I have a bid in on another house. The price isn't great but the house meets every one of our other criteria and I've only seen one other houses since 2005 that has done that even close to our price range.

Ventura County December 2009 Home Sales

Dataquick reported home sales for Ventura County for December 2009 today. Home sales came in at 896 up 2.3% YoY. The median sales price came in at $360,000 up 6.5% YoY. This report was a bit surprising to me because all of the data up through January 3rd (last time I looked) showed sales coming in down 10% YoY. The number of late reporters this year was much higher than normal by at least triple. Also the number of sales that aren't seen through my data sources were higher than average so my formula for predicting sales under predicted by much more than I have seen. This was the strongest December in the last 3 years but still a very weak sales volume. To put it in context if you look at the top chart you will notice this December doesn't even match the ultra-slow January/February sales volume for most years this past decade.

I still believe we will have a weak spring due to constricted supply caused by HAMP and higher mortgage rates. We shall see how things unfold this coming year.

Ventura County November 2009 Home Sales

Dataquick reported home sales for Ventura County for November 2009 today. Home sales came in at 752 up 3.2% YoY. The median sales price came in at $365,000 up 2.8% YoY and flat MoM. This months activity was pretty easy to predict based on the expectation that the tax credit would expire coinciding with ultra low interest rates. We now get to see how much demand was pulled forward. Historically for Ventura County sales go up from November to December. It is extremely clear this year that will not be the case, I am predicting DQ reporting sales of around 700 for December (and I believe I am being optimistic) which would be a 20% drop YoY and 6.9% drop MoM. Both highly unusual occurrences.

We also have Fannie Mae's underwriting change (lowering DTI to 45%) coming into effect just the other day. Lucky for agents Freddie has yet to tighten similarly, so those marginal conventional deals might just be delayed rather than blown up completely. The 10 yr note has also been rising lately and the Fed is lowering its MBS purchases. All of this combined with the low market inventory will mean 2010 will be a very slow sales year unless a miracle happens and more inventory comes on market. The only hope for that would be large number of short sales or foreclosures as they are really the inventory that will be enough to keep sales up.

Ventura County October 2009 Home Sales

Dataquick reported home sales for Ventura County for October 2009 today. Home sales came in at 879, up 9.6% YoY. The median sales prices came in at $365,000 which was down 2.7% YoY. Assuming people lock the month before they close September 2008 rates were 6.04%, September 2009 rates were 5.06%. Such a dramatic drop in rates combined with the tax credit expiration (it has been extended but people who would have wanted to take advantage of it would have had to sign contracts before it was extended) and the desire to close before the holidays start all made October the best sales month of the year. We will now see sales drop due to seasonality and the lack of inventory on the market. Rates are below 5% currently but there is little motivating reason for purchasing right now. Between the holidays and the lack of selection people purchasing now have either lucked out and found 'the one' or just settled on a lesser home.

I expect November to come in flat to slightly down YoY and December to definitely be lower YoY for sales. We are at historically very low sales and very little evidence of that changing anytime soon. Prices kept artificially high will mean sales will be kept artificially low.

DQ Foreclosure report and California Shadow Inventory

Dataquick reported on California foreclosures and defaults today in their press release. The above graphic is basically a rebuttal against the believers that there are a large amount of homes already taken back by the bank sitting on the sidelines. Basically when the green line is above the blue line REO inventory is dropping and when the blue line is above the green line REO inventory is rising.

DQ jumped on trying to determine shadow inventory bandwagon as well with this quote:

Of the homes foreclosed on statewide in an 18-month period ending this July, about 82 percent have re-sold on the open market, while 18 percent, or more than 57,000 homes, have not. Of those that have not re-sold, it cannot be determined from public records what portion is currently being marketed for sale, as opposed to, among other things, being used as rentals or being left vacant and not for sale. Over the past year California buyers have snapped up an average of nearly 18,000 foreclosure resales a month.

Now 57,000 might sound like a lot but shadow inventory is about what isn't currently on the MLS being marketed and if it averages a month or two to turn around the home after trustee sale (call it 45 days) you can assume about half of those are on the MLS (either active, contingent, pending, closed but not yet recorded) and the other half are mostly in the pre-list phase. Meaning less than a month and a half of inventory at current absorption rates sitting on the sidelines yet to be marketed. Certainly not a flood waiting to be unleashed. Shadow inventory is the massive amount of homeowner in default not being foreclosed on.. it is NOT a bunch of foreclosed homes yet to be marketed.

You can read the DQ press release here.