House listings index lowest in 3 1/2 years

June 29th, 2009, 12:05 pm · 36 Comments · posted by Jeff Collins

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The California Association of Realtors reported that the time it would take to sell all the houses for sale in Orange County fell last month to the lowest level since October 2005, the month the housing slump began.

According to the association:

It would take 6.3 months to sell last month’s inventory of houses for sale at May’s sales pace.
That’s the lowest level since October 2005, considered the start of the housing slump because sales began to falter then.
That’s three months quicker than the year before. The revised May 2008 listings index showed that it would have taken 9.5 months to sell all the houses then for sale.

The numbers are in line with other reports. Aliso Viejo broker Steve Thomas, for example, reported that the county had 9,313 homes listed for sale in the local Multiple Listing Service. That’s the lowest number of homes on the market since February 2006. By Thomas’ math, the time to sell all the county’s listings is now at the lowest level since September 2005.

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Ethan Buffett says:

June 29, 2009 at 12 pm

one word. shadow inventory.

Crystal Balls says:

June 29, 2009 at 12 pm

That’s two words. IEven if such inventory exists, it proves nothing because it does not tell us when these homes will enter the market and at what price. At the right price, any home is part of the “shadow inventory.” Do you folks believe we are going to reach some magic trigger point when all this inventory will come on the market? Seems more likely to me that the inventory will start to come on the market when the demand starts increasing.
- OC Bandito says:
  
  June 29, 2009 at 1 pm
  
  Looks like we had the easiest post-recession landing ever. Great job with those stats Steve. I wish I would have realized long ago that the only important variable for valuing an asset it to measuring the corresponding quantity of assets offered for sale. You make economics so simple and easy. I wonder when the misguided “professional”economists will start to realize what a genius you are and how elegantly you have been able to distill such a complicated subject into a simple exercise; measure the number of homes on the MLS- DUH!
  
  I just have to ignore the empty houses around town that I am aware of which are owned by the bank and not being marketed.
  
  The banks simply cannot and do not want to offer their inventory. If they have the wherewithal to keep this inventory for years, they may try and do just that. Let’s face it, if you are selling now, you are selling because you have to not because you want to. And why would a bank want to unload its inventory now if it can wait. Thankfully, we gave the banks the wherewithal through TARP. Now those of us with dry powder have to wait this out even longer. This purge may last many years. I am sure Steve’s postings will as well.
  
  The question is…how long can the banks wait?
- pdu says:
  
  June 29, 2009 at 2 pm
  
  Balls,
  
  You say:
  “Do you folks believe we are going to reach some magic trigger point when all this inventory will come on the market?”
  
  Come on. YOU know the answer and you know that you’ll know that point when you see it happen in full force.
  
  It’s called capitulation, and as you know, it is a natural and expected occurrence in any market correction.
  
  Here you go:
  http://www.thestockbandit.com/Capitulation.htm
  - Crystal Balls says:
    
    June 29, 2009 at 3 pm
    
    PDU. that is an intersting argument, but your citation references stocks, which a far different than homes and is not documented in any way. Does every down trend end with panic selling at the end? I don’t recall that was the case in the last housing downtrend and the reduced prices in homes corresponded to a reduction in sales volume. What I see now is modest increases in buying, particularly at the bottom of the market, based on the perception that we may be nearing a bottom. Those who are selling right now largely aren’t doing so because they fear future depreciation, rather because they have no choice but to sell. In short, your theory is not supported and seems to be contradicted by the facts we know.
  - NationalBubble.com says:
    
    June 29, 2009 at 9 pm
    
    “The numbers are in line with other reports. Aliso Viejo broker Steve Thomas”
    
    what a joke!!! Of course the CAR is going to agree with Steve Thomas. THEY ARE ALL REALTORS. Of course, they are going to say that everything is ok. That old guy Steve Thomas have been calling the bottom since 2005.
- not buying it says:
  
  June 29, 2009 at 3 pm
  
  CB: With the recent moratorium on foreclosures - I would not expect inventory to increase drastically in the next few months
  
  I would expect to see a revival of opinionated, unfounded comments that state we hit bottom, made by those with a vested interest that surpasses their integrity in magnitude.
  
  Who knows? Maybe Obama will decide to completely forego any accountability and decide to simply let everyone live mortgage / rent free for the next 3 months? Or give away an equal amount of money to all taxpayers - to those that made bad decisions and those that sacrificed by playing it safe?
  
  I hear it all the time from young professionals - “Why did I even wait if this administration will simply forgive the depreciated amount and let these people live in these homes for free for a period of time?” People that are paying alot of money in taxes.
  
  Overall message of Obama’s administration: its OK to make bad decisions as long as you like to spend money
  
  Kind of an off-the hook robin hood - take from those that save, live responsibly and do not spend beyond their means and give to those that really don’t care and will spend carelessly.
  - Bryan says:
    
    June 29, 2009 at 5 pm
    
    not buying:
    “Overall message of Obama’s administration: its OK to make bad decisions as long as you like to spend money”
    
    That is a very strange take away from Obama’s policies. How about he doesn’t want to punish those that made “good decisions” by having massive foreclosures on those that made “bad decisions” thereby dragging down the “good decision” makers who are already being hurt by falling values. How about the domino effect more foreclosures will have on other industries, and the unemployment rate which is already at critical mass.
    
    Do you want the “good” decision makers to be punished for the acts of the “bad”?
    
    BTW, the “good deciders” vs. “bad deciders” is a false premise anyway. Some people got lucky and some people got dumped on, some people made smart decisions and some didn’t. There’s a lot of people who were neither good decision makers or bad, but were recipients of fortune, or victems, due to timeing, market forces, etc.
    
    The problem with the old Bush crowd is that everything boils down to 2 choices….good vs. evil. That thinking helped get us where we are today. Your take on Obama makes the same mistake, pidgeon-holeing it into good. vs. evil situation. Let the bad decision makers (evil) get foreclosed, ignoring all the other things that will be affected, not to mention what it will do to the “good” people, because you don’t think that far ahead, you are happy just to let the “bad” people get what they deserve.
    
    There are a million shades of grey between “good” and “evil”. There’s more than one reason why the housing market collapsed, and banking, and insurance, and auto manufacturing…etc.
  - Mulliganville says:
    
    June 29, 2009 at 5 pm
    
    There is no true foreclosure moratorium. All lenders need is a loan modification program in place and earnestly work with the homeowner to try and modify before they move to FC proceedings. All of the big boys have this program in place and are in effect exempt from this new law. Many bears are making it out to be far more than what it is. In essence, most homes will not be affected here in NOD status…it will be like this bill did not get passed.
Gozer says:

June 29, 2009 at 4 pm

that;s actually two words.

Eat that! says:

And they are all short sales.

bloodinthestreets says:

How much does it cost to list a house on the MLS?

It’s not free, is it? Yeah, didn’t think so.

Would an agent bother to list a house at $320-360 a square foot (per ignorant demands from a ‘nice to meet you’ fresh client), when the average price per square foot in that same area is $220-280 and falling?

Why would they waste their time and money, especially when their money is in such short supply?

Of course there are some realtors who would be obligated to do it if they had a previous association to the client, but I think that most wouldn’t do it. For agents who already have half a dozen of these $350 boxes languishing on the market for months on end, they just say ’sorry, no’.

Sharpster says:

June 29, 2009 at 1 pm

The market has bottomed, unfortunately it did not fall low enough. So it looks like I or we have missed our chances once again.

Patricio says:

June 30, 2009 at 1 am

Don’t worry, check back in 6 months.

Dealeo says:

Take away the uber high end homes and those in the ghetto and we have a 1 month supply…..and getting tighter.

Bill says:

June 29, 2009 at 1 pm

It’s no surprise to see inventory drop when the government bans foreclosures for 9 months.

We’ll still have a 9 month backlog of foreclosures when the temporary game’s end.

Unemployment climbing, credit card delinquencies climbing, and Fannie May says delinquencies are mounting!

These are all signs of future price drops ahead!

Fannie Mae said its serious delinquency rate on loans it guarantees accelerated.

The rate of serious delinquent payments on single-family mortgages that Fannie Mae guarantees jumped 27 basis points.

On the multifamily side of the business, the serious delinquency rate rose four times the rate a year earlier.

Single-family delinquencies rose to more than triple a year earlier.

Get ready folks!

Part 2 is coming soon!
no worries says:

June 29, 2009 at 2 pm

Is “uber high end” everything requiring a down significantly larger than the $8k tax refund?
BOGEY says:

June 29, 2009 at 2 pm

There are no move-up buyers in sight = no demand, ie: only 2600 homes sold in May = 45% below OC avg sales volume.

WGAS anyway, just wait til the bailout bubble pops.

Surprised says:

Does anyone know how many new homes are on the market? How many are under construction in Orange County. It seems like that is the only shadow inventory we need to worry about and yet I don’t recall any articles about it in the Register.

Patricio says:

June 30, 2009 at 1 am

And you wont see it for whatever reason, we can all wax poetically on the reasons behind them holding back that information but alas we don’t know. If you want to see a ton of units sitting, just drive by the 55-405 interchange and look at the two shiny building sitting empty full of brand spanking new condos…..and that isn’t the only place like that.

I would enjoy a follow up on the new 405 neighbors in FV all “clamoring” for a new home for 1 million and see how that is working out now that opening day is over. Or even for that matter how Bright Water is fairing….that would be interesting reporting but we are subjected to RE angle shooters on this blog calling the bottom and funny math.

joes says:

unfortunately, so much of southern california is gangland that it’s difficult for a family with a median income to find a home in a safe area with decent schools and that is anywhere near work. the quality of life for most people here is horrible.

Dina says:

June 29, 2009 at 3 pm

Too right

‘Top 10 Reasons’ why to believe that there is a budding economic recovery and that RE prices indeed bottomed in January 09:

10. Median prices have INCREASED in OC for a couple of months now. (Some of the more seasoned RE bears here have attempted to discredit this as a mere ‘seasonal bounce’ that happens almost every year about this time . . . but I say: “is that all they got”?

9. Inventory numbers are looking frightfully low! If this keeps up, realtors will get up from their blogging desks and will start going door-to-door asking people if they want to sell their house! (Yeeeaaau - It soon will be just like 2004 all over again!)

8. When I looked my house up on Zillow, it said that “Price Change in last 30 days = +300”; that’s right, positive!

7. (Employment outlook – well, no; GDP stable or rising – no; Stock market recovery – no; Govt. action that did anything beneficial – no; … . Realtors busy selling houses - no)

Oops, I’ve run out of reasons.

Fact is, even during this spring-bounce time of wonderful optimism amongst a market bent into contrived stability due to foreclosure restrictions, YOY prices are still in double digits decline. Monthly price per square foot data is still in a declining trend. I’m looking for ANY foundational reason to suggest that a turn around in the market could be synthesized this year – wishful thinking abounds.

See ya bottom callers - next year same time, eh?

Crystal Balls says:

June 29, 2009 at 2 pm

You know blood, many of the bears on this blog were predicting that median prices would continue to fall through the spring and that inventory would continue to rise. Were these bears right but for the wrong reason? FYI, there was no seasonal bounce last year.
- Eat that! says:
  
  June 29, 2009 at 2 pm
  
  I for one said back in December that this exact scenario would occur. Price drops in the mid to high end would shift the median.

Jimmy2 says:

Ouch. Bubble, you better run and put an offer on that CdM beach cottage that is 60 feet away from the hillside. While you are at it, see if you can get the current owner to throw in the plastic.

republicans are TRAITORS says:

June 29, 2009 at 2 pm

Deal Tracker said,
“Take away the uber high end homes and those in the ghetto and we have a 1 month supply…..and getting tighter.”

I agree. The market is tight. But, there are two ways to look at it. A tight market “should” drive up prices. But this market looks, feels and acts very different from a tight market.

The second way to look at it, is the market is tight because it is completely broken and non-functioning. People can’t sell, they can’t move, they can’t move up, and more and more people are choosing the criminal act of walking away from their $400,000.00 loss/albartross. People are stuck, waiting… waiting to lose their job, waiting for prices to go up, waiting for the stock market to rebound.

My opinion, the 13 trillion dollars stolen from the United States Treasury by George Bush and Barak Obama has allowed the ciminal bankers to place themselves at the top of a manipulated system. House prices and wages will fall for years and decades while the price of bread and milk will restrain discretionary spending.

The solution: Immediately imprison the people that created the mess while lining their pockets. Chistopher Cox, John “Bailout” Campbell, Ben Bernanke, Timothy Giethner and Henry Paulson (to name a few).

Lucky victim says:

June 29, 2009 at 3 pm

First look, this article just confused me more and more. Thank you poster and commenters for trying to shed a bit more light on what this article is trying to say (I am guessing it is saying nothing).

Mac says:

June 29, 2009 at 4 pm

It seems like just about 3 or 4 days ago when the OCR said that the real estate in Orange County was picking up. Are we saying that this isn’t true? Duh! Did Jon Lasner get some ‘bum skinny’ from his real estate pals? Jon and his buddies are some of those who contributed to the moronic rise in real estate in the OC and yet, this rag lets him continue to opine with pipe dreams ala Bernie Madoff!

Noman Land says:

June 29, 2009 at 7 pm

This is a crack up… there are two polarized groups on these blogs… ‘those that will no matter what” and “those that won’t no matter what”…. I am usually of the opinion that most of us own our positions and we are not on the market for another .. never have I seen that concept demonstrated as clearly as it is in these blogs…

No middle ground here with ou fok’

MIKE-haWK says:

Can we get some journalism here?
Not just the inventory is low.
A tee for all the liars perpertrating the conspiracy to take off like
Crystal Balls.
A journalist would ask why is it low and more importantly why does it not make sense and why is this the biggest conspiracy going on right now.
It is.

Crystal Balls says:

June 29, 2009 at 8 pm

Crank up the meds buddy–they are obviously not working well enough.
- MIKE-haWK says:
  
  June 29, 2009 at 9 pm
  
  Hook up the lie detector you are a failure.
  
  “Owners who have been behind or not making payments at all while living in their homes for six months to a year have begun receiving foreclosure notices that have been delayed while Obama’s housing rescue plan passed in February 2009 was clarified. Now lenders who have delayed foreclosures are moving forward to take legal action and begin taking possession of the homes.
  
  This is called the 2nd wave of foreclosures and it is expected that by the time it is over, a total 2 million homes in the U.S. will have been forfeited. This is expected to depress the real estate market even further. Before the housing market can recover, these houses will have to be worked off.”
  Martha R. Gore

Gunner says:

June 29, 2009 at 10 pm

Wow, how fast this RE market had recoverd!! Back to the glory days of th RE boom. woohoo. Let the bidding wars begin :)

SMRR says:

June 30, 2009 at 7 am

Bottom.

Jessi says:

June 30, 2009 at 12 pm

Is it reasonable to say Cali is one of the only housing markets experiencing growth? I just don’t think the nation is quite ready to get out there and start buying houses again.
Here’s what some are saying:
http://tinyurl.com/kvqyww

Slice	Price	Ch.	Sold	Ch.
House	$500,000	+18%	1,833	+11%
Condo	$290,000	+7%	881	+22%
New	$617,500	+24%	171	-17%
All OC	$435,000	+10%	2,885	+12%

Orange County Register