Sales Fall, Pendings Rise Slightly, New Contracts Flat
Inventory Continues to Climb
Pending Sales: 6,515 ( +52 from last week)
Active w/Contingency: 1,047 ( +1 from last week)
Closed Escrows: 966 ( -75 from last week)
Active Listings: 54,143 ( +142 from last week)
Closed through 10/26/08 3,661
SINGLE FAMILY STATS
Pending Sales: 5,924 ( +63 from last week)
AWC 958 ( +3 from last week)
Closed Escrows: 872 ( -67 from last week)
Active: 44,580 ( +166 from last week)
Closed MTD : 3,302
The past week continues to show the difficulty we are facing in the housing market, locally and nationally. Our statistics are better than the first half of the year, but they are not showing improvement over the last several months, and this month could take a dramatic downturn from September. There are some seasonal considerations, of course, but if we were in a full recovery, it wouldn't matter, as the fact is, as good as September was, it would not be considered a great month in a decent market. For sales to reach even 5,000 in October, we will have to have a very strong last week. It is possible, of course, but given the relatively weak weekly showings in October, if we do reach 5000 sales, it won't be by much. We are looking for month to month growth, and that is not the case.
The other twist in the knot is that active listings continue to rise. I really thought with our sustained sales growth over the last half year, we would start cutting into inventory sharply by now, but instead, after making some early gains, we are moving closer to the high water marks than away from them. I don't know if its because banks are flooding the market with inventory, or if it is a case of better market news, giving people more hope they can put the house on the market now. I think it is likely the former.
The good news is nationally that sales rose both in new homes and in resales according to the most recent statistics. This was of course accompanied by the normal gloomy reporting of home prices falling.
We knew that prices are still going to recede for a while, as there is simply a lot of inventory driving the market. There is also the concept that people are going to buy lower priced homes, as they are not being driven by the "irrational exuberance" of the "McMansion" days. Simply put, buyers are looking for Basic Black. A good many of the homes being sold now are bank repos and short sales, and many of the homes they got back were for entry level buyers, so the homes that come on the market were originally from the lower end of the spectrum. This drags on the average price. Banks are trying to unload homes, even if its at a loss, so there is much downward pressure on pricing. It is a great time to be a bargain hunter. There is lots to choose from, at relative to the last 3 years, at very good prices.
That brings me back to my chief concern, which is of course, the inventory. Builders have brought their inventory down to manageable levels, but the glut of resales is our biggest obstacle right now. We are not going the right way with that number. Mccain's plan to bailout homeowners is not likely to be put in place, although it seems to me that before we spent the hundreds of billions bailing out banks, the taxpayers probably should have been helped in some way. I think I heard a stat yesterday that said that ridiculous program they came up with to help homeowners had all of 79 homeowners actually go through with it, while they were expecting as many as 400,000. Not a well designed plan if homeowners won't use it. I think it included giving up half your equity when you do finally sell the house in the future.
Still, we have to hope that the recent sales numbers like September will hold up. I have been perhaps a little too negative about October, but I had hoped for some build in numbers and reduction in inventory to cement the idea that we are on our way to recovery. Instead, we got treading water numbers. November through January are not typically very good months anyway, so don't expect to see any substantial good news about our market until February. That is why I had higher hopes for October-we are going to go through a seasonal decline, and it would have been nice to be able to point to October as a great "normal" month. If we can tread at the 5000 sales per month through November to January, I will actually consider that to be pretty good, however. Less homes tend to come on the market in November and December, so its possible if we have decent sales, we may also cut the inventory back in those months.
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