Home sales flattish, inventory building

News item: The Realtors' report on existing home sales for July is out, and here are the numbers: "sales slipped 0.2 percent to a seasonally adjusted annual rate of 5.75 million units in July from an upwardly revised pace of 5.76 million in June, and are 9.0 percent below the 6.32 million-unit level in July 2006."

Median prices, at $228,000 and change, were down 0.6% from year-ago levels.

Inventory: "Total housing inventory rose 5.1 percent at the end of June to 4.59 million existing homes available for sale, which represents a 9.6-month supply at the current sales pace, up from an upwardly revised 9.1-month supply in June."

Our take: Rising inventory is probably the headline here; 4.6 million homes for sale is a lot of homes.   Interesting analysis, as always, from NAR economist Lawrence Yun:  “Home sales probably would be rising in the absence of the mortgage liquidity issues of the past two months,” he said.

Well, yes, of course. If only lenders would resume giving 100% financing to everyone with a pulse, sales would be stronger. While we're at it, If only I could hit the ball long and straight, and could putt, I would be a scratch golfer.

Comments? Thoughts? Insights? E-mail story tips to lalandblog@yahoo.com.

Comments

[jemarqu]

I am always amazed by the good job people in the real estate business do to dress up bad news. I can't wait to read the reports a year from now. When the news is really grim I would love to see how its dressed up.

[Kurk Rolands]

"For buyers able to qualify for conventional financing, there are ample opportunities in the current market,” said NAR President Pat V. Combs.

Oh really? How about if you need a jumbo loan and your rate has gone up 1 full point in just a couple of weeks? Who can buy in California without a jumbo loan?
I guess it depends on her definition of "conventional financing".
The glass is always half-full for the NAR. These are the same people that back in 2005 were telling subprime buyers to get whatever loan they could get because otherwise they would be priced out of the market. Well, you can buy those same prices for less money today. Would you believe anything a realtor says?

[CD]

Lawrence Yun should run for US Attorney General , Gonzales now needs a job, they could swap.

[Cal]

I like comparing last months data to this months data to see the revisions, the major revision was in inventory (remember how they were talking about what a positive sign that was?) from 4,196,000 to 4,368,000 and then this months inventory with a big spike to 4,592,000. Sales were adjusted upwards last month with each region jumping slightly and the South jumping a lot. But in the end this data is so pre-mortgage crunch (part deux) everyone is looking past it and wanting to see how that is playing out.

Anecdotal evidence from realtors who post pending sales data and my own tracking of my local market pendings, I've seen approx a 16-18% drop in pendings in a short period of time from these sources.

Jim the realtor pending stats for SD (from July 29 to Aug 25, a major move):
http://www.bubbleinfo.com/statistics-2007/

Steve Thomas OC county report:
http://ochousing.blogspot.com/
(better formatting for the 2 week ago comparison can be found here: http://lansner.freedomblogging.com/2007/08/27/ocs-got-a-years-worth-of-home-to-sell/ )

[Toby]

I was told by EVERYONE that Beach property is shielded by downturns. Flat, that's the worse that could possibly happen.

So in 1993 I bought a nice little home in Seal Beach.

And immediately after I bought it, I sat upside down. At worst to a tune of 50%.

It wasn't until 2002 did I break even. It took 9 years.

Now the good news was, it didn't really matter. I loved the little house and bought at a price I could afford and I was planning to live for an extended amount of time.

But let me warn everyone thinking about buying in the next 2 to 3 years (Kate in the Valley, I'm looking at you). Be prepared to be Upside Down for a VERY long time. Because even the VERY best deal today could be a financial disaster tomorrow.

Be prepared for a decade. Mark my words.

[Rodney Brown]

Even great land deals are moving slow, i`ve taken $3 million off the asking price which is already under market on this malibu land deal with a rare vineyard and it`s still slow moving.

nulyfe2000@yahoo.com

[MyLessThanPrimeBeef]

I agree with Toby. Your best deal in 1991 was not as good as any average deal in 1995. There is really no point in trying to get a best deal today.

That 20% off bargainyou want to snap up could go another 20% lower before recovering all of it in a decade like Toby said. Blame it on the low volatility that finance professors so love. 'Hey, real esate is a safe investment because if the seller doens't get his price, he will just pull it back,' the agent assures you. Well, it makes the correction last forever.

There goes 9 years of your life because you are waiting for things to normalize. Unlike stocks, a house is a big part of the homeowner's life. I don't care if I don't have a chance to Apple or Google in the next 10 years.

[MyLessThanPrimeBeef]

Rodney Brown, will the seller carry?

[longdriver]

You haven't taken 3 million off "market value". If it was priced at market value it would sell! Market value today is not what it was last month and certainly not what it was in 2005.

This is one phrase I see again and again in nearly every bleeding heart article about the downturn. "I have it listed below market value". NO YOU DON'T! If it was priced below market value it would probably sell. Lower the price until it sells and then you will find what market value really is! it's a very simple concept....

[adrian]

That guy Lawrence Yun from NAR, is a clown. I'm sure he knows about this stupid talk, but he has to do his best to keep the job and inflated paycheck every month.
I talked to people who speculated in the housing market for decades. Both told me the same thing;"The prices will go down 40% until they will match the income increment for all these years".I believe them because they went through this cycle at least 4 times in the last four decades.

[Martin]

Yes, the market will take awhile to bottom out and show renewed signs of growth.

Yes, we might as well ignore all realities about prior market cycles and the inevitability of even this crisis coming to an end.

Yes, the sky is falling.

But a house is a home. And everyone wants one for all of the right reasons. In time, new construction of homes will stop. Rents will climb to unimaginable, Manhattan-like levels. Incomes will continue to rise. And housing affordability will be restored.

I am not a cockeyed optimist. I am just referring to the historic imperative. What goes down must come up.

[MyLessThanPrimeBeef]

Martin, what do you mean by 'in time?'

For me, that means the time it takes for people to no longer know how to spell these two words, real estate.'

[Martin]

Actually, My Less Than Prime Beef, I'm not so sure that the majority knows how to spell real estate. They can, however, d-i-s-a-s-t-e-r.

I can answer what I meant by "in time." I actually had to ask myself why I chose those words. In time means NOT TEN YEARS, as some here claim. Everything is moving faster in this new wonderful world that includes the Internet.

I wouldn't ask anyone to lay bets on my opinion. They are only that. However, I think we will see a much different scenario in a few years. Just look how quickly this mortgage and real estate market crisis took shape. Subprime lending started to grab a big share of the mortgage market only a few years ago. I even remember a tenant of mine -- a Countrywide executive -- telling me a few years ago that her company was "gearing up" to enter the subprime market. That means so much damage occurred in such a short period of time.

I just don't think the funeral for real estate will go on for ten years.

One other point: Toby wrote in this blog item that he purchased his Seal Beach home in 1993 ... saw his home value fall 50% ... and finally was at a break even point in 2002. All I can think is he paid too much for his place ...14 years ago... in his wonderfully upscale neighborhood.

By 1993, we were in the third solid year of a real estate and national recession. The 1994 earthquake made matters worse for awhile, but also served to revive the Southand economy (by the end of 1995) because of dollars, new construction and retail jobs that were needed to help the Southland recover from the natural disaster. I bought an investment condo in Sherman Oaks in 1990. I did see same size condos in the building sell for 40% of what I paid after the quake. But by 2002, my original purchase price doubled. That's a fact. So, even today, it all depends on the purchase deal. Toby ... sorry. Don't mean to reduce what you wrote. But it seemed like an extreme case and not the norm.

Yes, I'm bullish about the real estate market. I'm foolhardy enough to believe that, within one year, smart investors should start shopping. Of course, I could be wrong. But I'm also suggesting that I'm tired of months of fretting about the decline of real estate civilization as we know it. It's time to take a proactive position. One simply can't deny the reality that real estate ownership is a rite of passage in our culture. As long as Los Angeles is above the Pacific Ocean, demand will never go away.

[longdriver]

I bought in the south bay in 88. By 1990 my home was worth 70% more than I bought it for. By 1993 it was back down to roughly it's original purchase price. My neighbor had her home on the market for 3 years before it sold back then. It took until 1998 before I could have sold for a "profit". So, fast forward and it roughly quadrupled in value since 98. Well it had before this year. Nothing has sold near me lately, but one neighbor did try. He listed his home at peak prices in Jan and it sat...and sat...and sat... then he reduced the price 100k and it sat and it sat and he finally gave up. So we still don't have a new comp but judging from that I would have to guess that the prices are already down at least 15%.