Thursday, June 21, 2007

17 Months of Inventory

From the Stockton Record:

[T]he median sales price [in San Joaquin County] has steadily fallen from $395,000 in February to $370,000 last month. That compares with a high of $425,000 last July.

Meanwhile, the number of listings, fed by rising foreclosure numbers, broke the 5,000 mark for the first time since the downturn began in the fall of 2005....At the current anemic sales pace, it would take 17 months to sell those homes if no other houses went on the market in that period.

"The prices are coming down," said Jerry Abbott, president and co-owner of Coldwell Banker Grupe, Stockton. "When people are reducing the sales price of their home, they're not reducing it by $3,000 to $5,000, they're reducing it by $10,000 or $15,000 - or more.
...
Sean Snaith...said the "housing hangover" is lasting longer than thought because of the subprime market implosion that began in March. "It is a painful transition, no doubt about it," he said. "With all the inventory, it's difficult to sell a house, and there's downward pressure on prices." He predicted that the market wouldn't begin to return to normalcy until the first or second quarter of next year.
Must be Sean Snaith week at The Record.

9 comments:

smf said...

OK, let me see if I get this logic:

You have 17 months of inventory if no additional houses are added to the mix. Right?

But Mr. Snaith says that the market will return to 'normal' in 12 months?

Something doesn't add up? Is it just me?

Sippn said...

Yes it is just you.... and those people who don't want to live there.

The volume of sales has to return to some normal number. The reason # months inventory increased is 2 fold... the increase in # of listings due to foreclosures and slow sales and the decrease in the rate of sales....

# months inventory is inventory divided by sales rate. Sales rate in Stockton is 1/3 of what it was in 2005. IF it recovered to 2/3, still a volume 33% lower than 2005, it would cut the # months inventory in 1/2.

RMB said...

Sippn,

That IF is huge... can't really see what would bring qualified buyers back into the market now and as for unqualified buyers or speculators, doubt they are going to be able to find anyone to lend them money with what is happening to Bear Stearns.

smf said...

"it would cut the # months inventory in 1/2."

Leaving a buyer's market still (inventory higher than 6 months)

"...Bear Stearns"

'The beginning of the end'

"...speculators..."

And what % are/were they? 30% minimum?

Sippn said...

Stockton is running about 1/3 of the 2005 sales rate, Sacramento is at 50%. If the sales rate recovered to 50% of 2005 in Stockton, it would have a 14 month inventory with those numbers.

How would it get there.... lower prices and/or more jobs and/or lower gas prices for the commuter coming from the bay area.

Diggin Deeper said...

Wow can anybody make sense of all the adds and deletes possible on this blog?

Sippn...

Anything over 6 or 7 months is a real downer. To quibble over whether its 17 months, with the caveat that maybe sales catch up with cancellations or extended closing dates pull back in to a reasonable period, and then maybe it goes to 8.5...kind of like a magician on speed or my accoutant during tax time...Say what you will, explain what you must, but once again the bottom line is... it's pretty screwed up and getting worse with evey breath you take.

And the IF scenario is starting to sound like desperation....You either ought to buy in or move on...because this same dialog is starting to make any no sense at all.

Face it, there's no more excuses. The market is tanking and there's little anyone can do to break the fall.

Quit trying to mediate the inevitable. It's getting old...

Sittin' Out This One said...

Diggin,

I hear what you are saying. Keep in mind a lot of people feel the same way you do....only about bubble bloggers in reverse...same old tired message.

Sippn gets that the market is tanking. He is probably going down with his ship, just as other people with long term horizons will do.

His points are valid. If you have 10,000 homes and sell 3,000 month, then you have 3.3 months inventory. If you have 15,000 homes and sell 1,000 per month, you have 15 months of inventory. The change in the absolute numbers of listings is not that great relative to the whole market.

If 3,000 buyers just come back, viola, we are back to 5 months of inventory....in 2011. Bwhahahahha! Sippn, the market is tanking. Please tell us about the elevator again. Assume it is in 53 story twin condo tower downtown. How close will it make it to the top by 2011?

Diggin Deeper said...

I apologize sippn...you've got every right to keep these numbers in perspective...

dvobell said...

"He predicted that the market wouldn't begin to return to normalcy until the first or second quarter of next year."

The temerity, the unmitigated GALL, is astounding. TELL me he didn't have a straight
face when he said this.

Mssr. Snaith would probably do well to stick with his earlier quote found on this blog:
"I think the housing hangover is going to last a little longer than we thought."

...

imho, sippn's input is a plus.

It HAS, however, gotten so very parse-a-licous lately. But then I don't blame him. I have no clue how else I'd positively spin the Carnage that will continue to unfold over the next daysweeksmonthsyears. Big picture, Sacramento will end up to be one of the worst places to have bought RE (ESPECIALLY spec) at the peak in the history of the world, save maybe Stockton. Or Punta Gorda.

The numbers just scream it.

So get dissectn', sippn'. Yours is no easy task.