“Shadow Housing Inventory” Put At 1.7 Million in 3Q

“Shadow Housing Inventory” Put At 1.7 Million in 3Q According to First American CoreLogic
Summary:
• As of September 2009, First American CoreLogic estimated there was a 1.7‐million‐unit pending supply of residential housing inventory, up from 1.1 million a year earlier. Pending supply, sometimes referred to as “shadow” inventory, estimates real estate owned (REO) by banks and mortgage companies, as a result of foreclosures and other actions, such as deeds in lieu, as well as real estate that is at least 90 days delinquent. Normally shadow inventory would not be included in the official measures of unsold inventory. At the current sales rate, the pending supply is 3.3 months, up from 2.4 months a year ago. The months’ supply measures how quickly the inventory will run off given the current sales rate.

• The visible supply of unsold inventory was 3.8 million units in September 2009, down from 4.7 million a year earlier. The visible inventory measures the unsold inventory of new and existing homes that are currently on the market. The visible months’ supply fell to 7.8 months in September 2009, down from 10.1 months a year earlier.

• The total unsold inventory (which combines the visible and pending supply) was 5.5 million units in September 2009, down from 5.7 million a year ago. The total months’ supply was 11.1 months, down from 12.7 a year earlier. This indicates that while the visible months’ supply has decreased and is beginning to approach more normal levels, adding in the pending supply reveals there is still quite a bit of inventory that will impact the housing market for the next few years, especially in the context of the current increase in home sales, which is in part due to artificially low interest rates and the homebuyer tax credit.

Number of escrows on rise in Palm Springs Valley

Increase shows 'we're inching in the right direction,' top Realtor says

Erica Solvig
The Desert Sun

Monthly sales may be down, but the number of escrows is slowly rising in the Coachella Valley.

With the exception of a slight dip during traditionally slow December, the upward trend started in September.

Unlike housing sales figures - which show what's been happening month to month - experts use escrow data to indicate what's coming in the market.

The numbers, released this week by the California Desert Association of Realtors, show January's pending sales still lag the escrow figures seen in early 2007.

Still, officials say the increasing number of pending sales means that other market indicators - mainly the closely watched sales tallies - also should start showing an upswing.

"It's going to be a while before these numbers all start to turn positive," said Greg Berkemer, executive vice president of the California Desert Association of Realtors.

"We're inching in the right direction."

January saw 549 pending sales, down about 7 percent from a year ago and up 11.4 percent from December, according to association figures.

February figures have yet to be released.

But if One Brokerage with 400 desert agents are any indication, the upward trend is continuing.

With a few days to go in February, their agents earlier this week reported 206 pending sales - versus the 150 seen in January - said regional vice president Ron Gerlich.

"Normally, around this time of the year, sales do start to increase," he said. "To have this many openings so far in February, this is the best month we've had in six or seven months.

"Its an indication. There are people out here buying."

Villain or Hero?

Greg Thomas and Gary Drake are realtors with Windermere Real Estate in the Coachella Valley representing sellers and buyers in the cities of Palm Springs, Palm Desert, Indian Wells, Rancho Mirage, Cathedral City, Indio and Desert Hot Springs.

I remember just two years ago being the good guy by finding buyers great homes and getting top price on properties for the sellers we represented. Gary and I worked with a handful of first time buyers back then and talked most of them out of the teaser loans they were being offered at that time, explaining what would happen if the market slowed down and prices dropped. Yes, we did lose some higher commissions by selling homes that our buyers could actually afford with a loan where the payments remained steady rather than jumping $600.00 a month or more in three years. Today we are heroes to those families and they will be our clients for life.

What I find interesting is that Realtors® were heroes a few years back when we were hustling to find homes to fit clients’ needs in a very low inventory market. Now the media paints a picture of greedy, misleading agents who sold people homes with crazy loans just to get higher commissions. I know there were some unscrupulous agents who did that, but, quite frankly, I am not sure if most of them have been able to survive this current market; I have a feeling they were in it for a quick buck.

To survive long-term in any business, my belief is to put the client first and be honest and you will make out in the long run and be able to sleep at night (it’s not rocket science).

Palm Springs area real estate is blessed in many ways since it is a vacation destination for people around the world during the season. We also have many baby boomers flocking here to retire and to enjoy the easy living the desert offers, not to mention the second home owners and full-time families who now live here year-round.

Gary Drake and I have had three escrows in January and we represented the sellers on all of these transactions. If homes are priced right and fairly they do sell. Two of the buyers were from Canada and the others were baby boomers who bought a home on the golf course for under $400,000 near Mission Lakes in the newer side of Desert Hot Springs.

I know I am one of those damn Realtors® who no one wants to listen to now compared to three years ago when I was a hero because everyone was making double-digit appreciation on their homes. There are some really great buys right now in the Coachella Valley prices are down. You see, now it’s your turn to take advantage of the greedy people who bought new homes as commodities, waiting to flip them and make a quick $75,000 or more. Some of the greedy ones are now in trouble and are either losing the property they never lived in or selling them at hugely discounted prices!

So in the long run who wins?

Just make sure you get all the facts that you possibly can and have a true professional help you navigate the market they specialize in. Chances are that you will be calling that person a hero in a few years because it is my opinion that at some of the prices I see now, you can’t lose in the long run.

Greg Thomas
The Thomas and Drake Group
www.ThomasAndDrake.com

Waiting for the Bottom: You Could Be Left Just Waiting

In recent weeks, several of our buyers have found a great property at a great price, then they tell us "We are going to wait for prices to come down even further."My advice to buyers who are sitting on the fence: "Get off the fence. You're in danger of getting a picket stuck in a very uncomfortable place."

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Palm Springs Valley home sales jump 16.4% in October

Palm Springs (Coachella Valley) monthly home sales jumped 16.4 percent in October from September, a positive sign for the dragging real estate market but not enough to indicate the slump is over. Though officials are optimistic, the valley's home sales are 30.1percent lower than this point last year. But that's better than the statewide sales figures, which have dropped 40.2 percent compared to October 2006.The exact number of homes sold in October was not available late Tuesday, according to the monthly information released by the California Association of Realtors."You can't call it a trend, but if it's moving, it's moving in the right direction," said Greg Berkemer, executive vice president of the California Desert Association of Realtors."That's the most encouraging news."The Realtors association's October data also show:The median price of a Coachella Valley home is $323,440 - a 6.5 percent drop since September and a 5.1 percent decline since this time last year.While the median price is used as a benchmark for tracking homes, it can be misleading when several high-end, multimillion-dollar homes sell in a single month.The Coachella Valley continues to be affordable by California's standards, where the statewide median price is $497,110.While roughly 24 percent of Californians can afford the median priced home in their communities, 33 percent of valley residents can afford homes here.At the "height of the market," the local figure was as low as 11percent, Berkemer said.Nearly 9,200 Coachella Valley homes were on the market in October and 9,593 were on the market last month, according to the local figures.That's about a 1,000 more homes than were for sale in November 2006.A typical home on the market - three bedrooms, two baths, spanning 1,766 square feet - is listed at $379,000 and has been on the market 81 days."This market is not fully recovered," Berkemer said."September was a poor sales month. We're moving into our season. Hopefully that will help."

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