Thursday, February 14, 2008

Weird data trend

I'm a big believer in taking a step back and looking at the details. Today I look at inventory. How is the inventory growth looking like across the nation. What I talk about below is the growth in home invenotry since 1/11/08 per day per data from ziprealty. (I skip the first 10 days of the year due to reset noise.)

Nationally: 1005 properties added to ziprealty per day (versus 1300 in 2007 from a lower start point). We have 40% more inventory today in 2008 than on the same day in 2007. The implication is that nationally inventory will make the problem worse.

Areas falling apart
Palm Beach country: 99.3 properties added to ziprealty per day to a decade+ inventory.
What do you say about an area that might not need to have a single new home built for 25 or more years?!?

Seattle: 96.7 properties per day (brave new world!) The immune city seems to need antibiotics…

San Francisco: 84.5 properties added to ziprealty per day. Wow! We just read about how sales there are falling apart!

Phoenix: Adding 80 properties per day. (~1/3 faster than 2007) This is the poster child of the housing bubble. With its current multi-year inventory, be ready for a long show.

DC: 43.4 properties added per day (normally no inventory growth until march due to the cold winter weather) And inventory is already 133% of a bad 2007. Now DC is lagging other areas in this downturn; but this inventory buildup will cause the wheels to fall off by July.

Orlando: 36.6 properties added to ziprealty per day. That's onto an incredible existing inventory too! Like the rest of Florida its falling apart.

Areas bleeding equity, but not collapsing
LA: 23.8 (slower growth than 2007 but starting from a high January start)
LA is interesting. The numbers should be higher, but I'm seeing two properties a day being pulled from the market in the following cities: Lancaster, Palmdale, and to a lesser extent from other 'less desirable areas.' In blunt, people there have given up and are just waiting to have the cops come and take the house away. With just over a year’s worth of inventory, LA could bring down the Jumbo loan market alone. Add in Florida… and we have a sweet credit crunch.

Denver: 19.2 properties added to ziprealty per day. Since Denver is doing quite a bit to attract jobs and has remained affordable, I wonder if it might be sustained by California economic refugees? Probably not. A recession combined with high inventory isn't a sustainable market.

Houston: 15.9 properties added to ziprealty per day. This city has a pretty constant inventory year round. So will really only see conditions worsen due to the credit crunch and job losses (or gains...).

We are not seeing normal inventory growth. We're seeing the abandonment of the housing market by buyers. That means that soon home prices will become affordable again. Soon being ~30 months. This is just one more data point for a historic ‘Real Estate Emotions’ change that is occurring.

Got Popcorn?


Anonymous said...

From Wolf Laurel in NC - I believe Merrill Lynch is correct about the arrival of recession in the United States. The housing downturn is negatively impacting property sales in second home communities in Florida. This is also slowing sales in NC mountain resorts that depend on Florida buyers.

Still the downturn in prices and building of inventories is starting to attract second home buyers from Florida looking for cool temperatures in our mountains. Also the dramatic decline in the dollar combined with weakness in American real estate markets are beginning to interest some bargain hunting European investors.

Ron Holland, Broker/Realtor with Wolf's Crossing Realty. See Ron markets resale mountain and ski resort properties in NC in Wolf Laurel and The Preserve at Wolf Laurel.

wannabuy said...

Everyone I know is trying to pare their 2nd home holdings and convert the assets into liquid cash. For some reason the only 'bullish' real estate reports come from those whose income is dependent on transactions... Note: I know people who can afford to own five homes. So what, now that the 'fashion' to own multiple homes is over, they're going to diversify their investments.

2008/2009 is going to grind down the market.

Got popcorn?

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smf said...

I have tracked my ZIP code (95827) for almost 8 years now. This is the ZIP where I first noticed the bubble growing, and when I first noticed the end of it in June 2005.

When we purchased our home in 2003, there were perhaps up to 40 homes for sale on the MLS.

The top # of homes for sale so far has been around 140. That is about the # for sale right now, BEFORE the peak season.

(Sick of popcorn)

wannabuy said...


(Sick of popcorn)

Too much Schadenfreude? ;)

Yea,the inventories are amazing. I'm going through data quick now to pull information for future articles.

Got popcorn?

smf said...

No kidding about inventory. I have been trying to get census data to see where the high end inventory lies at.

In some very high-end (or at least high priced) it seems as if up to 80% of the for-sale mansions have been built since 2003.

That gives me the feeling that high-end will do a pretty significant drop-off soon.

As I told my wife, the price of a larger home would have to be fairly cheap to us to offset the much higher monthly utilities + time expenses.