Thursday, August 30, 2007
Wednesday, August 29, 2007
According to the data available from the Melissa Data website, unit sales volumes are down dramatically over the last two years. According to them, in August of 2005 5,227 homes were sold in OC while last month only 2,253 were sold. That's a reduction of nearly 3,000 units or 56.9%. Brutal market.
Another interesting stat I was able to create from the fine Melissa Data information was the total value of homes sold by month here in OC. In August of 2005, roughly $3.65 billion dollars of residential real estate changed hands. Last month, only $1.76 billion worth the residential real estate was sold. That's a reduction of nearly $2 billion dollars. Epically brutal market, especially for RE agents.
Consider this, with a reduction of roughly $2 billion in transactions, at a 6% commission rate, Realtors collectively made $120,000,000 LESS in commissions than they did just 23 months ago--those poor bastards.
I've tried to help these poor souls in the past, but they keep on with their 'buyers on the fence', 'good time to buy' drivel trying to spark demand and get their transactions/dollar volumes/commission back up. Based on the inventory levels in OC, this strategy clearly is not working. But, don't worry guys, I am here to help.
At the top of this page, you'll find the latest installment in the OC Prudent Bears' 'Discuss it with a Realtor' campaign. Realtors, feel free to share this with ALL of your sellers, help your clients sell their homes and earn yourself a commission!
Posted by HB Bear at 9:28 PM
Monday, August 27, 2007
Steve Thomas at Remax Real Estate in Aliso Viejo calculates Orange County now has 12.2 months of inventory of homes currently on the market. Inventory numbers are certainly very high compared to the last two years, but the real culprit here seems to be a collapse in OC housing demand.
The following areas have inventories of less than ten months: Anaheim Hills, Brea, Canyon Areas, Cypress, Foothill Ranch, Huntington Beach, Laguna Woods, Mission Viejo, Rancho Santa Margarita and Seal Beach.
The following areas have inventories greater than fourteen months: Anaheim, Corona Del Mar, Dove Canyon, Garden Grove, Laguna Hills, La Habra, Lake Forest, Portola Hills, San Clemente, San Juan, Santa Ana, Talega, Tustin, Villa Park and all ranges above $2 million.
Very interesting analysis, to be sure...then out of nowhere, Steve suggests that it's probably a good time to buy and even employs the tired, noisome 'get off the fence' metaphor. With home sales as sluggish as they are, I can understand the need to drum up some business...but come on, Steve. Are you buying real estate right now, my friend?
Honest to God, every time I hear an RE agent try to explain why they think it's a good time to buy, well, I feel a bit like Brian in this classic snip of Family Guy:
VIVA LOS OSOS!
Posted by HB Bear at 4:23 PM
Sunday, August 19, 2007
There's been a lot of hoopla lately about the median home price in OC bumping up close to historic highs. The data, such as they are, seem to indicate that is the case, but remember here, that's true only if you're looking at the county-wide median price.
In the past, you've seen me and others deride the county-wide median price stat because of the sheer size and/or heterogeneity of OC. Talking about the county as a whole, particularly when using the flawed median as a metric, just doesn't tell one a whole lot. Parts of the county could be collapsing, while other parts rise, but when you throw every neighborhood in the county into one big bucket, all of that movement is washed out, all of the uniqueness statistically smoothed over. County-level stats just aren't granular enough to truly convey any meaningful information.
For the vibrancy and dynamism of the market to be seen, we need to analyze the market by segment. Simply by bucketing areas of the county together by similar characteristics and then analyzing them, patterns that betray notion that prices in the county are strong quickly appear, particularly if you look at homes by price segment.
I decided to divide OC's ZIPs into three segments based on median price: ZIPs with median prices less than 85% of the county-wide average (23 ZIPs) , ZIPs with median prices between 85 and 115% of the county median (33 ZIPs) and the last group with prices more than 115% of the median (27 ZIPs.) I then looked at the number of ZIPs in each group where the YOY sales volume and/or price were down. The results were dramatic.
In the ZIPs with the lowest prices, essentially all of the ZIPs were down in terms of price (91%) and volume (96%)--a profoundly weak segment. In the middle price group, both price and volume were down for 70% of ZIPs--a weak to very weak segment. While the most expensive ZIPs showed volumes down less than half of ZIPs, at 41%, and a relatively equal number of ZIPs (52% down) with price declines--a neutral segment. Clearly, OC is not one market, but at least three, varying from neutral to very weak in terms of their market strength.
Just to emphasize how different OC's price segments are performing, ZIPs in the lowest price range were roughly twice as likely to be down in terms of volumes and price as the most expensive ZIPs. Twice as likely.
Now, my personal area of interest are the middle ZIPs: white picket fences, middle class, 2.3 kids, regular folk. Fully 70% of those ZIPs have have dropped in terms of prices and volume. At 50%, we'd be at parity, but at 70% were in the midst of some serious volume/price weakness. As half a dozen Realtors told me today at open houses, this weakness could be a sign to buy, but as I explained to them, I don't think so. After all of the mortgage resets occur next summer and sellers panic, that may be a time to buy.
In the mean time bears, eschew claims that the "OC prices are strong", keep your financial powder dry, your FICO score up and enjoy another 12 months of cheap rent. Next summer if the middle is collapsing like the bottom price segment is today, it might, just might be time to get a great deal on a distressed home.
Viva los Osos!
Posted by HB Bear at 3:32 PM