Archive for April, 2008

Bay Area Home Sales Decline Again

April 17, 2008

The March 2008 Bay Area real estate numbers are in and it’s yet another decline in Bay Area home sales – for the seventh straight month. Year over year sales are down 41% and median price is down 16%.

For a closer look, check out the county by county numbers provided by DataQuick. Sales volume is down evenly for the most part except for San Francisco with a 20% decline. It’s the median price that has wild fluctuations by county, with San Francisco actually going up a fraction of a percent while Contra Costa, Napa, Solano and Sonoma all have 20%+ declines.

“Other parts of the state have been hit harder by the downturn in the housing market than the Bay Area. Most of the distress is in areas that absorbed spillover activity during the 2004 and 2005 frenzy. For the most part that’s the Central Valley and inland Southern California. It still appears that a lot of Bay Area activity is just on hold, waiting for the mortgage markets to open back up,” said Marshall Prentice, DataQuick president.

What you talking about?

Perhaps Mr. Prentice is looking at things as a matter of scale. Or maybe his definition of the Bay Area is composed of San Francisco, Marin and San Mateo. Whatever his reasons, I find this statement strange and almost … uninformed (which seems odd since he has so much data at his fingertips.)

March is the beginning of the seasonal real estate season, the shotgun start of sorts. It should have been stronger, and helped along by a very light rainy season. Yet, the numbers aren’t showing any real strength.

Reductions in both sales volume and median price; an increasingly nervous consumer; continuing foreclosures; high inventory; and tight credit all seem to point to continued weakness in sales volume which will ultimately drive median prices lower.

I know folks are trying to pump sunshine into the market in a self-fulfilling prophesy type of way, but it’s becoming a bit silly given the reality of the situation and market.


Foreclosure Heat Map for Walnut Creek Area

April 7, 2008

Technology is a great thing. Today TechCrunch reports on a HotPads foreclosure feature that lets you see a heat map of foreclosures based on data from RealtyTrac. (I won’t get into how reliable that data is, but it’s a benchmark nonetheless.) I poked around and finally got it to work and took this screen cap:

foreclosure heat map for walnut creek california

As with most heat maps, the spectrum goes from red to blue. Most of Walnut Creek is in the hottest bands or highest density of foreclosure. Even Walnut Creek proper is an above average orange color.

On the one hand I’m not shocked. I know plenty of folks reached a bit too far, taking on massive loans and prayed that things would work out. Yet, the color coding drives the point home and shows that even upscale neighborhoods are not immune from the housing decline.

Try it yourself at HotPads. (FYI – I couldn’t get it to work in Firefox so try Safari or the dreaded IE if you must.)

Lies, damn lies and statistics

April 7, 2008

It’s been interesting to see how both sides of the housing bubble are putting their spin on the monthly real estate numbers. The same statistics can show a positive trend and a negative trend. You’d think that’s impossible, but it’s really pretty easy and underscores the adage of ‘lies, damn lies and statistics’.

Lies, damn lies, and statistics

One of the phrases I hear a lot lately is ‘pending sales’ are going up. Realtors grab hold of this and use it as evidence that the market is picking up. “It’s time to get off the sidelines before it turns into a seller’s market and/or loan rates go up.” Sure enough, in February, pending sales were up … from the month prior.

In Walnut Creek, it looks like pending sales in February 2008 were up a whopping 40% from January 2008. Hey, hey, the good times are back, right?! Wrong. Compare that to February 2007 and pending sales are actually down 10%!

The natural real estate cycle will make some of these months look good if they’re presented in the right context. But do the digging, compare them to last year and even the year before that. And don’t look at one statistic in isolation. Look at pending sales, actual sales, inventory, days on market and price all at once to get a sense of the market in your area.

Extra credit? Read up on the difference between median price and average price. Yes, it can be important.

Highest Consumer Delinquency Rate Since 1992

April 3, 2008

A quarterly study by the American Bankers Association found that Americans are falling further behind on consumer loans.

… the percentage of loans at least 30 days past due rose to 2.65 percent in the fourth quarter from 2.44 percent in the third quarter, and from 2.23 percent a year earlier.

Anyone who thinks about the housing crunch shouldn’t be surprised by this type of statistic. It’s not like you’re going to pay your car loan first and then short your mortgage! Many Americans are on ARMs that are adjusting or simply took on too much home during the housing frenzy. Now, they’re struggling to keep their houses, leaving them with less money for other loans. I’m guessing this is going to get worse before it gets better.

The Mortgage Monster

But take this one step farther and I think it becomes a bit scarier. If Americans are putting more of their income towards a home, and they’re still trying to keep up on other consumer loans (but faltering), how much is left for consumer spending which accounts for 2/3 of our GDP?

I know I sound a bit like chicken little but … higher ratio of income going to housing, increasing consumer debt, inflation and a soft job market. This isn’t a rousing mix of ingredients in my opinion. What say you?