The housing question of 2012: "Where'd all the sellers go?"
The time to sell an Orange County house — by one measure — quickened three days in two weeks in mid-April and sped up 52 days vs. a year ago. And a sharp drop in supply can get much of the credit, says the latest Orange County home inventory report — data as of April 13 -- from Steve Thomas and
ReportsOnHousing.com.
The time to sell an Orange County house — by one measure — quickened three days in two weeks in mid-April and sped up 52 days vs. a year ago. And a sharp drop in supply can get much of the credit, says one recent Orange County home inventory report
Thomas writes that "Unbelievably, the active listing inventory shed an additional 261 homes in the past two weeks, totaling 6,354, levels not seen since June 2005. If you recall, both 2004 and 2005 were nuts with very little inventory and scorching demand. Ask any real estate professional that experienced that market how the activity today compares and they will quickly state that it is not much different. Lower prices and plenty of distressed properties are the big differences. To date in 2012, the inventory has dropped by 1,760 homes, a 22 percent drop. The unabated drop actually began back in July 2011. Compared to this time last year, there are 42 percent fewer homes on the market. There are 31 percent fewer than 2010. In some ranges, the year over year differences is stunning. There are 51 percent fewer homes on the market priced below $500,000. Even the upper ranges are experiencing tighter inventory with 20 percent fewer homes on the market for all homes priced above $1 million. The low levels look like they are here to stay."
Thomas' signature housing measurement is his "market time" benchmark. It tracks how many months it theoretically takes to sell the entire inventory in the local MLS for-sale listings at the current pace of pending deals being made. By this Thomas logic, as of April 13 — we see ...
•Market time of 1.63 months for Orange County buyers to gobble up all homes for sale at the current pace vs. 1.72 months two weeks ago vs. 3.36 months a year ago vs. 2.45 months two years ago.
•It's broad-based: Of the eight Orange County pricing slices Thomas tracks, six had faster market time vs. 2 weeks ago; and 7 improved over a year ago.
•The cheaper, the faster: Orange County homes listed for under a million bucks have a market time of 1.34 months vs. 6.04 months for homes listed for more than $1 million. So, basically, it is 4.5 times harder to sell a million-dollar-plus residence!
•If you can afford it ... just so you know, the million-dollar market represents 24 percent of all homes listed and 6 percent of all homes that entered into escrow in the past 30 days.
Another part of the current housing puzzle is distressed properties. Or, in 2012, "Where's the rush of foreclosures that were purported to come swamp the market?"
Thomas shows that the distressed-home inventory has dropped 49 percent so far this year. In October 2011, 3,563 distressed properties were on the market. Now, 1,602!
Thomas writes: "There are 328 foreclosures in all of Orange County, a drop of 64 in the past two weeks. The inventory started the year with 620. The foreclosure inventory has not been this low since October 2009. The expected market time is 0.7 months, almost untouchable for a buyer unless they come to compete. Short sales have become almost as hot as foreclosures. After shedding 164 homes in the past two weeks, the short sale inventory now totals 1,274, levels not seen since the distressed inventory began to rise in 2007. The expected market time for short sales is 0.9 months, a very hot sellers market. The short sale process is improving, but only slightly, almost undetectable to the untrained eye. They still take a long time to put together and the more complex the short sale (multiple lenders, delinquent HOA dues, unpaid property taxes, liens against the title), the longer it takes to put together. Distressed properties now represent 25 percent of the overall active inventory versus 35 percent one year ago."
What's for sale, in a distressing way?
•1,602 distressed Orange County properties were listed for sale — 25 percent of the 6,354 listed overall. It was 35 percent a year ago!
•1,883 new escrows were opened to buy distressed Orange County properties in the past 30 days. That is 53 percent of the 3,553 new pending sales countywide.
•Thomas calculated "market time" — cross of supply and new escrows showing how long, theoretically, it would take to sell inventory. Using that "market time" math, there's 0.85 months worth of distressed properties on the market vs. 2.71 months worth of non-distressed homes. So, distressed homes currently sell 3.2 times faster than non-distressed homes.
•Pricey? No, as just 67 of the listed distressed homes were price above $1 million — 4 percent of all distressed listings. Note: 1,195 of the listed distressed homes were priced $500,000 or less — 75 percent of all distressed listings.
Thomas offers this advice for all spring shoppers: "The lower the inventory, the stronger the pressure on purchasing and the harder it is to be a buyer in today's market."
And for those with eyes on distressed properties: "Good deals will be much harder to come by. That's not to say that a lender won't get it wrong and price a home incorrectly. I have seen it in my own backyard. Instead, it means that when demand drops anywhere below 1.5 months, the seller, and banks, are in the driver's seat and NOT buyers!"
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