Friday, March 16, 2007

Are Inventories Actually Higher than are Being Reported?

I decided to pull some data yesterday from Homeseekers.com to have a look at what their data says about the housing inventory situation here in Orange County. They have a feature that lets the user pull lists for cities either including or excluding properties that are in escrow; so, coming up with "in escrow" counts is a pretty simple, if time consuming, process.

What I found blew me away:

First, note that there isn't data for all cities, just the largest, those for which there was a decent sample size of listings and those where the data made sense (there were very few homes listed in Fraudera Ranch.) But once you get past that, the data is pretty amazing.

If the Homeseekers.com data is correct, there are a total of 13.9 months of inventory currently available in OC largest cities. This is more than double what is being reported in the media elsewhere and over a year's worth the homes already on the market! I have to wonder what a seller might think if he were to know that number--he just might be forced to get serious about selling his home and cut his price.

On the other hand, his level of panic may be influenced, as well it should, by his LOCAL conditions. Have another look at the chart. Some cities like Seal Beach and Laguna Hills have few months of inventory, while other areas like San Clemente, Newport Beach and Lake Forest have have huge amounts, at over 2.5 years of inventory a piece.

There seems to be a general pattern here. In-land cities, in general, seem to have fewer months of inventory than their coastal counterparts while southern OC, seems to have much more inventory than northern OC. With that in mind, I would NOT want to be trying to sell a house in Dana Point or San Clemente at this point.

On the other hand if you're a buyer and want to cut your best deal, print out the worksheet and take it with you when you go to open houses. Ask the your seller (in Dana Point?) if he plans on keeping his house on the market for 27 months and ask him to consider an offer that will get his house sold before the glut of homes hits this summer. Just a thought.

Now like I said before, these data look very different from what I've seen on Lasner's blog and elsewhere so somethings going on. It could be:

  1. Homeseekers.com data is unreliable. (I don't think so.)
  2. Homeseekers.com classifies houses in escrow differently than others. (Could be.)
  3. We're on the cusp of the largest inventory run-up in OC history and I beat the mainstream media to the punch by reporitng it first. (THAT would be cool.)

Have a great weekend.

Vivo los Osos!




3 comments:

Anonymous said...

looking the data today for all OC cities, the months of inventory are only 10.5 months. still plenty to cause a panic.

oc_fliptrack said...

Hmm. I wonder if it would be more accurate to compare active listings to the number of listings that *went into* escrow over the last 30 days. This would capture the rate at which homes are entering the escrow process and not just a static snapshot of the homes which are already in escrow. This kind of thing seems pretty much impossible to capture without having a daily dump of the MLS in order to track the day-to-day delta.

How long does the escrow process typically last, anyway?

HB Bear said...

Flip_track,

You know I had the same thought and came to the exact same conclusion you did: I need a dump of the MLS to get really accurate data. But I figured that since "snapshots" are the way that Lansner reports it, I figured I was at least in good company.

I have it under fairly good authority that "most" escrows last 30 to 45 days, though it's really up to the parties involved in the transaction. With that in mind, I think I might be okay with the assumption as is.

The other thing I find myself wondering about is how many of these homes are falling OUT of escrow. If it's a significant number, then 30-days trailing completed sales may be the better measure.

 
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