awgee - 29 October 2009 02:55 PM

Geotpf - 29 October 2009 02:44 PM

awgee - 29 October 2009 02:11 PM

Steve Thomas’ October 19 data:
Slice     Listings   Deals   Time in months   2 weeks ago     1 year ago     2 years ago

$2m-$4m     698     36       19.39         20.41       22.42         25.09
$4m +      380     12       31.67         32.17       34.30         31.63

 

Yeah, they are just flying off the shelves.

So, there’s over a year and a half’s worth of supply in 2-4 mil and two and a half years at 4 mil+?  Geez.  Maybe if you are a buyer in that category you should make extreme low-ball offers on everything even marginally acceptable and hope there’s an equity seller desperate enough to take the bait.

Why?
Why not just wait?

I’m sure many people are tired of waiting.  But that’s certainly an option as well, assuming prices actually go down (as opposed to most sellers continuing to price their properties at WTF prices and buyers continue to refues to pay for such, so nothing sells).

I would imagine that, in the higher price ranges, foreclosures and short sales are still rare (because even during the boom, rich people frequently paid cash or had high down payments), and those are the things driving down prices on the lower end.  Does anybody know how many of those listings are REOs/short sales?

awgee - 29 October 2009 02:11 PM

Steve Thomas’ October 19 data:
Slice     Listings   Deals   Time in months   2 weeks ago     1 year ago     2 years ago

$2m-$4m     698     36       19.39         20.41       22.42         25.09
$4m +      380     12       31.67         32.17       34.30         31.63

 

Yeah, they are just flying off the shelves.

What’s the average DOM and months of supply for this price range in a healthy market?

Realistically for a potential buyer, their pool of homes to choose from is much smaller. The same unrealistically priced properties just sit on the market for 1, and 2+ years, while the correctly priced properties get snatched up.

Let’s look at closed sales for Newport Beach, Newport Coast, Corona del Mar, and Laguna Beach
     
                                        Closed Sales
$2-$4m  
    Sept 09                                 26
    Sept 05                                 27
$4+
    Sept 09                                 10
    Sept 05                                 3

RoLar_USC - 29 October 2009 03:55 PM

What’s the average DOM and months of supply for this price range in a healthy market?

Realistically for a potential buyer, their pool of homes to choose from is much smaller. The same unrealistically priced properties just sit on the market for 1, and 2+ years, while the correctly priced properties get snatched up.

Let’s look at closed sales for Newport Beach, Newport Coast, Corona del Mar, and Laguna Beach
     
                                        Closed Sales
$2-$4m  
    Sept 09                                 26
    Sept 05                                 27
$4+
    Sept 09                                 10
    Sept 05                                 3

Who cares about DOM. What was the price per sqft. in 05 compared to 09?

The market time for $2m-$4M in Sept 07 was 18.35 and $4M+ was 19.50. In August 08 the market time for $4M+ was 49.71. So tracking market time in that category is useless because it is too volatile and it would only be hot if it had a three month trend at 15 months, and slow if it had a three month trend of 22 months or greater.

graphrix - 29 October 2009 04:58 PM

RoLar_USC - 29 October 2009 03:55 PM

What’s the average DOM and months of supply for this price range in a healthy market?

Realistically for a potential buyer, their pool of homes to choose from is much smaller. The same unrealistically priced properties just sit on the market for 1, and 2+ years, while the correctly priced properties get snatched up.

Let’s look at closed sales for Newport Beach, Newport Coast, Corona del Mar, and Laguna Beach
     
                                        Closed Sales
$2-$4m  
    Sept 09                                 26
    Sept 05                                 27
$4+
    Sept 09                                 10
    Sept 05                                 3

Who cares about DOM. What was the price per sqft. in 05 compared to 09?

The market time for $2m-$4M in Sept 07 was 18.35 and $4M+ was 19.50. In August 08 the market time for $4M+ was 49.71. So tracking market time in that category is useless because it is too volatile and it would only be hot if it had a three month trend at 15 months, and slow if it had a three month trend of 22 months or greater.

That was basically my point. That market time in those price ranges doesn’t mean much.

But what was the price per square foot difference from 05 to 09?

And the $2M-$4M range does have meaning, it is the $4M+ that doesn’t mean much. It’s the price that means something.

In Newport Beach, Corona del Mar, Newport Coast, and Laguna Beach

Average sales price per sq. foot from 6/1/2009 to 9/30/2009 between $2-$4m was $754.57.

Average sales price per sq. foot from 6/1/2005 to 9/30/2005 between $2-$4m was $795.23.

Average sales price per sq. foot from 6/1/2009 to 9/30/2009 $4m+ was $1116.54.

Average sales price per sq. foot from 6/1/2009 to 9/30/2009 $4m+ was $1431.70.

What I don’t get is if demand is really high as RoLar says.

How can it be? Record unemployment and tighter credit guidelines would lead me to believe that the number of qualified buyers out there is much less than in recent years.

Or is it just relative to inventory? Are there as many buyers now as there were at peak? At the last trough?

Granted low interest rates lend to more affordability but even zero interest won’t work unless you have income.

Or were there a ton of cash buyers just waiting out the bubble and are striking now? Or maybe it’s all those people who stopped paying their mortgages for over a year and saved that money to have a high down payment?

Help me understand RoLar Kenobi… you are my only hope.

irvine_home_owner - 29 October 2009 07:35 PM

What I don’t get is if demand is really high as RoLar says.

How can it be? Record unemployment and tighter credit guidelines would lead me to believe that the number of qualified buyers out there is much less than in recent years.

Or is it just relative to inventory? Are there as many buyers now as there were at peak? At the last trough?

Granted low interest rates lend to more affordability but even zero interest won’t work unless you have income.

Or were there a ton of cash buyers just waiting out the bubble and are striking now? Or maybe it’s all those people who stopped paying their mortgages for over a year and saved that money to have a high down payment?

Help me understand RoLar Kenobi… you are my only hope.

It’s not like I’m making it up, the numbers are posted everywhere. Demand is up, way up. Just look at the number of closed sales over the past 3 months, compared to the same time during 2003-2008. The same number of homes are closing as were in 2005, up a little bit from 2003 levels. You still have 85-90% of the working capable population with jobs, a large pool of the population that has been renting and waiting affordable housing, and a number of individuals looking to purchase second homes. As to where all the buyers are coming from, its purely ones speculations. But, you can’t deny the numbers.

Everybody calm down. We are not done yet, far from it.  This is just a seasonal impact.  The drop will continue this winter/slow season.

See below for a comparison with 90s drop (based on months from peak).

I don’t think it’s realistic to assume we are done with it yet.  C’mon think a little about what’s going on:

Low Interest, First Time Homebuyer Credit, HAMP, etc.  Whenever this is unwind (and it will) it will impact the housing market.

Hold your breath, we won’t know for use until 2012.

Geotpf - 29 October 2009 03:08 PM

awgee - 29 October 2009 02:55 PM

Geotpf - 29 October 2009 02:44 PM

awgee - 29 October 2009 02:11 PM

Steve Thomas’ October 19 data:
Slice     Listings   Deals   Time in months   2 weeks ago     1 year ago     2 years ago

$2m-$4m     698     36       19.39         20.41       22.42         25.09
$4m +      380     12       31.67         32.17       34.30         31.63

 

Yeah, they are just flying off the shelves.

So, there’s over a year and a half’s worth of supply in 2-4 mil and two and a half years at 4 mil+?  Geez.  Maybe if you are a buyer in that category you should make extreme low-ball offers on everything even marginally acceptable and hope there’s an equity seller desperate enough to take the bait.

Why?
Why not just wait?

I’m sure many people are tired of waiting.

This is the real reason the rich get richer and the poor get poorer.

USCTrojanCPA - 29 October 2009 05:46 AM

Let me ask you about something else that has really surprised me.  I’m sure you see how much debt the gov’t is having to auction off to pay for all spending….why is there so much demand for that debt and why are the bid-to-cover ratios so high for that new debt?  Are the big banks that got all of that free cash from the Fed/Treasury just parking it in gov’t bonds?

A recent example from Zero Hedge.

If you want to convince yourself that a 20 months supply is a healthy market, cool.

A question for you folks:
Why do you think it is that the smart money, (the over $2mil) market is not buying, and the not so smart money is buying?

Where did the latest uptick in prices come from?  Will it last?  And why or why not?
From Dr. Housing Bubble

There are very very few people with the means that will delay a home purchase decision. As a result the majority of the population is actively out hunting for “bargains” in the moderately adjusted housing market justifying the decision by telling themselves that they are taking advantage of all time low interest rates.

The fact remains however that there is a very limited pool of buyers that are able to purchase homes out of cash without first selling another property. This lack of move-up buyers, because of limited or negative equity will have dampening effect on the housing market (Hanson has written extensively on this). This is not to say that prices will come down, but it does indicate a strong potential for demand destruction in the future. In order for prices to come down we need demand destruction combined with forced supply. Forced supply is critical because homeowners will tend to avoid selling properties in down markets, thus limiting supply and maintaining price equilibrium.

The hotly debated shadow inventory becomes the supply source necessary to cause further price declines.  Lacking this source of forced supply (even if it is being withheld), has and can reasonably be expected to support a higher equilibrium price point than would otherwise be the case.

For me, I am going to wait. The primary reason is not because I believe prices are going to come down further (though I believe they will), the reason is that I am unwilling to purchase a home in my price range (I just don’t like any). And, if prices are likely to decline, and are far far less likely to increase in any meaningful way, time is on my side.

Meanwhile I get to relax with cash in the bank while the housing market faces the triple threat of (1) rising rates, which WILL happen once the Fed MBS purchase program expires in March (2) increasingly and persistently high unemployment (3) enormous unresolved non-performing mortgage loans (read: shadown inventory).

awgee - 29 October 2009 09:10 PM

If you want to convince yourself that a 20 months supply is a healthy market, cool.

A question for you folks:
Why do you think it is that the smart money, (the over $2mil) market is not buying, and the not so smart money is buying?

It’s funny that you call purchases under $2mil not so smart money. Thats calling out a lot of people as “not so smart money.” There’s plenty of people, especially investors, that have the money to make the large purchases but choose to purchase multiple properties at lower costs. Over the last two months, the demand for housing above $2m has been close to its peak levels of 2003, 2004 and 2005. Granted, I did not include areas like coto de caza in my analysis, but only areas along the coast that justify the $2m + pricing. It’s just a matter of having more houses on the market, and the majority of the $2m+ houses on the market right now are crap. The good ones all sell, and leave the shabby ones to sit.

awgee - 29 October 2009 02:11 PM

Steve Thomas’ October 19 data:
Slice     Listings   Deals   Time in months   2 weeks ago     1 year ago     2 years ago

$2m-$4m     698     36       19.39         20.41       22.42         25.09
$4m +      380     12       31.67         32.17       34.30         31.63

Yeah, they are just flying off the shelves.

Well, in Newport they are:
                          Closed Sales
$2-$4m  
  Sept 09                       26
  Sept 05                       27

(Thanks Rolar for posting the info)

Per my post, I was referring specifically to Newport Coast and even more specifically, ocean view properties in the low 2mil range.

Someone who has a few million in cash sitting around is probably in the smart money category.  Also, there’s a big difference between an investor and a home owner. An investor should wait… a home buyer has to factor in other variables. My home is not an investment for me.

Volume is there? WTF are you people smoking over there at NAR? Please, I wanna know so I don’t become so… (must be nice)... naive. Sales volume is still 30%-40% BELOW HISTORICAL AVERAGES. Duh volume is up, it is up from record low volume not seen since the 80s. The problem is… it is still below average, meaning it is not up, it is still below NORMAL. Woo hoo sales are up from the last three most dismal years of home sales probably since the depression when adjusted for housing stock/population growth. People who say and/or believe sales are up are really bad at math and probably buy lottery tickets.

RoLar_USC - 29 October 2009 11:32 PM

awgee - 29 October 2009 09:10 PM

If you want to convince yourself that a 20 months supply is a healthy market, cool.

A question for you folks:
Why do you think it is that the smart money, (the over $2mil) market is not buying, and the not so smart money is buying?

It’s funny that you call purchases under $2mil not so smart money. Thats calling out a lot of people as “not so smart money.” There’s plenty of people, especially investors, that have the money to make the large purchases but choose to purchase multiple properties at lower costs. Over the last two months, the demand for housing above $2m has been close to its peak levels of 2003, 2004 and 2005. Granted, I did not include areas like coto de caza in my analysis, but only areas along the coast that justify the $2m + pricing. It’s just a matter of having more houses on the market, and the majority of the $2m+ houses on the market right now are crap. The good ones all sell, and leave the shabby ones to sit.

I did not call out the under $2 mil as the not so smart money.
I called the over $2 mil as the smart money.
I made no monetary reference to the not so smart money.
It is easy to claim sales are close to peak when you data mine, ie. only the coast, only where they are justified, the rest are shabby.
As you are prone to say, “the number don’t lie” and Thomas’ data includes all the numbers.
20 months for the over $2mil
and 30 months for the over $4mil
Yeah, that is some demand.
But, keep on data mining and convincing yourself.
Is anybody else convinced?

awgee - 30 October 2009 02:42 AM

RoLar_USC - 29 October 2009 11:32 PM

awgee - 29 October 2009 09:10 PM

If you want to convince yourself that a 20 months supply is a healthy market, cool.

A question for you folks:
Why do you think it is that the smart money, (the over $2mil) market is not buying, and the not so smart money is buying?

It’s funny that you call purchases under $2mil not so smart money. Thats calling out a lot of people as “not so smart money.” There’s plenty of people, especially investors, that have the money to make the large purchases but choose to purchase multiple properties at lower costs. Over the last two months, the demand for housing above $2m has been close to its peak levels of 2003, 2004 and 2005. Granted, I did not include areas like coto de caza in my analysis, but only areas along the coast that justify the $2m + pricing. It’s just a matter of having more houses on the market, and the majority of the $2m+ houses on the market right now are crap. The good ones all sell, and leave the shabby ones to sit.

I did not call out the under $2 mil as the not so smart money.
I called the over $2 mil as the smart money.
I made no monetary reference to the not so smart money.
It is easy to claim sales are close to peak when you data mine, ie. only the coast, only where they are justified, the rest are shabby.
As you are prone to say, “the number don’t lie” and Thomas’ data includes all the numbers.
20 months for the over $2mil
and 30 months for the over $4mil
Yeah, that is some demand.
But, keep on data mining and convincing yourself.
Is anybody else convinced?

Yes, actually. I believe others are convinced. And you call it data mining and I call it breaking down into specifics instead of throwing out vague facts about an entire county/state. You need to realize that there is more than one market.

“Why do you think it is that the smart money, (the over $2mil) market is not buying, and the not so smart money is buying?” - That sounds like monetary referencing to me. iiiiiiif the smart money is over $2m…. what does that make the under $2m? You slipped, accept it, don’t try to argue your way out and we can move on.

Again, what is the average months of supply in a healthy market in those price ranges? Others even admitted that noting the months of supply on houses over $4m is pointless…

graphrix - 30 October 2009 01:18 AM

Volume is there? WTF are you people smoking over there at NAR? Please, I wanna know so I don’t become so… (must be nice)... naive. Sales volume is still 30%-40% BELOW HISTORICAL AVERAGES. Duh volume is up, it is up from record low volume not seen since the 80s. The problem is… it is still below average, meaning it is not up, it is still below NORMAL. Woo hoo sales are up from the last three most dismal years of home sales probably since the depression when adjusted for housing stock/population growth. People who say and/or believe sales are up are really bad at math and probably buy lottery tickets.

I’ve been referencing 2003, 2004 and 2005 numbers….

graphrix - 30 October 2009 01:18 AM

Volume is there? WTF are you people smoking over there at NAR? Please, I wanna know so I don’t become so… (must be nice)... naive. Sales volume is still 30%-40% BELOW HISTORICAL AVERAGES. Duh volume is up, it is up from record low volume not seen since the 80s. The problem is… it is still below average, meaning it is not up, it is still below NORMAL. Woo hoo sales are up from the last three most dismal years of home sales probably since the depression when adjusted for housing stock/population growth. People who say and/or believe sales are up are really bad at math and probably buy lottery tickets.

Sales as a proportion of total inventory is up, but only because of low inventory levels not because there are more buyers.  There are less buyers out than there were in the bubble days, that’s for sure because of the loan qualification standards.  It’s simple economics….a slight decrease number of buyers + a bigger drop in supply of homes for sales = a seller’s market.  The gov’t has a lot to do with inventory being so low…Fed buying all those MBS bonds to bring mortgage rates down, market-to-fantasy accounting for lenders, all the TARP and free money for banks, the extend and pretend strategy used by the lenders, and a lot of potential sellers who can’t see because they are underwater.  One of the reasons why I don’t think prices will drop much over 10% over from here over the next few years (I see an even smaller chance of price increases of over 10%) is due to the expectation that REOs will trickle onto the market over years and years and interest rates are going to remain low for years….welcome to Japan’s Lost Decade 2.0.

readytopurchase - 28 October 2009 03:55 AM

http://mhanson.com/archives/274

It just amazes me that on mainstream media, all we hear is how the housing market has bottomed/corrected itself, and through sites like Mark’s, Dr. Housing Bubble, and IHB, we hear the truth - based in facts and figures. Stop lying, NAR!

Mark Hanson:  To Catch a Predatory Lender

RoLar_USC - 30 October 2009 03:37 AM

graphrix - 30 October 2009 01:18 AM

Volume is there? WTF are you people smoking over there at NAR? Please, I wanna know so I don’t become so… (must be nice)... naive. Sales volume is still 30%-40% BELOW HISTORICAL AVERAGES. Duh volume is up, it is up from record low volume not seen since the 80s. The problem is… it is still below average, meaning it is not up, it is still below NORMAL. Woo hoo sales are up from the last three most dismal years of home sales probably since the depression when adjusted for housing stock/population growth. People who say and/or believe sales are up are really bad at math and probably buy lottery tickets.

I’ve been referencing 2003, 2004 and 2005 numbers….

Have you seen a 10 year chart of the NASDAQ lately?

I dunno why, but for some reason I felt this article belonged in this thread…

Pimps provide more value than real estate agents.

In arriving at their conclusion that a pimp provides more value than a real estate agent, the authors analyzed two completely unrelated studies.

Brushing off the fact that real estate agents actually do the sales work for the property owner, the authors conclude that “once you consider the value you get for each of these two agents, it seems clear that a pimp’s services are considerably more valuable than a Realtor’s.”

graphrix - 30 October 2009 04:21 PM

I dunno why, but for some reason I felt this article belonged in this thread…

Pimps provide more value than real estate agents.

In arriving at their conclusion that a pimp provides more value than a real estate agent, the authors analyzed two completely unrelated studies.

The first, using data compiled by former University of Chicago sociologist Sudhir Venkatesh, found that prostitutes working solo in Chicago’s West Pullman and Roseland neighborhoods earn $325 a week while performing an average of 7.8 tricks, while prostitutes with a pimp working the same area earn $410 a week while doing only 6.2 tricks.

In addition, a prostitute who works with a pimp is “less likely to be beaten up by a customer or forced into giving freebies to gang members,” the book states.

Even after paying a 25 percent commission, the authors conclude, prostitutes with a pimp “come out ahead on just about every front.”

They contrast this with a study out of Madison, Wis., that concluded that houses sold by owners over the Internet fetched about the same price as those sold by real estate agents.

Why even compare pimps to real estate agents?

“A Realtor and a pimp perform the same primary service: marketing your product to potential customers,” Levitt and Dubner explain.

Brushing off the fact that real estate agents actually do the sales work for the property owner, the authors conclude that “once you consider the value you get for each of these two agents, it seems clear that a pimp’s services are considerably more valuable than a Realtor’s.”

And again… the child comes out to play.