I have checked out several sources of statistics and they all seem to be close to the following provided from www.rereport.com by Rick Campbell. Let’s take a look at the numbers from last month:
Inventory of single-family, re-sale homes was down for the fourth month in a row. It dropped 7.1% compared to last May. Pending sales rose 3.1% from April, and were up 16.7% year over-year. This is the sixth month in a row pending sales have been higher than the year before. Closed sales were off 1.5% month-over-month, and down 16% year-over-year. This is the eleventh month in a row closed sales have been lower than the year before. The median price for single-family, re-sale homes inched up 0.3% from April, but was down 3.9% compared to last May. This is the fourth month in a row the median price has been lower than the year before.
This is how I see what these numbers tell us:
First, inventory is down buy 7.1% and the median price is down by 3.9% from last May. Decrease in inventory usually creates some upside on price, especially in central San Diego where inventory always seems to be lacking. So, demand must also be down to create this year-over-year continued price decline. Demand is still being negativity effected by tight money and fear of an even deeper recession (or at least a lack of much indication of economic recovery).
Now let’s take a look a pending sales to closed sales. Normally, pending sales are the main indicator of future closed sales. Pending sales were up 16.7% year over-year but, closed sales were down 16% year-over-year! Usually there is only a few percentage points or even fractions of a percent difference in these numbers. The month to month difference can be due to long escrows for short sales, delays in banks closing on REO inventory as well as financing difficulties. However, the year over year difference being 16% has to be mainly attributed to financing issues.
Lenders have really buckled down and things needed to be tightened. But, it really seems the pendulum has swung too far in that direction. Of course, this is not all caused by the tightening of money by lenders. Buyer’s financial situations shift drastically much quicker then ever before which is also often a factor in the deal not getting closed. Loss of a job or even slight cutbacks in hours can change everything. We will discuss financing issues further in a future article. Let me know your thoughts.
I am getting long winded here so I will wrap this one up and we can continue this discussion next time. What these numbers say to me is this is possibly the best market for buyers, investors (who qualify for, know how to get, or have money) ever in San Diego and most other markets. We will discuss why next time!
