Trends updated

This is an update with the recently released April data for California.

My conclusions are not changing. While the last few data points are above trend, there is no break in the overall downward slope. We should expect a season spike this time of year, but what the CAR is raving about is a really weak seller's season. In none of the zip codes is there anything but noise around the long term trend.

I'm assuming that any potential 90275 buyer looks at that coastal developments that are failing:


http://www.terranea.com/,
Wait... they next a tax break!
http://www.dailybreeze.com/news/ci_12302705

Terranea is locally famous as the reason it was given the go ahead based on the expected tax revenue for the city... hmmm...

or
http://www.trumpgolfcoursehomes.com/

ROTFL. Their own web side points out that out of the first 5 homes constructed, only one is is escrow!?! So Trump sues the city as some of the lots are unstable (the local 'slide zone' that swept the signature golf course hole into the ocean)... sigh. 1 out of a planned 50 sold. Trump, leave the city alone. This is like your Baja, Tampa, and other projects, a failure.

One out of 50 sold... talk about a missing the boat. Its called 'hamburger hill' for a reason. People stretch to get into the good school districts in RPV. The 'flashy money' is in Manhattan beach, various Westside areas, or elsewhere.

The data really says it all:
1. The price per square foot is declining.
2. Sales are slow. Again, only Rancho Palos Verdes, 90275, broke 20 sales in an area where, for this time of the year, pre-bubble sales would break 30 per month for every zip code!























Why am I being harsh on the coastal developments? They are far overpriced for the local market. When that one home closes in Trump National, it will skew the data. How could the only sale above $2 Million out of 20 sales not skew the data? I have no idea where in the $8M to $10M price range that sucker is going to pay. But ouch... RPV is not where people buy estates. Oh, there are a few true ones in 90274. That is not 90275. There simply is not a market for the combined 82 McMansion 'estates' these two developments are trying to sell.

I have not done my real estate emotions lately. Basically, we're still in Panic. Capitualation isn't here yet. But that is next... When these charts turn down, we'll know we hit the next investment emotional state.

Got Popcorn?
Neil

Long Term trends for 5 zip codes

A coworker has been saving the DQ data since March of 2003. Sadly, the REIC pulls the data off after a new version is released.

But this data tells quite a story. Sadly, it has personal information so tied in with it, I haven't had time to scrub it. This is the *full* data set for LA county though.

Since I'm only interested in single family homes, that is all I will plot. Also, the data is on a bunch of excel spreasheets in varying formats, so there was quite a bit of effort just to sort out the data for a few zip codes. I have all the torrance zip codes... but whenever sales were low, it was "n/a" if the data was ugly and a high value if it showed what the REIC wanted people to see... Grrr...

I really think the graphs speak for themselves. But I'll still comment. ;) These are my first choice zip codes to buy into. Look at that sales graph! It tells us clearly this area is *not* done dropping.

90275 is my first choice zip code to buy into. As with Case Shiller, we can see that the price per square foot peak was in 2006. Just earlier than Case-Shiller!


















Look at the sales trends. Notice the long term decline? It looks like people were 'priced out forever' before this data series even started. This leads credance to the theory that the bubble really started earlier than many people suspected. Certainly earlier than I was aware.





















I've been curious which areas 'align' where I wish to buy. 90274 was easy too eliminate, its low sales rate and variety of unique (and pricey) properties had me cutting it first. But then I noticed that these three zip codes align on a price per square foot basis... Notice how they all align? So much for it being 'different here.'

















We're not ready to buy now. But this data strongly suggests that waiting is the best strategy. We hear the noise of the recovery... there might even be a blip. But the long term trend is clear. Prices and sales have yet to recover. Sales must recover 12 to 18 months before prices. So waiting is pretty safe. :)

I'm still shocked how 90275 dropped from 60+ sales per month to where 20+ sales in a month is considered something for the CAR to brag about. Note: All 5 zip codes should be seeing 20+ sales per month! Not one out of five! Most actually should be seeing 30+ per month... None are above that threshold (yet).


Now to take off the bear's hat. One truism that the bears have held is the downturn would be as steep as the uptick. So far, its at a much lower slope (I 'eyeballed 90275). Does that mean?:
A) 'green shoots' is sort of working...
B) The worst lies ahead
C) The theory was wrong

They say the 'trend is your friend.' Well, this is an interesting sales trend (same sales per month plot, with a few trendlines). The sales trendlines do look like they are approaching a singularity. This, to me, implies we're at or near the sales bottom. Certainly by next February. That isn't the same as a price bottom though.

Inventory

I've been really bad at both blogging and tracking inventory. Mea Culpa. Inventory is down everywhere I'm tracking and crossing through 2007... EVERYWHERE! The most dramatic drops, which I haven't been charting, have been in Palmdale and Lancaster California.

Palmdale has 1,094 homes on the market. Peak was at 3,281 on 9/17/2007 (per my snapshot).

Lancaster has 1,133 homes on the market per zip realty. Peak was 3,521 on 9/27/2007 (ten days after Palmdale).

Greater Palm Beach Florida is even below 100,000 (peak 132,636 on 2/28/2008)

Phoenix is at a mere 45,086. Remember when it was at 64,815 on 3/26/2008? On 5/4/2008 it was still 62,071.

Something seems odd though. Why is LA inventory down so much? Why is any inventory down so much when so many people are known to be doubling up. I speculate the foreclosure moretorium... But is that enough to explain it? I see two groups of buyers. Those confident of their job who are leaping at the chance to buy and those being more hesitant.


Ok, inventory graphs that speak basically for themselves. We're crossing through 2007 pretty much everywhere:

Case-Shiller released seasonal worst month of year

The Case-Shiller data for January was just released. Normally, the fastest price drops of the year happen in this data set. Now, for Florida and maybe a few other places, it looks like February could be worse; but for most areas we expect slower price drops until November.

So expect your favorite Realtor (tm) organization to state how much the market is improving.

Since Calculated Risk does a much better job of documenting the big picture, I focus on the last 3 cities that held their Case-Shiller above 200: Los Angeles, Miami, and DC.
















I believe the derivative provides even more information than the absolute number. Notice the seasonality? The greatest drops are October-February. Suddenly for march the slope changes, pretty much every year and I do not expect an exception for 2009. However... I still expect the overall year to be negative. Loan rules keep being rewritten.

I also wonder when the black hole of 'off the market foreclosures' will be relesed. Sorry... but I know of too many people who haven't made a payment in 9+ months. When the time comes, they'll move back in with mom and dad. Too many bedrooms for too little income.


















What is it with journalists pointing that the price declines are easing in LA?!? A 2.87%/month price decline might be less than the peak of a year ago, but it points to a bottom in 2011, not even 2010!

Now I'll do a caviat. You could see miniscule price increases, per Case-Shiller in May-August. But... they will be given up in the winter.


e.g.:

yeahoo article













Oh, any price increases will require the job market to stop sucking. Do you think that will happen? Historically, the price bottom is about 12 to 18 months after the employment bottom (or when employment is starting to rise again).


Thankfully, unless there is a huge surprise to the downside, I think we're starting to come to the end of the worst of this recession. Now when are we going to fix the trade deficit? We have to (again, as we did for a little time under Reagan). By trade deficit I mean oil and goods (China). Not to mention, its going to be 7 years before easy credit rears its ugly head again (and it won't be as easy for 70+ years).

Got Popcorn?
Neil

Saturday Music

Mea culpa to all the blogs that started this trend years ago.

But I've been having too much fun watching bearish Youtube songs this morning.

You've got the Fed was a nice morning song:



Got Popcorn?
Neil