1. To sell your home, you need a buyer.
Source: Sandicor Multiple Listing Service (MLS), month over month home sale trends.
2. A buyer will become a buyer when they can afford your home and when they perceive value.
Median list prices for detached homes offered for sale in Scripps Ranch, Altos Research.
Median list prices for detached homes offered for sale in San Diego, Altos Research.
Are we there yet? No, not yet.
{ 15 comments… read them below or add one }
Jakob
04.09.08 at 8:32 am
Nice data Kris. Any chance of getting a similar time-span plot of inventory?
Kris Berg
04.09.08 at 10:12 am
Jakob,
Yes - I need to work on that. Past inventory is not searchable through the MLS, but I can request that data (and will). I will say this - Our current inventory is not high by historical standards.
Jim Klinge
04.09.08 at 12:36 pm
not yet, but soon - Lawrence Yun said end of 2008 (did you get the NAR bulletin?)
Sven
04.09.08 at 5:40 pm
You’ll have to put this URL together, but this is a chart of inventory from the middle of ‘05:
http://bp0.blogger.com/_QMoXJ8fOgo4/
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t1EpTpu51nw/s1600-h/SD+graph.jpg
Sven
04.09.08 at 6:09 pm
Well this is probably going to come as a colossal shock to anyone who knows me, but I just recently placed an offer on a house. (It was a good deal, I was drunk, all the cool kids were doing it) That’s not why I’m writing this though. This is interesting.
So I go loan shopping. With a six figure income, plenty of cash/stock/bond savings, 780 credit score, no debt, credit history with a paid home and 2 paid car loans, I figured I had to be in the top 5% of eligible buyers. Turns out, I may not be able to get financing on this place.
I’m told that because the loan is over the conforming limit of 417k (which mind you… I thought this was increased, the purchase price is well under 700k), I’m being told from several lenders that I can’t buy it unless I put at least 10% down, take on an interest rate over 7%, and even then…. It’ll be a stretch with less than 20% down. This is full doc too.
Piggyback loans are gone, and I couldn’t even find a lender that would quote 5% down. You can still do that for the loans under 417k, but I guess because the increased loan limit isn’t all it’s cracked up to be. The requirements and rates are almost the same as a pure jumbo loan.
I knew things were bad, but this just made things worse. Maybe I should wait it out another year…
Real Estate Raj
04.09.08 at 7:11 pm
Sven-
“A fixed-rate jumbo loan on a $600,000 home with a 20 percent down payment could have carried a full percentage point penalty last year. Under the new loan limits, that loan could be refinanced as a conforming loan and save the borrower more than $300 a month.” Something doesn’t seem right with your loan guy…
Jakob
04.09.08 at 9:19 pm
Sven, are you the same Sven of the greatly missed PB house bubble blog? I’m curious where you found a good deal on a house. Not PB I assume, as prices there haven’t really come down much.
Sven
04.10.08 at 12:22 am
Yes Jakob, that’s me. I did find a gem of a deal. It’s still not where I think it should be, and I personally still think a “smart” person should wait to buy. I don’t always do the “smart” thing though, but I wasn’t about to go out and commit financial suicide in 2005 and buy a house… Even now, I’m pretty sure this “amazing” deal I am finding now will be a par price in 6 months when the market has had more time to unwind.
It’s not rocket science, the market has flat lined for years after every significant price drop. You want a good deal, wait till prices haven’t moved in a year. Right now the YOY price change is a record settings negative number.
So I started that blog instead. If I don’t end up buying this house, I’ll probably wait 6 months before I go looking again. Hell, I should start that blog up again.
The news on the loan situation. Raj, believe me, I did my homework. I’m sure my credit report shows like 7 inquiries now. (note to readers, multiple inquiries in a short period of time doesn’t have a significantly incremental negative effect on your credit report, the banks think you are simply shopping around). The issue is that loans between 417k and the “new” limit are considered a hybrid loan of some kind. They do have slightly lower interest rates now, but it’s barely lower. Where I could get a 6% or less conforming rate with no problem and 5% down, I’d have to put at least 10% to get a 7% or higher rate because I passed that magic line.
Kris Berg
04.10.08 at 7:18 am
Sven,
Funny, I know I am a busy, busy girl, but I don’t remember writing that offer for you.
Yep - The magic line you talk about exists. The tweener category, “agency conforming,” carries slightly higher rates and different qualifying standards. It’s all about perceived risk to the lender. Question - Why aren’t you looking at an FHA product? 3% down and you can finance the 1.5% funding fee.
Jakob
04.10.08 at 10:26 am
Sven, yes you should start that blog again. There’s quite a number of people posting on sdlookup.com who are waiting out the PB market. Your loan experiences are very interesting. I’ve been hearing conflicting things. “Financing is tight!” “You only need 3% down!”
Sven
04.10.08 at 12:49 pm
Kris, maybe you did
I’m pretty sure we’ve all figured out that “Sven” isn’t my legal name.
I may end up doing that FHA loan if my offer gets accepted. I can put 10% down, but I really don’t want to be that illliquid. It’s bank owned (of course), so these things take a while.
Kris Berg
04.10.08 at 12:56 pm
Regrettably not me, but good luck!
Sven
04.10.08 at 8:11 pm
What’s ironic about all this is that I predicted back in 2004 that lending would tighten tremendously as soon as the housing bubble popped. I always figured all those people with cranky credit, mystical income, and no real financial success would get shut out, but I never anticipated that it would get so bad that there was a distinct chance that I couldn’t get financing.
I got off the phone with an underwriting for Wells Fargo earlier. They won’t even do a loan in San Diego with a LTV of more than 75%. It’s supposedly a “super distressed” area.
The bank did finally accept my offer, and I’m going to look into the FHA route, but I think I’m going to end up having to back out of this one. I guess I should be happy. Tighter lending means cheaper houses, but I did really like that place
Jayson
04.14.08 at 2:55 pm
Nicely put - a lot of things go into a purchase decision but when it comes down to it - if there are no buyers and they can’t afford the home, it won’t sell.
I look forward to your data on inventory.
Bob
04.21.08 at 7:40 am
The higher loan limits are only good if someone is buying the loans, and there has been little (or is it latent?) demand for anything jumbo even if they call it something else.
That may change a bit with Freddie now agreeing to buy loans at the higher limits, but only from select lenders. Blown Mortgage covers it here.