Comments on: Market Update Time (Oh boy!)

By: Weighing in on Wall Street — The San Diego Home Blog

Weighing in on Wall Street — The San Diego Home Blog — Wed, 17 Sep 2008 15:14:15 +0000

[...] a loan officer who embraces and studies economics with the same enthusiasm I show my Altos Charts. And with the scenery changing by the minute, I am told he is about eight redrafts into the [...]

By: Kris Berg

Kris Berg — Sat, 06 Sep 2008 13:18:57 +0000

Oops! Carmel Valley is a community of San Diego (92130) located near the coast just east of the city of Del Mar. Scripps Ranch (92131) is also a San Diego community and is located inland near the Miramar Marine Corps Air Station along the I-15 corridor.

By: Tara Jacobsen

Tara Jacobsen — Sat, 06 Sep 2008 11:56:58 +0000

Hey Kris,
For those of us who are just weird about reading stuff that has no relevance to our lives – which zip is which city? Thanks! Tara

By: Mike from Altos

Mike from Altos — Fri, 05 Sep 2008 01:04:08 +0000

Hi Kris and Jakob -
Those are very insightful questions. Let me see if I can be thoughtful in the answers:
First our MAI – We use the Market Action Index because it gives an opportunity to visualize market quality on more data than a crude “months of inventory” measurement. For example, we can take into account not just the sales rates, but what percentage of homes are having price reductions. That is, every home can sell if you price it low enough, so adding this aspect is very telling when understanding demand levels. Additionally, Months of Inventory is a seriously lagging number – especially in this market where financing falls through or buyers get cold feet after offers – you may not know actual sales rates for several months after the fact. The downside is, as you point out Jakob, that the MAI isn’t a well known standard and you have to learn what it means.

As for “median inventory”, you’re absolutely right. I confess that this label is a silly artifact of our charting system. It isn’t median anything, it’s just a number, the label should be simply “inventory”. Shame on us for not changing it sooner.

By: Kris Berg

Kris Berg — Fri, 05 Sep 2008 00:39:33 +0000

Good comment, Jakob. I will try to get Mike Simonsen from Altos over to explain it. I think the genesis is probably that these stats are snap snots, taken one day each week. Stand by.

By: Jakob

Jakob — Thu, 04 Sep 2008 21:32:01 +0000

Love the stats posts, Kris, however I’ve always found the Altos data unsatisfying. I would much rather see a simple “months of inventory” rather than this strange MAI thing. Months of inventory would be more elucidating.

And I’m puzzled by the term “median inventory”. Inventory is number of homes for sale, right? What’s median about it.

By: Jim

Jim — Thu, 04 Sep 2008 21:14:30 +0000

Steve, I think you’ve got it right, and I was off earlier. Ooops – that’s why you guys are the realtors, and I’m just a SR resident with an interest in keeping up to date on too many topics.

It would be easier to see that 92131 and 92130 have similar Market Action Indexes if the left hand axis were the same — they both appear to be sloping upward and currently around “19″.

Also the inventory counts on the same scale would be, perhaps, more interesting – while the curves between SR & CV are similar, the CV number is much higher, and their peak came a bit later. Perhaps those in SR that wanted to sell knew they wanted to sell, and so got out of the gates in time for summer, and those in CV were just jumping in to see what offer might find them as they saw their neighbors go? Both charts show the number of homes on the market going down, likely due to the typical third quarter issues brought up earlier this week.

By: Steve Berg

Steve Berg — Thu, 04 Sep 2008 20:51:54 +0000

Jim and Kris – Is it me or am I reading these charts wrong (again)? It looks to me that Scripps Ranch market action index is almost the same as Carmel Valley, yet the median inventory in Scripps is much lower than CV. This would appear to suggest that Scripps is more closely approaching the sellers market. Bottom line – We have several qualified buyers who want in Scripps and just can’t find the right home yet. With only 99 active listings (detached) we are hovering around only 1% of the of the total inventory. Even at our low year-to-date sales average of approx. 20 closed escrows per month, that’s only a five month absorbtion period. Technically this is a sellers market. So why doesn’t it feel that way? Very strange…

By: Kris Berg

Kris Berg — Thu, 04 Sep 2008 17:28:49 +0000

Jim – Your definition of Market Action Index is spot on. I probably should have explained that in the post myself.

As for the corollary question, I will have to chew on that one as I head off to an appointment.

By: Jim

Jim — Thu, 04 Sep 2008 16:53:03 +0000

Apparently, I shouldn’t use double quotes unless I want them to be mangled with escape characters when stored. Oh well.