Friday, September 14, 2007

Inventory everywhere

Quite a while ago I predicted inventory, per Ziprealty, would peak at 1.3 to 1.4 million homes in 2007. We are already there! 1,366,352 homes are on the market this morning; that is a new record. Note that it is only 6,000 above 8/28/2007, so we are growing slowly. However, as I predicted in the previous article, we're not done yet in 2007. The peak should be later (partially due to the credit crisis). In a way its comforting to see things unfold in a predictable manner. Do note how I split 2006 and 2007 in the chart above in order to more clearly show the YOY (year over year) difference.

Due to the credit crisis, home sales should continue to drop in a YOY basis. If you haven't read OCrenter's excellent Bubble Market Inventory blog (in links), you should. Hattip for providing to the public domain the data for all the bubble markets, including LA, for years; the public service is beyond value. I've taken the end of month inventory and divided it by each month's sales to create the inventory in months of sales. As you can see, during crazy 2005, there really wasn't much inventory. In 2006 the inventory to sales started in a normal range and then went a little high. Now in 2007 we have just gotten into break away inventory. Instead of August competing with June to be the best sales month of the year, August was the weakest sales month (so far) of 2007. Gulp.

When I do the market emotions in a week, I fully expect us to continue being in "fear." Yes, some regions are far worse. When will people wake up to all of the empty homes that are flips? 90277 is absolutely littered with them. I wish 90275/90274 were also, but I'm not seeing that... yet.

My wife's latest concern is that we won't be able to get a mortgage for the amount we could have six months ago. I'm not sure my response of "that would be the best thing for us" has convinced her.

Last thing:
HBB meeing in the South Bay on Saturday 9/29/2007.
Anyone interested? I was suggesting the Cheesecake Factory in Redondo Beach. Nice location, good schadenfreude. I'd like to put a face with some of the names. Please responds in the "weekend topics" of HBB.

Got popcorn?

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