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Sellers Rushed To Market As Supply Has Grown Sharply

A report from the Orange County Register in California. “Southern California’s housing market enters the typically slower-selling fall season relatively awash in listings amid a significant cooling of house hunters’ willingness to make a deal. ‘New cracks in the housing market are demonstrating that the cooling trend is here to stay,’ wrote Steven Thomas of ReportsOnHousing that tracks homebuying patterns found in real estate broker networks.”

“Thomas’ biweekly report found a stark change in the market for existing homes as of Sept. 20 vs. a year ago: selling time was 26 days longer as listings grew by 22 percent. As summer ended, the four-county region covered by the Southern California News Group had 36,923 listings, up 6,548 in a year or 22 percent. It’s also up 10 percent vs. the six-year average.”

“Note that Southern California builders’ unsold inventory, which is not included in this study, stood at 3,336 in the second quarter, the highest in six years, according to MetroStudy.”

“Sellers have rushed to market as year-to-date supply has grown sharply: Up 13,774 listings vs. a rise of 2,787 in the same period in 2017 — yes, a nearly five-fold increase.”

“Surprisingly, in a market that was once seen as supply-starved, house hunters have pulled back despite the significant increase in choices. On Sept. 20 there were 11,603 new escrows, down 1,473 sales contracts in 12 months, or an 11 percent drop.”

“More supply and fewer purchases mean ReportOnHousing’s ‘market time’ metric for selling speed rose to 95 days vs. 70 a year earlier and an average 82 days in 2012-2017. This is the slowest end-of-summer market in four years.”

“Local home seller’s quick loss of market power is likely due to high homes prices and rising mortgages rates. By one metric, the number of Southern California’s ‘affordable’ homes has been at least halved in five years.”

The Union Tribune. “Following national trends, San Diego has seen more homes available for purchase over the last few months. In July, there were 7,021 listings, up from 5,828 in July 2017 and 6,571 in July 2016, said the Greater San Diego Association of Realtors.”

“Mark Goldman, real estate lecturer at San Diego State University, said the local market was strongly affected by increasing interest rates, more so than other parts of the nation, because of higher prices in California.”

“‘Even if the house stayed the same price,’ he said, ‘the house got more expensive because interest rates are higher.'”

“The interest rate for a 30-year, fixed-rate loan was 4.72 percent at the end of July, said Mortgage News Daily, up from 4.1 percent at the start of the year. The median home price for a single-family resale home was $630,000 in July, which meant the monthly mortgage payment (assuming 20 percent down) went from $3,044 at the start of the year to $3,275 by July.”

“San Diego County existing home prices in July increased 6.2 percent in a year, its slowest pace since January 2017, said the S&P CoreLogic Case-Shiller Indices released Tuesday. San Diego’s price increases were the second-slowest in the West, only ahead of Portland, and fell behind other California cities. America’s Finest City still slightly outpaced the national average of 6 percent.”

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This Post Has 29 Comments

  1. ‘Note that Southern California builders’ unsold inventory, which is not included in this study, stood at 3,336 in the second quarter, the highest in six years’

    Oh dear…

    But, they can’t build shacks fast enough in California? Nancy Pelosi keeps it from happening said rentalwatch! Just where in the heck did these 3,000 shacks come from? Somebody’s been a lion!

    1. “Somebody’s been a lion!”

      There’s a whole bunch of somebodies with fraud charges coming their way.

      1. “the cooling trend is here to stay”

        Realtors are going to realize they have to go get a real job 🙁

        1. “the cooling trend is here to stay”

          That cooling trend could turn into an arctic chill if the Fed raises Fed Fund rate which eventually spills into the 10yr treasury and then mortgages.

          IMO it won’t take much of a pop in mortgage rates to push the SFR/condo market right off a steep cliff. Joe Average loan owner is so stretched that there simply is nowhere else to go.

          As Ben mentions in a further post, the OC has morphed into a casino.

          Yes, there really are some very wealthy people here, but those folks are a minority. Too many folks (who used to be called the middle class) living on the financial edge. I have lived in the OC for 40 years now, and homeless situation has gone from zero to a significant issue. Traffic is a friggin’ nightmare. But hey we’ve got great (most of the time) weather!

          1. ” the homele$$ $ituation has gone from zero to a $ignificant i$$ue”

            Bugs: “eh, could bee!”
            40 x $9.00 = $360 x 4 = $1,440.00 (-taxe$) = $1240.00

            $helter rent$ @ 65% net.income$ = $806

            35% fer EVERTHANG el$e (including x30 bottle$ of$2.50 Trader joe$ wine & x1 $hare of Buffet$ Berk$hire “b” for retirement inve$tment: as.of.today: $217.86)

            Ya reckon there’$ a waitin’ li$t for $helters co$tin’ le$$ than $810 in the $hinning land$ of Thee.Oh.See?

            Goggle: movement.on.the ground!

            Tom Petty vinyl song plays: ” … ya don’t have to live like a refugee”

            Remember$ kiddie$, x86 day$ until Wall $treet bonu$e$ are placed in their $tocking$

  3. ‘Up 13,774 listings vs. a rise of 2,787 in the same period in 2017 — yes, a nearly five-fold increase’

    This has to be the largest national migration in US history. Never have so many loanowners decided to move simultaneously ever!

    ‘Surprisingly, in a market that was once seen as supply-starved, house hunters have pulled back despite the significant increase in choices’

    Surprise, surprise, surprise! Why it’s almost like these people were timing the market and potential buyers were only interested if they could rake in some easy sweet equity. Gosh, it’s more like a casino than a, whatever Orange County is.

  5. We start off the day with some San Jose crater. Later it’s Seattle, now Orange County and San Diego. It’s like the entire west coast housing market is sinking like a turd in a well!

      1. & you’re gonna have to ju$t $uffer it all without a pla$tic $traw to $uck on, … poor, poor, pityfull Jeffer$on $tate wannabee$

  7. Another somewhat loose argument. Rising interest rates in high priced areas like San Diego. Is pertinent in starter or 2nd homes and will always have some effect. However a large amount of sales are for cash. In our area of SW Florida, about 40% of home sales are cash, and that skews higher at the upper end, not the lower end. Might be different in SD. Possible that those that have the cash are savy enough to see what is evolving. Regardless, I find the increase in listings quoted is highly unlikely primarily to interest.

    Down here there are a lot of Canadian and British buyers, and their market disruption is probably going to be felt. Tourist season is about to commence here and the next month or two will be very telling. Record red tide may exacerbate.

    1. Where did the hordes of all-cash Chinese buyers go? Oh…
      ———————————————-
      The Economist
      Hunker down
      America’s tariffs on China are likely to last for some time

      That is bad news for everyone
      Print edition | Leaders
      Sep 22nd 2018

      IN HIS trade war with China, President Donald Trump appears to have the upper hand. The new tariffs his administration unveiled this week, which will raise the share of Chinese imports subject to levies to at least 44%, are unlikely to dampen America’s sizzling economy, or to boost inflation by much. Though some firms will be disrupted, most Americans will not notice the damage (see article). China, however, is under pressure. Its growth seems to be slowing and its stockmarket is down almost a quarter from its peak in January. China’s government has announced retaliatory tariffs against American goods, but it is fast running out of imports to tax.
      …

    2. “… about 40% of home $ales are ca$h, and that $kews higher at the upper end$”

      “Record red tide$ may exacerbate.”

      Do ya have a $atalite branch of this bank?
      March 1, 2018
      Deut$che Bank America$ Foundation support$ Mexican immigrant communitie$ … Google.it!

      Monie$ + dirty laundrie$’ + red.as.inn.Ru$kie$ = GAGA (Grift$.America.Greed.Again)

  8. Oh yes, one more thing. The builder inactivity argument is tough to swallow. Most of my work involves servicing builders. The builders I service do not produce high quantities of inventory homes. They have a few model homes and most buyers select the model, options, and site then enter into contract and the house gets built. They do have a few “move in ready” inventory units but not a large proportion. This argument that I see about builders not producing enough homes does not appear to be the way it works. Atleast not in my area.

    2. I$ there any Amazing Prime member$ in yer area?

      God Ble$$ Yankee Innovation$!

      Amazon invest$ in prefab $tartup focu$ed on $mart home tech
      Could this inve$tment in California-based Plant Prefab be a new avenue for Alexa expan$ion?

      By Patrick Sisson Sep 25, 2018

  13. “Following national trends, San Diego has seen more homes available for purchase over the last few months.”

    This ride has just barely begun. Fasten your seatbelts and hang on tight!

    “In July, there were 7,021 listings, up from 5,828 in July 2017 and 6,571 in July 2016, said the Greater San Diego Association of Realtors.”

    IIRC there were over 20,000+ San Diego listings by the time the 2007-2009 financial crisis was in full swing. It will be interesting to see how far the inventory backlog builds up in the present episode before it plateaus. Price declines will have to happen in order to stanch the bleeding.

    1. “in order to stanch the bleeding”

      Realtor bank accounts will be bleeding dry as they realize their “profession” is a scam. Selling AmWay has more integrity than being a Realtor.

    2. Love that sound the roller.coa$ter make$ as it begin$ it$ climb$ to it$ vertical apex …

      Clickty.click, … clicktly.click, … clickty.click

  14. It is interesting that we are seeing signs of the housing market softening in a relatively strong economy. I remember in 1990 the housing market turned and then the economy followed. In 2007, I think it was more the financial sector (housing financing?) That turned the market and housing followed into the abyss. I wonder how it will play out this time?

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