Comments on: Sales Up for the First Time Since ’05

By: How Do Bank Sales Figure in Home-Sales Data? | Redfin Los Angeles Sweet Digs

Mon, 25 Aug 2008 15:12:58 +0000

[...] week, I wrote a post about home sales in SoCal in July being up year over year for the first time in three years. [...]

By: Patrick

Patrick — Thu, 21 Aug 2008 05:32:31 +0000

Well, here in toluca lake my best friend just found out that even though his credit score is 801 (I know, amazing) and he makes $150K a year as an editor for one of the studios, that he only qualifies for a $500K loan.

Since the lowest end houses around here are still going for $700K+ (realistically more like $800K plus), it seems there is a huge gap between reality and fantasy for banks and potential buyers, even for those who happen to have stable well-paid jobs and a 10% downpayment.

Just a datapoint, throwing it out there.

By: Jeremy Miles

Jeremy Miles — Wed, 20 Aug 2008 20:17:16 +0000

I think it was in the LA Land blog that they reported that in the last house price collapse, prices bottomed out four years after sales bottomed out.

By: brad

brad — Wed, 20 Aug 2008 19:13:09 +0000

Cindy,

Just delete his posts. He’s really not adding anything…

By: Cindy Allen

Cindy Allen — Wed, 20 Aug 2008 19:01:39 +0000

Hi, Workafrolic: Excellent question. You’re right: There are a lot of lenders that are buying back properties, and I’m quite sure they get recorded as sales in the recorder’s office and tallied in with the monthly sales figures. I’ve put in a call to DataQuick to try to get an answer. If I hear back, I will post here. Thanks!

By: Cindy Allen

Cindy Allen — Wed, 20 Aug 2008 18:59:21 +0000

Andrew Waite: Please stop with the condescending asides directed at me, or I will delete your posts. Disagree with what’s written all you want, but do not get personal. Thank you.

By: Workafrolic

Workafrolic — Wed, 20 Aug 2008 16:08:01 +0000

OK, this one got me so upset that I actually emailed the radio station on which I first heard the story. Sales are up and prices are down so they concluded that more people are buying houses. Simple, right? But, here is the key question: what happens to the numbers when you regularize for foreclosures? As I understand it, when the bank forecloses, the transaction counts as a sale because it’s a change in ownership. But that doesn’t mean that more people (like you or I) are actually buying houses. That could be the case, but until you subtract out the foreclosures, we won’t know. Since the outstanding loan amount on foreclosures is usually less than what the house would have sold for last year, it can look like a drop in price. BUT … that doesn’t mean that listing prices have come down significantly. Anecdotally, a lot of would-be home buyers are seeing a continuing lack of realism in listing prices, and I’ll bet every seller who heard the news story had the desire to put their price back up on that basis.

Can DataQuick back out the foreclosures? I’m told the figure is usually a ragged number (the outstanding loan balance, not a usual negotiated amount) so if someone could run some logic on this, it would be VERY helpful to know. ~W

By: Andrew Waite

Andrew Waite — Wed, 20 Aug 2008 15:55:09 +0000

Well I guess poor Cindy missed the market again.

Three things have been happening since Jan 08, invesntory has been shrinking in better neighborhoods first and have now crept from 5 to 3 star neighborhoods. Pending contracts and now closed sales are up and the cost per aquare foot is rising from often below replacement cost to a reasonably profitable point. Widespread price stability by January 09 and return to predictable appreciation although probably less than historic annual 5%.

Come out from under the bed people….it was only bad for folks that made ill-advised decisions or have their attitude on upside down!

Best. Andrew Waite
Best A